1. Software Wallets
Software wallets are Hot Wallets that require the download of software clients to create and use a wallet.
Software clients are available for both — desktop platforms and mobile platforms.
Software clients are a lot more easy to use on mobile devices.
You can download a wallet app and start creating and using your new wallet right away.
You should keep in mind that they are only as secure, as the computer/mobile they are stored on. It’s tough, but not impossible for any malware to steal your wallet information.
2. Online Wallets
Online Wallets or Web Wallets are the easiest to use amongst all the different kinds of Hot Wallets. Creating an Online Wallet is as easy as signing up for a new account or any other similar service. Also, you can access your wallet from any device connected to the internet, so making transactions couldn’t get any easier.
But there are certain trade-offs of using an online wallet. Most importantly, your private keys are stored on another server, which could lure prying hackers all-around the globe to steal them. Online wallets should be used only for making small everyday transactions. If you hold a large number of digital currency, you may want to stay away from online wallets.
3. Paper Wallets
A Paper Wallet is a fancy term for printing out your public and private keys on a piece of paper. Paper Wallets are more secure than using software or online wallets because you physically have your keys printed on a piece of paper. As you might have guessed, it is a Cold Storage method, as it is offline.
While more secure than online counterparts, a paper wallet can be torn, water-damaged or destroyed in many ways because you know, it is a paper. Therefore, it is important to make multiple physical copies of this paper and make sure you keep it secure.
4. Hardware Wallets
Hardware Wallets are stand-alone hardware cold-storage devices that generate keys on the fly while making a transaction.
Hardware wallets are secured from your regular computer malware because it generates private keys offline, on the device itself. They are extremely convenient to use and do not require the understanding of complex technical details.
They also provide backup options, so you do not lose access to your wallet. They can be also secured with a password to combat theft.
Overall, as you carry your private keys along with you all the time and it is prone to computer malware, hardware wallets are the most secure option.
If you regularly deal in digital currency, you should definitely invest in Hardware Wallets like Coin.FM cold wallet storage. It is worth every buck spent and brings you a great deal of peace of mind.