A comprehensive wallet provider test can help anyone interested in investing in digital currencies. If you want to buy Bitcoin, Ethereum, Litecoin or one of the many other cryptocurrencies, you must meet one of the basic requirements: you must own a digital wallet. This is the virtual equivalent of the wallet in which we hold real money. Our Wallet review shows what types of wallets exist, their differences and similarities, and what criteria to consider when choosing the right crypto wallet.

 

How wallet works

The comparison with fiat currency wallets is actually not as far off as one might suspect at first glance. Because they both have the same benefit: they are needed to hold personal property and make payment transactions. With the difference that the wallet is a sequence of random digital characters. Participants in a network can usually use a public database to see how much digital currency is in the wallet. However, they do not have access to the assets and cannot understand who owns them.

To explain how the Wallet is accessed, the Bitcoin Wallet serves as a practical example. For many years, Bitcoin has been the market leader among digital currencies, which is why a wallet comparison makes sense for those interested. Owners can access Bitcoins stored in the wallet through the public key. This should be kept with the utmost care and not shared with others. Because it’s valid: the owner of the private key automatically has access to all the bitcoins stored in the wallet. In the event of a loss, there is no central case to which the person concerned can turn. It is still difficult to prove that you own bitcoin because it is not a good product. In addition, private keys are anonymous and contain no information about the owner’s name or address.

In addition to storing private keys, wallets are also responsible for managing public keys. The difference of private keys is that public keys are shared with other Bitcoin holders to initiate transactions. Therefore, the recipient of a Bitcoin transaction must notify the sender of his wallet address (= public key) so that BTC can change ownership. It should be noted that each wallet has only one private key, but for each transaction a new public key can be generated, which is assigned to this wallet exclusively. Therefore, the wallet’s task is also to administer all the keys.

 

Wallet experience: what types are there?

One Wallet review states that there is no single best wallet that meets the needs of all users. Because each cryptocurrency holder has different security, cost, flexibility, and criteria, there are several different manufacturers in our wallet provider comparison. Basically, a distinction must be made between two types of wallets: hot wallets and cold wallets.

Hot wallets are always available

Hot wallets are digital wallets that can be accessed over the Internet at any time. Nearly every crypto trading platform also represents a hot wallet, as it is possible to send and hold crypto on a customer’s account. In addition, there are many other providers in our wallet comparison wallet that offer hot wallets without a built-in trading platform. However, those interested in this form of digital asset preservation should keep in mind that hot wallets always present a high security risk. Because they are not only accessible from the owner from anywhere, even attackers can exploit security holes in the system and thus access the data. This is especially dangerous if the provider owns the private keys of all user wallets.

Therefore, it is best to only use hot wallets to store a small amount of the relevant currency. Always have flexible access to several digital assets, without exposing them to unnecessary dangers.

The following wallets are among the hot wallets:

  • Web wallet
  • Mobile wallet

They differ mainly in that a Web Wallet is accessed through a browser, and a mobile wallet exists an app for a smartphone or tablet. The biggest plus of these two solutions is that there is no problem with the near-constant availability of cryptocurrencies, however, for example, the loss of a smartphone is also a loss of a wallet..

 

The highest security cold wallet

Where else, if not in a hot wallet, can investors save their assets? Answer: in cold wallet. Experience shows that these can be kept much more secure since they are not connected to the Internet. Since Wallets are specifically keeping Private Keys safe up front, Cold Wallets can be created with the simplest tools – slips and pencils are enough for this. The key is noted and then kept as secure as possible. As long as no one else has access to it, assets in BTC, ETH, LTH or other currencies are also safe from hacker attacks.

In the Wallet Provider Test, a lot of wallets are referred to as hardware wallets, so especially to keep the devices private key generated. Many are barely larger than USB sticks and function similarly. Once a hardware wallet has been connected to a computer, tablet or smartphone via a USB cable, credit can be managed using a special software or application. There are also desktop clients that can be used to manage cryptocurrencies without connecting to the Internet.

In a wallet comparison, the following are cold wallets:

  • Hardware Wallet
  • Paper wallet
  • Desktop Wallet

 

Wallet Review: Web and Online Wallet

Since all Wallet species have only been described superficially so far, we focus our attention on the next step of detailing all the solutions in our Wallet review. Initially, the focus will be on the web or online wallets. However, these are not two different categories, but just two generic names for the same product.

Web-based wallet providers manage private keys online on servers. As mentioned, for example, trading platforms for Bitcoin, Ethereum and Co. also often represent one online wallet at a time. This is always the case if cryptocurrencies can also be stored on a trading account. However, there are also cryptocurrency exchanges and markets that do not actively participate in the payment process, but only provide the basis for decommissioning. An online wallet will not be provided in this case.

Perpetual availability is undoubtedly the biggest advantage of the wallet. However, experience in recent years has shown that this is also their greatest weakness. Since the private keys of all wallets are stored centrally, hackers have a chance to gain access to them through a targeted attack. Investors can protect themselves from a big loss by comparing wallet providers, while also paying attention to security.

 

Detailed smartphone wallet

Many points applicable to web-based wallets can be transferred 1:1 to smartphone wallets. They offer the highest possible flexibility and availability of crypto assets, as the smartphone is now undoubtedly one of those devices that is always carried by the owner. The storage of the private key is done directly on the device, that’s why the wallet address can be transmitted within seconds, for example by QR code or NFC. Thus, digital currency can be conveniently used for payment at the appropriate terminals.

It should be noted that the mobile wallet is not an official client and provides access to the entire cryptocurrency network. For example, the size of the Bitcoin blockchain is currently more than 150 gigabytes, which will have to be downloaded for this purpose on the device – in the case of smartphones, this is hardly possible. As a result, smartphone wallets increasingly use Simple Payment Verification (SPV), which only has to store a small portion of the database on the device to make secure transactions. However, mobile wallet users should be very careful with their devices and perform regular backups. Otherwise, loss or theft of the smartphone also loses access to the wallet.

 

Money management via desktop wallet

The clients mentioned above, who download a complete image of the blockchain, lead us directly to the desktop wallet. What many interested parties don’t know about wallet provider testing: for example, if you use the Bitcoin Core client, you automatically have a desktop wallet. This applies equally to other cryptocurrencies. Programs that provide access to the cryptocurrency network can also be used to receive and send BTC. In addition, they are responsible for managing the private and public keys.

However, the client is not the only desktop wallet, there are many other providers. They often offer different features, focus on issues like security or anonymity, or are tailored for use on these platforms:

  • window
  • Linux
  • Mac OS X

The big advantage of desktop wallets is that another computer behind a firewall cannot access them. They belong to the so-called Cold Wallets, which are not connected to the Internet and are suitable for storing large amounts of digital currency. As a result, they are not flexible. Anyone who is on the road and wants to have assets on a desktop wallet, this is not possible.

 

Offline wallet: handy utility with high security aspect

If you want to ideally protect your crypto assets against unauthorized access, you can look for another form of Cold Wallet: Hardware Wallets. There is now a wide range of vendors offering devices in different sizes and designs. Most devices are similar in shape and size to a standard USB stick and thus find space in any pocket. This makes them even suitable for mobile use. However, it is recommended to use hardware wallets to store larger amounts of digital currency and keep devices safe. For this purpose, for example, an indoor safe or a safe deposit box is mentioned. Cryptocurrency owners can protect themselves from loss through theft by adding a secure PIN or password to the wallet.

However, hardware wallets are connected to a point not found in many other wallet solutions, and making wallet comparisons is absolutely essential: cost. Device purchases cost money, while many other wallet solutions are completely free. Most devices are in the 70 to 250 euro range, with hardware wallets also available in the higher price segment. However, those interested in using hardware wallets are often tied to their availability. Demand for secure storage solutions for Bitcoin and Co. is huge, which is why not all devices are immediately available.

Paper wallet: store via QR code

This is a fairly simple way to keep a private key, but at the same time a pretty secure key. While the entire string had to be noted in the early days, there are now programs that print both the public and the private key as a QR code on a single piece of paper. Access to your own wallet is done by scanning the private key, so it never gets out of hand. Public key QR codes, on the other hand, can be passed through to allow transactions to your own wallet. By laminating the paper, it can be protected from most environmental influences, but it can be destroyed by fire. Without a backup, access to the wallet will be lost.

A variation of paper wallets are coins in which the keys are engraved. In this way, payment in physical form with a coin is possible, even though it is a digital currency. Wallet’s experience with this form of storage shows that such a coin is nearly indestructible, but due to its small size can be lost quickly. In addition, the private key must be kept out of reach, if the owner cannot do so himself. Again, this poses a security risk.

 

Why is a wallet comparison important?

Themenicon Wissen_varianteSo are different Wallet solutions, so so are the needs of owners of cryptocurrencies. Whoever decides without comparing previous Wallet providers or touting other users’ Wallet experiences to find a solution, often chooses a solution he is not 100% satisfied with in the end. Especially when it comes to investing in cryptocurrencies, but all the factors must be right to achieve the best possible results – after all, sometimes a lot of money is at stake.

The market leader Bitcoin can ideally be used as an example at this point. The price has increased a lot in recent years and it has reached a value of just under $20,000 per BTC. While the price has corrected significantly lower once again, it quickly became clear where investors must now move if they want to build a small fortune in crypto. It is therefore more important that this can then be secured where it is protected against unauthorized access. One possible model might be to keep most of what’s in cold wallets and distribute smaller amounts across multiple hot wallets where they are available.

For example, this system also uses major cryptocurrency exchanges. Up to 98 percent of deposits are stored on cold wallets, where they are protected against outside access. Only small remainder is available on hot wallet for instant payment service. Cryptocurrency exchanges are frequent targets of hacker attacks, so they need to protect themselves against this form of threat. If an attack is successful despite high security measures, only a small fraction of crypto assets will be lost.

These criteria must be taken into account in the Wallet test report

As Wallet providers examine by interested parties, several factors need special attention. Only then can the selected product then perfectly fulfill the requirements. As stated, investing in cryptocurrencies currently involves high capital costs, so no aspect should be left to chance. Investors should pay attention to the following properties when comparing Wallets:

  • Cost: Hardware wallets are always associated with an initial cost. Other solutions are mostly free, but sometimes also involve fees.
  • Security: Cold Wallets offer extremely high security, but many Hot Wallet solutions are at risk of being accessed or lost by third parties.
  • Flexibility: When using a hot wallet, crypto assets are always available. On the other hand, Cold Wallet cannot be accessed from outside.
  • Availability: Depending on the model, Hardware Wallets may experience distribution bottlenecks and increased demand.
  • Support: There is a chance to help when having problems with the Wallet. Ideally, support should be available in Vietnamese, or at least in English.

Conclusion: Compare wallets worth investors

It turns out that there is not just one way to digitally store assets in Bitcoin and other cryptocurrencies. There is no such thing as absolute best, each variant has its own advantages and disadvantages, as our Wallet experience shows. Thus, a combination of several solutions has been established in the past to be able to balance the disadvantages of one wallet with the benefits of another. With dozens of providers on the market today, a detailed comparison of options can certainly be profitable for investors.

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