All the Bitcoin assets are stored in special applications - wallets. Every one of those allows users to create addresses on the Bitcoin blockchain, as well as receive or send transactions. Wallets may differ in functions and capabilities and this article will cover those. 👍
Applications for storing and transferring bitcoins are classified based on three main criteria:
PC (Windows, Mac OS, Linux) or phone (Android, iOS). The desktop wallets are also subdivided into “light” and “heavy”. The latter requires the entire bitcoin registry to be stored on the device being used. One wallet can have an application, usable for multiple platforms. 💳
What is a hot and cold crypto wallet?
“Hot” - wallets require constant Internet connection, whereas “cold” wallets are physical devices that do not need any connection to work properly - they are the closest it gets to crypto becoming material. Most wallets are, however, hot with cold being mostly used by people, who have been with crypto since day one and are mad about the technology.
What is a custodial and noncustodial crypto wallet?
A wallet, giving a third party access to the address and the bitcoins stored on it is called custodial. Non-custodial wallets will only allow their owner to manage the wallet and all the funds held on it. An individual would mostly encounter custodial wallets when using a centralized cryptocurrency exchange.
The basic terms are pretty straight forward, but is there anything else you need to know? Surely, the answer is yes. 🙌
The advantages of heavy wallets
The main reason for people choosing a heavy wallet over a light wallet is the improved security due to the wallet being a proper node in the Bitcoin blockchain. Thus, allowing the user to pass all the unnecessary intermediaries. 💨
The huge disadvantage here is the need to store the bitcoin blockchain file larger than 500 GB (data for September 2022),with another 5-10 GB added monthly on your device. Furthermore, some intermediate programming skills are required for working with the node software. 👨💻
Heavy bitcoin wallets are mainly used by miners, as well as application developers who send and receive a large number of transfers daily - e.g. cryptocurrency exchanges, shops, etc. 💱
The most sought after “heavy” wallet is Bitcoin Core - an original client, based on Satoshi Nakamoto’s idea. Its source code is open and is actively maintained and monitored by the community. 🔧
Light PC clients are designed to simplify working with blockchain as much as possible. They are much less secure, though. All the mobile wallets can also be considered light. 🪶
Improving your security level even more
The only way to store your Bitcoin safer than using a heavy wallet is probably a cold wallet, which is simply connected to your PC to transfer the coins from your hot wallet. A hacker is simply unable to access this kind of wallet because it is isolated from the outer world. 🚫
Even though the market offers us a very wide variety of Bitcoin wallets, we would still stick with the certified and trusted mobile wallets like Trust Wallet for example. We haven’t seen any cases of hacker attacks on those and you shouldn’t have any problems with using the interface or paying for anything. 😉
Stay tuned 📻