Digital Wallet vs. Crypto Wallet
A digital wallet, or e-wallet, is your electronic device or online software that allows you to make electronic transactions. It virtually stores your payment and identification information so you can make purchases from online systems using a computer, tablet, or mobile device. An e-wallet is like an actual wallet and may hold several credit cards that can be accessed for purchases from various online systems.
A crypto wallet, or bitcoin wallet, differs from a regular digital wallet. It is a wallet that stores private and public keys so you can interact with various blockchains to send and receive digital currency, or monitor your balance. Think of a crypto wallet like a ring of keys that holds copies of each private key and each private key’s corresponding address. You can access all of the addresses that are inside the wallet, much like the wallet is a house and once inside, you can access any room in the house.
Your crypto wallet can be an online service, a mobile app, a desktop program, a hardware device, or a paper printout. There are pros and cons to using each, and most bitcoiners use a combination of these types depending on what they want to do with their bitcoin or another cryptocurrency.
Crypto Wallet Types
Online Service Wallet – a wallet that is accessed online and runs on the cloud considered to be a hot wallet because it is connected to the Internet. Accessed from a computer, tablet, or mobile device.
Mobile Wallet – smartphone apps installed to open an account are considered to be hot wallets as they are connected to the Internet.
Desktop Wallet – software wallet installed on a computer, considered to be a hot wallet if the computer is connected to the Internet.
Hardware Wallet – a wallet that stores private keys on a physical device considered to be a cold wallet because it remains primarily offline.
Paper Wallet – a physical copy of generated public and private keys considered to be a cold wallet because it is never connected to the Internet.
Bitcoin Credit Stick – a physical USB stick that allows spending Bitcoin much like a “bearer bond”.
Crypto Safe – a credit card-sized Bluetooth device that stores and secures your private keys that works wirelessly. Complete cold storage for Bitcoin, Ethereum, Litecoin, XRP, Bitcoin Cash, and ERC20 tokens. Uses encrypted Bluetooth anti-theft smart pairing to combine two-factor authentication to work only on your iPhone or Android smartphone so you can store and take your crypto safely anywhere. The only waterproof, tamper-proof, impact resistant, and heat/cold resistant wallet.
Bitcoin Card – an open protocol, secure hardware Bitcoin wallet for small amounts that looks and works like a credit card. Secure and easy to use, aimed at those who wish to use bitcoin but are new cryptocurrency. All the user needs to know is their own Bitcoin address and a PIN code. Private keys are offline inside the card and the user does not need an Internet connection, computer or smartphone. Merchants can accept bitcoin on the card by using a free app, and do not hae to be online to accept payments – and, there are no fees.
Hot wallets are connected to the Internet, cold wallets are not. Cold storage is when access to your assets is offline. Typically, long-term funds are kept in cold storage using a cold wallet, while funds you intend to use are kept in a hot wallet. Security level depends on the wallet features. Enabling two-factor authentication, using trustworthy wallets that encrypt private keys, updating software regularly, and backing up your wallet are considered best practices for the highest level of security. Using a clean browser to access online portfolios will reduce the probability of theft since browser extension malware is often used to steal online wallet access.
Most importantly, protect your private keys! He who owns the keys owns the bitcoin!