Mobile
For those who use Bitcoin daily, pay for goods in stores or carry out face-to-face transactions, a wallet for cryptocurrencies on mobile is the ideal tool. It acts as an app on your smartphone, storing the private keys and allows you to pay, trade, and store cryptocurrencies on your mobile.
In addition, some apps use the smart verification function for payments or NFC which means that users can pay at a POS with their mobile without the need for any further information.
The downside is that control of your wallet can be lost if someone gains access to your mobile device, especially if two-factor authentication (two-factor authenticator) is not enabled.
Two-factor authentication is a second layer of protection when you enter a password in addition to your username and password to log in. The key difference between a 2 FA code with a password is that the 2 FA code is sent to your email or mobile via SMS to verify your own access. A more secure method 2 FA is to use an authenticator app like Google Authenticator, Free OTP, or Authy, because they are immune to SIM swap attacks and email hacks.
There is a wide variety of Bitcoin wallet apps on Android and iOS. They are lightweight in size without downloading the entire blockchain to your phone or tablet. Beware of scams and fake wallet apps, there are many out there that will steal your private keys.
Internet wallets (exchange wallets)
Internet wallets store your private keys on a server that is constantly online and controlled by third parties. Like mobile wallets, e-wallets allow their users to access their money on the go from any device connected to the internet. Third-party organizations that take part can gain access to your private keys.
Most e-wallets operate on exchanges and there have been cases of exchanges closing and disappearing along with the money its users had. Exchanges also become a target for hackers because they only need your email and password to gain access.
In some cases, exchange wallets offer some degree of security, but if passwords or emails are leaked there is a serious security risk because people usually use the same email addresses and passwords across many different services.
Desktop
Computer wallets are downloaded and installed on your hard drive or SSD where your private keys are stored. They are safer than online and mobile wallets as they do not rely on third parties for their data and are less easy to steal.
There are various computer wallets that meet different needs, some focus on security, some on anonymity, others on ease of use, and others on decentralization. Wallets that act as full nodes download the entire blockchain to your computer. This requires hundreds of gigabytes of disk space and a fast internet connection. However, they offer granular control over your transactions which you won’t find in most wallets.
Hardware
A hardware wallet is probably the only type of Bitcoin wallet that stores private keys on a secure physical device. It is considered to be the most secure way to store any amount of Bitcoin. In addition, they are safe against computer viruses. Never buy hardware wallets from used sites as there are fake wallets that can steal Bitcoin and other cryptocurrencies.
Paper Wallet
A paper wallet is a physical document containing a public address for receiving Bitcoin and a private key, which allows you to spend or transfer Bitcoin stored at that address. Paper wallets are often printed in the form of QR codes, so you can quickly scan them and add the keys to a software wallet or wallet app.
The main advantage of a paper wallet is that the keys are stored offline, which makes it quite safe against hacking attacks, including malware that records keystrokes such as keyloggers.
Banks
Many banks criticize Bitcoin-related activities, including, transfers to cryptocurrency exchanges. Banks often report that due to money laundering they cannot offer services related to Bitcoin or cryptocurrencies. Banks are also against Bitcoin as they want to protect their own business model, this is because Bitcoin is designed to reduce or eliminate the need for intermediaries such as banks.
In recent years, financial institutions and banks have expressed interest in developing their own cryptocurrencies. Regulators are also carrying out procedures to allow banks to provide cryptocurrency custody services.
Web interfaces
Web interface wallets are a popular alternative to both mobile-facing wallets and desktop-facing wallets. They are websites that allow users to interact with the Ethereum blockchain after connecting their wallets to the interfaces.
Internet wallets allow users to use a browser to link to their accounts. These wallets take advantage of a cloud storage and are accessible from anywhere in the world. Using wallets directly can be risky as users have to trust the website with their private keys.
Phishing attacks where hackers may access the site while pretending to be from the Site in order to steal your keys.
Browser extensions
Browser extensions are used in browsers on a computer to enable interaction with decentralized applications and to be able to store ETH tokens and ERC-20 while all of them support an almost infinite number of addresses. For more advanced users one can interact with other blockchains.
Browser extensions are considered a safer alternative than Web Interfaces as they store the user’s private keys in an encrypted manner. For users to have access to their wallets, they must protect them with a password that enhances security.
Like mobile wallets, installing browser extensions is easy, and some browsers already have built-in Ethereum wallets that can and do interact with dApps.