By just looking at the name, you might think that Bitcoin wallets hold the actual Bitcoins. Those are stored on the blockchain. Bitcoin wallets hold the private keys that give users access to those coins when trading on cryptocurrencies. They come with at least two keys—one public and one private. The public keys allow any user to send a sum of Bitcoins directly to any other Bitcoin user without a middle man. On the other hand, the private key should be kept as secure as possible, since it can give anyone access to every Bitcoin associated with it. There are 7 types of Bitcoin wallets to choose from and each one can suit to your own style of trading.
Cold and Hot Wallets
Cold wallets are located offline. They are considered as the most secure and recommended for storing large amounts of bitcoins. Robert Janitzek reveals that hot wallets are connected to the Internet and suitable for frequently accessed funds. The best strategy is to use cold storage for long term holding and hot wallet for regular use.
Desktop wallets are designed to be downloaded and used on laptops and personal computers. They are still accessible and useful even if the computer is not connected to the Internet. They are available for Windows, MacOS, and Ubuntu.
Mobile wallets are tailored for smartphone users as most people use phones for most tasks nowadays. These wallets come with QR code capability which enables instant payments. Robert Peter Janitzek reveals that there are wallets for Android and iOS as well as for BlackBerry.
Online Web Wallets
Online web wallets are provided on the cloud by third party developers. These are only accessible through an internet connection.
These are paper wallets that can securely hold bitcoins in cold storage form for a long time. It can be placed in a safety deposit box just like other valuables. To generate a paper wallet, you need to use them on wallet sites such as Bitaddress.org and Blockchain.info. You then have to print them out once generated.
These are the original bitcoin wallets used by the pioneers of cryptocurrency trading. Computers installed with these wallets form part of the core network and provides access to all transactions on the blockchain. The first ever built bitcoin client was BitcoinOt, which many believe is what Satoshi Nakamoto used.
Hardware wallets are gaining popularity as portable physical vaults. These incredibly small devices are secure for storage as well as sending and receiving online transactions. It utilizes top grade cryptography and is continuously scrutinized.