After we understand that wallets store our private keys (Part 1), the next hill to conquer is learning the different types of storage we can have.

If you know the tradeoffs of each, you can use the technology more securely and efficiently, and keep your hard earned money safe!

The type of wallet = where your private keys are stored.

Software wallet: stores private keys in a computer program

• MetaMask is a software wallet. It stores your private keys in your web browser (like Google Chrome).

• These are the least secure, but highly convenient.

Desktop / mobile wallet: stores private keys on your cellphone / computer

• Mobile wallets store your keys on your cell phone. Convenient but vulnerable to losing your device, as well as hacking.

• Desktop wallets stores your keys on your hard drive. Slightly less convenient, but less likely to lose.

Hardware wallet: stores private keys on an external device

• These typically store your keys on a pin-protected USB drive.

• Most inconvenient (you have to plug the device into a computer to authorize a transaction), but also the most secure.

• The Nano Ledger is a popular one in the community. Its a $150 investment, but worth it if you have value to lose.

Cold wallets vs hot wallets

• Cold = on a device not usually connected to the internet (hardware wallet).

• Hot = on a device which is always connected to the internet (web browser, phone, desktop).

• If a device is connected to the internet, hackers have much more opportunity to extract your keys.

• If a device is not usually connected to the internet, hackers have no access point to extract your keys from the device.

Stay tuned for Part 3: which wallet to choose, and how to use them securely (spoiler: you need more than one)