Digital wallets: by @small-ville

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Wallets in the early 2000s was mostly referred to a small purse that has the size of a pamphlet and is most times foldable. Basically then, it was use to put small amounts of money that would be spent in a shirt amount of time.

Fast forward to the 2010s the term ''wallet'' now have a new preferential meaning, but this is as a result if the emergence of the digital or crypto currency.

In this post I will be going into detail the different types of wallet and there specific uses, but first I would like to explain the meaning of a digital wallet.

A digital wallet can be a software or hardware, which is used for the storage of different digital assets, ranging from crypto currencies to collectibles(NFTs. etc.) also they can be used to transfer these digital assets from one wallet to another.

There are basically two types of wallet which are the Custodial and the Non-custodial wallet, but I would also like to add the hard wallet as an option.

Custodial wallet:

Custodial wallets are wallets where by the private keys are not in possession of the owner, but rather it is controlled or in possession of a third party.This means that the wallet is controlled by a central authority which would have the power to freeze the account of the wallet owner should they go against their policies. Examples of these custodial wallets include the Binance exchange wallet.

Pros

• Where there is a mid placement of password owners can retrieve their accounts, through emails or other security measures.
• Users are able to easily swap there digital assets.

Cons

• To register requires the user to provide private information, and when hacked information could be leaked to the wrong people.
• users are charged outrageous fees for transactions.
• The central organisation controls the private keys.

Non-Custodial wallets:

Non-custodial wallets are wallets we're in the owner is in possession and in control of there private key, this means that no third party has control of there private key. Examples include Trust wallet and Metamask.

Pros

• Users are in absolute control of their accounts because they are in possession of their private keys.
• Users have no need to relay their private information
• User are charges low fees for transactions.
• Non-custodial wallets can store any amount of digital asset.

Cons

• When a user losses their private key to another person, then their wallets is deemed compromised.
• When a user forgets his private key or phrasal word then that wallet account should be forgotten because there is no way to retrieve that wallet account.

Hard wallets

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Hard wallets which are also referred to as Cold wallets are hardware that have been programmed to be capable to store digital assets. They are said to be the best way to store digital assets. They hard wallets originally have a parent company or site from where there digital assets can be transferred from.
The three major Cons of the hard wallet is that it can be stolen, misplaced and users cannot transfer digital assets from it as long as it is in the hardware. Examples include, Ledger Nano and Trezor.

Thanks for reading.