Bitcoin is a famous cryptocurrency that is based on blockchain technology and it was launched in 2009 by Satoshi Nakamoto. This is considered the easiest, safest, fastest, and secure way of transacting the payment against goods and services across the world. All transactions are confirmed by internetwork nodes through cryptography and logged in a public distributed ledger called a blockchain. Bitcoin has also been utilized as an asset, although several government regulatory bodies have delivered investor warnings about Bitcoin. However, in September 2021, El Salvador legitimately accepted Bitcoin as legal tender, becoming the first and only nation in the world to do like this. Storing is much more important than buying Bitcoin.
- Online/Web Wallet: Online wallet is easily accessible and available for anyone and this is the cheapest type of wallet in the cryptocurrency market. Some web wallets use the TOR networks for an extra layer of security and anonymity the main point is the user-friendly approach for web wallets. These come in the form of mobile applications and others, so you can access them in various ways in a user-friendly way.
- Mobile Wallet: A mobile wallet is a kind of cybernetic wallet that stores cryptocurrency keys, credit card numbers, debit card numbers, and loyalty card numbers. This is accessible through an app installed on a mobile device, such as a smartphone or tablet.
- Desktop Wallet: Desktop wallets are installed on a computer device and give the user a whole control over the wallet. Some desktop wallets also include supplementary features, such as node software or exchange integration. Desktop crypto wallets are considered as secure as compared to web-based crypto wallets but less secure than hardware wallets. It provides the advantage that you can control your private key and funds, and don't require to trust a third party to hold your cryptocurrencies.
- Hardware Wallet: A hardware wallet is a kind of crypto wallet where you may keep your private keys in a secure physical device. The cryptocurrencies kept in this wallet lie offline, meaning that they cannot be hacked. However, when required, the coins stored are willingly available.
- Paper Wallet: A paper wallet is a written piece of paper that contains keys and QR codes that are used to facilitate cryptocurrency transactions. As they are removed from the Internet, at one point, paper wallets were considered to be more secure than other forms of cryptocurrency storage.
Risk in storing in a single wallet:
- Hacking: This is a common problem with wallets being hacked, and so it is advisable to use or keep your cryptocurrency in more than one wallet and wallets can be a combination of online and offline. It will minimize the chances of hacking.
- Password Disremember: There is a chance of disremembering credentials or access codes of wallets where private keys are stored. In the case of only one wallet, you may forget the login information, and it will lead to the loss of all your cryptocurrencies. Therefore diversification of passwords is required.
- Misplacement: Misplacement of passwords is also possible so to avoid such trouble, you should have more than one wallets where you can put private keys. Few people keep somewhere and forget to recall the place. It is advisable to use two different wallets in such cases.
- Theft: Cryptocurrency used to expose online and when it is online then it is exposed to be theft also. As we know this is not a physical currency but digital-only. So hackers are around us to steal the private keys, and then they can transfer them easily to their wallets. It has been seen that the theft of cryptocurrency is a general issue.
Here, with respect to the above, we have a general idea to conclude that when you keep your cryptocurrency in single wallets then there are high chances of risk in terms of disremember, hacking, and stealing. Therefore, it is always advisable to put your cryptocurrency in more than one wallet to minimize the risk. There are so many wallets, which we have discussed above already, and you may choose among them as per your wish and feel relaxed from being victim easily. That's why this is called a bad idea to use a single wallet for storing your valuable cryptocurrency.