Types of wallets explained

August 22, 2021

The idea behind cryptocurrency is to be your own bank and cut out the middle men (the bank). That sounds great, as you yourself are in control of your finances, without any unnecessary fees or risks from how the bankers manage your funds.

But with that comes the responsibility of taking care of your own wallet security.

In this article, we will explain the different wallet types and some basic security principles you can use to make sure you do not lose access to your wallet or, if you do, how to restore them.

Easiest: Online wallets are the easiest to use generally, such as Blockchain.com.

Intermediate: Software wallets have the advantage that you are self-hosted, meaning, you are fully in control of your own finances. But also you might are required to do more yourself.

Hardware wallets can be easy to use, the Crypto Geeks favorite (Trezor), has most of the advantages of an online wallet, and yet a high or even higher security than the average software wallet. Trezor also has the option to store many other popular tokens, all ERC-20 (Ethereum protocol) tokens. Find this tutorial on setting up a Trezor wallet.

In all cases: Do not forget to make proper (offline) backups of your seed!

Software wallets (Bitcoin)

Bitcoin Core (site)
Bitcoin core has the advantage of being an open source wallet. That means that the code of the software has been likely audited by thousands, if not more, programmers all around the world. This means that it is less likely that any exploits or risks exist in the software. Open source wallets have a distinct advantage in that sense.

If you install a Bitcoin core wallet, we’d recommend you to look at a this tutorial.

The downside is it is rather large, you would have to download 7GB worth of Blockchain data.

Electrum Wallet (site)
Electrum wallet is a lightweight wallet client. That means that you don’t have to download the entire blockchain data. Electrum is considered one of the old and trusted wallet clients.

Now for the safety tips:

Make sure to make a backup of the wallet seed.
Write down your wallet password on a piece of paper and store it in a safe place
Make sure your computer is free of viruses (See this link. Tip: Bitdefender)

What happens if I lose my password?
You should be able to restore it with the backup wallet seed.

Find this usefull link of Bitcoin.org to help you find a suitable wallet.