• Web/ Exchange-based/ Cloud Wallets

This is a web-based wallet and is often hosted by exchanges themselves. Since you have instant access to your wallet, web wallets are a very fast way to complete transactions. Creating a wallet is super easy and can be accessed from any device or server with an internet connection. Some online wallets can also manage multiple currencies and even swap one currency to another.

Some online wallets are also called custodial wallets because private keys are saved on third-party servers?—?a feature that heightens the security risk. Since exchange-based wallets have had instances of shutting down or being hacked, it is imperative not to store all your assets on these wallets. Online wallets are ideal for small amounts of cryptocurrencies only. Make sure to use reputable exchanges, and to enable two-factor authentication to add an extra layer of protection. You can also spread your cryptocurrencies on a variety of exchanges to diversify your assets. Coinbase is one such popular example of an exchange-based custodial wallet, while blockchain.info is an online wallet for Bitcoin.

  • Desktop Wallets

Desktop wallets are software programs installed on a computer/laptop and accessed directly from that device. The keys are stored on the hard drive and offer much better security. Two examples of desktop wallets are Exodus (which has a great interface and supports multiple currencies)and Jaxx (good privacy and security and feature-rich).

A desktop wallet is still prone to malware, keyloggers, and hacks. Loss or damage to the device also causes your wallet to be inaccessible. To be on the safe side, you could opt to use a dedicated device (for example, an old laptop), or partition your desktop for digital assets. Another important point is to stay safe online! Avoid using public Wi-Fi connections, clicking unknown/phishing links, and downloading suspicious files. Last but not the least, install a really good version of an anti-virus software and firewall.

  • Mobile Wallets

These wallets run as an app on both Android and iOS devices. It brings portability, ease, and practicality to serve as a great option for those actively trading or using cryptocurrencies. Mobile wallets also have a number of features such as storing keys to allow for payments on the fly, or instantly transferring funds through near-field communication. Mobile wallets are lightweight because they are only a subset of the blockchain ledger and, therefore, they work with Simplified Payment Verification (SPV) technology.

Again, mobile wallets can be compromised if damaged, misplaced, hacked, or infected with malware or keyloggers. Remember to tighten your security like Fort Knox. Breadwallet, Mycelium, Coinomi, Electrum and Copay are a few examples of mobile wallets.

  • Multi-Signature Wallets

Multi-signature (or multisig) wallet, as the name suggests, requires more than one signature to authorize and complete a transaction?—?just like a shared bank account. This division of keys is ideal for use by businesses and families, creates more security, and acts as a backup in case you lose your key.

Cold Storage

The term ‘cold storage’ denotes storing cryptocurrencies on wallets not connected to the internet, and these are comprised of hardware and paper wallets. Cold storage is similar to a safety deposit box or vault, or a savings account. They are best utilized for long-term storage of large sums of cryptocurrencies.

As improved security and reliability is, cold storage has a few shortcomings as well (theft,

environmental damage and human error), so it is advisable to be diligent about such

methods.