What are crypto wallets?

Crypto wallets are the medium that allows you to store and securely manage your digital assets. Each crypto wallet has its own private key that allows access only to the person holding it. Crypto wallets are available in the market with some variation but most of the functions work in a similar way. Before purchasing any digital assets, it is necessary to fully analyze the crypto wallet and its use.

Crypto wallets are available in different forms including software and hardware. One thing is common in all of these assets that allow users to securely access any crypto they own. Wallets in crypto can be either software or hardware. But, there are a different number of wallet types that fall into the general category.

Hosted Wallets:

Hosted wallets aka “exchange wallets” are the most used and simple wallets in today’s market. Such type of wallet is hosted directly on the exchange where users can buy, sell, and trade crypto assets of any type. Crypto exchange holds the private key of the users for them.  Private information is kept and accessed online which makes it vulnerable to hackers.

Example:

Coinbase is an example of hosted wallet that is accessible from users’ device browsers. This wallet allows you to store, send and receive Ether and a plethora of ERC20 tokens. There is no guarantee from Coinbase that users will get compensation for lost funds. Coinbase implements user side encryption technique.

Non-custodial wallets:

A non-custodial wallet allows you to have complete control over your crypto, with no third-party involvement. These software wallets generally offer more freedom and features than hosted wallets.

Example:

MetaMask is the leading non-custodial crypto wallet. Clients from all over the world can hold and own their private keys. This wallet provides full control of funds to the users. MetaMask is less vulnerable to attacks when compared to custodial/hosted wallets.

Other wallets:

Other wallets in the crypto market can be hardware wallets that are the most secure because they are present physically with the users. They tend to look similar to a USB stick. Your private key for accessing your cryptocurrency on a blockchain is stored on this device.

KuCoin is a hybrid wallet that offers both custodial and non-custodial services to users. That means you can either store your crypto assets directly on the KuCoin exchange or connect a third-party wallet directly and trade from there.