Crypto Wallet: It is a tool or software applications on computers or mobile devices such as phones or tablets that you can use to interact with a blockchain network. 

It is a device or program that stores your cryptocurrency keys and allows you to access your digital assets for storage or trading. 

The wallet includes an address (public key) in which assets can be sent or received and also a pair of private keys (seed phrase).

NOTE: Crypto wallets don't truly store digital assets. 

Instead, they provide the tools required to interact with a blockchain which stores digital assets. 

In other words, these wallets can generate the necessary information to send and receive cryptocurrency via blockchain transactions.

 TYPES OF CRYPTO WALLETS

1. Custodial Wallets:

 These wallets are hosted by a third party that stores your keys for you. 

It is centralized in nature and so less secured as it can be hacked or go bankrupt though it’s very convenient to use.

 Example is an exchange wallet.

2. Non-custodial Wallet: These are wallets in which you take responsibility for securing your private keys, 

once lost or compromised your assets becomes irrecoverable or lost. 

It interacts with decentralized exchanges, it’s more secured.

 Examples are trust wallet and metamask wallet.

Sub-Categories of Wallets

 1. Hot Wallet/Soft wallet:

 This is any wallet connected to the internet/ internet enabled wallets. 

They are convenient to use but more vulnerable to hackers. 

Examples of soft wallets are web (e.g. exchange wallets), desktop (e.g. electrum and exodus) and mobile wallets (e.g.  metamask wallets). 

 Types of Hot Wallets

a. Desktop wallets: They utilize encryption to keep a user’s private keys securely stored on their computer hard drive.

 Examples of desktop wallet are; BitPay, Exodus, Electrum.

 Advantages of Desktop wallets

• Excellent for securely conducting small crypto transactions using a computer

• Free and easy to use

• No third-party holds your private keys

• Some can be used offline for cold storage

 Disadvantages of Desktop Wallet:

• Most are online anytime your computer is connected

• Potentially vulnerable to malware or computer viruses

• Anyone who has access to your computer could potentially access your crypto

b. Web wallets: are wallets provided by a third party, typically a crypto exchange, which offer seamless access to a user’s holdings using a web browser. 

Examples are;  Coinbase,  Guarda

 Advantages of Web Wallets: 

• Easy to use; generally favored by most crypto newcomers

• Support a variety of transactions (buy, sell, swap etc.)

• Account security outsourced to trusted third-party (exchange, etc.)

 Disadvantages of Web Wallets 

• Requires trusting a third party to secure your private keys

• Potentially vulnerable to hackers

• Computer used to access web wallet also subject to threats like viruses, malware and keyloggers

c. Mobile wallets: It allows users to quickly and securely spend or receive cryptocurrency anywhere they have their phone and an active internet connection.

 Example of mobile wallets are  BitPay, Edge,  Trust wallet, Electrum, Blockchain.com

 Advantages of Web Wallet 

• Easily send or receive crypto payments on the go

• Highly convenient and easy to use

• One of the easiest ways to spend cryptocurrency

Disadvantages of Mobile Wallets

• Holdings are only as secure as your phone

• Account could be compromised if device is lost or stolen

• Like a computer, phones are potentially vulnerable to viruses and malware

2. COLD WALLETS: These types of wallet have no connection to the Internet on its own.

 Instead, they use a physical medium to store their keys offline, making them resistant to online hacking attempts. 

As such, cold wallets tend to be a much safer alternative to "storing" your coins especially for long time HODL though they may require some technicalities to use. 

 Categories of Cold Wallets

A. Hard wallets: They are physical and electronic devices, often resembling a USB thumbdrive, and are offline unless plugged into a computer or mobile device connected to the internet. 

They are more secured against online attacks. Examples are trezor and ledger.

 Advantages of Hard Wallet 

• One of the most secure methods of crypto storage

• Transactions are signed using private key offline, and only online to upload the transaction to the blockchain

• Available at most major electronics retailers.

 Disadvantages of Hard Wallet 

• Not free; Priced between $30-$200

• Can be challenging for crypto beginner

B. A paper wallet: is a piece of paper on which a crypto address and its private key are physically printed out in the form of QR codes or written on a paper and securely stored. 

These codes can then be scanned to execute cryptocurrency transactions. 

Though it’s kind of obsolete now.

 Advantages of Paper Wallet

• Being completely offline makes it impossible to hack

• No third-party has control of your private keys

• Optional inclusion of QR code allows for easier access

 Disadvantages of Paper Wallet

• Paper can be easily lost, stolen, incinerated or otherwise destroyed

• Requires more time and effort to move crypto between wallets

• More technical know-how needed

In conclusion, the  cold wallet is safer than the hot wallets