Lesson 4: Let's learn about the different types of wallets

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Just as there are altcoins in cryptocurrency, there are also several types of wallets. Understanding cryptocurrency wallets will help you better understand the security of cryptocurrencies.

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  • Types of cryptocurrency wallets (software wallets, hardware wallets)
  • Features and advantages/disadvantages of each type of wallet

Types of cryptocurrency wallets

As we learned in Lesson 1, there are two types of cryptocurrency wallets: "hot wallets" and "cold wallets.

This is a way of categorizing them in terms of whether or not they are connected to the Internet. Here, we will categorize them in terms of whether or not the wallet itself has substance.


Cryptocurrency wallets are classified into "hardware wallets" and "software wallets".

This literally means that there are two types of wallets: hardware wallets with substance (things you can touch) and software wallets without substance (apps and web services that you can't touch).


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Characteristics of software wallets

A software wallet is a wallet without any substance.

Software wallets can be downloaded to a smartphone or computer or accessed on the web.

Most of the common wallets are software wallets.


Since cryptocurrency is a digital currency, it is more convenient to have a digital wallet.

However, as long as it exists digitally, you should not forget the possibility of being hacked.


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Features of hardware wallets

A hardware wallet is a real wallet.

Hardware wallets were born from the fact that software wallets are vulnerable to hacking because they exist in digital form.


A hardware wallet is a dedicated terminal for cryptocurrency wallets.

While smartphone devices have many functions such as camera, phone, calculator, etc., a hardware wallet has only the function of a cryptocurrency wallet.

As we will learn in detail in Lesson 5, hardware wallets have a much higher security performance than software wallets because they are connected to the Internet only when transferring money.


However, hardware wallets are not as convenient as software wallets because you have to go through a series of steps to connect to the Internet.

Even if you lose your hardware wallet, your cryptocurrency will not be lost unless you lose your private key.


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Lesson 4: Let's learn about the different types of wallets

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