source- https://hackernoon.com/crypto-wallet-vs-address-54f7fb980bd3
Unfortunately, history has shown more than once that a lack of knowledge in this area can result in a loss of funds. Unfortunately, any errors and scams are quite common, so it is very important to know how and where to store cryptocurrencies. The second point is that in recent years Blockchain technology has developed quite strongly and many companies, start-ups and departments of famous financial corporations have been created to enable cryptocurrency storage. Before all these places are mentioned, however, it is worth paying attention to safety. For the most part, the way cryptocurrencies are stored is similar. To make any transfer, you must have the address of a given cryptocurrency and a private key. To more accurately illustrate this, the address of a given cryptocurrency can be compared to the bank account number, and the private key to the password.
Technically, they play very similar roles. It is worth realizing, especially that a large part of applications and companies allow you to store cryptocurrencies without sharing their private keys with users. It is exactly as if the bank released the account, and did not enter the account password, only said that for transactions, they should be contacted, and they will use the password, log in and make the appropriate transfer. In fact, a given company owns cryptocurrencies and they can do whatever they want with them at any time, and the user can only order them to do the job. Of course, this is also a contradiction of decentralization and the role of cryptocurrencies, although a large part of this type of companies has been operating on the market for quite a long time and has positive customer feedback.
Storing funds on cryptocurrency wallets
Keeping assets in this type of entities does not have to immediately mean their loss, but it is worth being aware of this. Coming back to being able to store cryptocurrencies, there is basically one place to store them: these are cryptocurrency wallets. However, the current offer is very wide and offers a spectrum of various possibilities. They are of course dependent on the type and given cryptocurrency and it is impossible to describe all the possibilities. However, you can divide cryptocurrency wallets in a rather general way.
Paper wallets
The most prototype, the oldest, but also the safest. It's basically just a string that you have to write down somewhere. Due to the fact that such a wallet does not have any access to the Internet, it is basically impossible to hack. How the funds are safe depends directly on how the address and private key are hidden. Unfortunately, losing this information is associated with the loss of funds, and another downside is making transactions that are very onerous and certainly uncomfortable. Therefore, these types of wallets are not dedicated to people who make transactions quite often.
Hardware wallets
You could say improved paper wallets. These are devices that are the size of a flash drive, remember data for us and allow you to store a significant part of cryptocurrencies in one place. Since they're not constantly connected to the internet and have security features, they're pretty hard to hack. Also, losing them does not always mean a loss of funds, and in the event of theft, additional security measures will allow you to block the funds.
Making transactions is now easier. The disadvantages are the necessity to make a purchase. It is true that the prices are not so high anymore, but for a person who is just starting his adventure or putting aside small funds in cryptocurrencies, such a purchase may simply be unprofitable. Also be careful about updates. It happened more than once that fraudsters impersonated official applications and websites and took control of devices. The most famous brands are TREZOR and LEDGER.
Desktop wallets
These are programs or applications installed on the hard drive, which store all information and data there, and connect to the Internet only for the purpose of making a transaction. The way it works is very similar to hardware wallets, only there is a program or application instead of a device. The positive aspects of this solution are therefore the same as in the case of hardware wallets, plus no need to purchase equipment. The disadvantage is the larger dimensions of the computer. It's hard to always have it with you and any disk damage or failure may result in loss of funds.
Mobile wallets
These are phone apps related to cryptocurrencies. They can be divided into strikte wallets and applications that offer many more possibilities. The simplicity of use, the intuitive menu, which is mostly similar to banking applications, is a big plus. It can be used at any time and place, because the phone is rather carried by everyone.
In addition, there are often other options for the cryptocurrency exchange, some bonuses or staking, i.e. additional earning in return for storing funds in a given application. Something like bank deposits only related to cryptocurrencies and often with a much higher interest rate of up to 20% per year. The downside is security. Unfortunately, many of these great-looking applications do not share private keys with their users, and thus the application owners actually own the funds.
So you can be exposed to a scam or a hacker attack. In the case of this type of wallet, the situation is similar to that in the case of exchanges, you should not keep a large part of your funds on them. In fact, these are good places to hold some of the funds that will be used for transfers, which in the case of applications can be made in a simple and quick way.
These are basically all of the main possibilities. Recently, the last group, which can probably be divided into a number of smaller subgroups, has been experiencing real development. Recently, even banks have started offering cryptocurrency accounts, but they are basically nothing new, just another type of mobile wallet. Exchanges have been deliberately omitted from the entire list, because cryptocurrencies should not be stored on them.
They should only be used for replacement. The reason for this is the high risk of exposure to a hacker attack and not sharing the private key with users. As new exchanges are emerging, offering various bonuses, it becomes increasingly difficult to distinguish real from scams. Nevertheless, with the current wide range of products, there should be no problem with choosing the right and most suitable place to store cryptocurrencies.
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