Paper wallets are crypto wallets in the form of paper. But unlike a currency note, they do not have any intrinsic value. They have a single private key and crypto address.
Paper wallets are comparatively unsafe to store crypto as they are subject to wear and tear like currency notes.
Though hardware wallets are disconnected from the Internet, they need internet connectivity for a transaction. Saleem Rashid, a 15-year-old hacker was able to crack the security of a Ledger device. He even wrote a blog explaining how he did it.
Air-gapped wallets are another type of hardware wallet. They follow the same principle of being disconnected from the internet. However, unlike normal hardware wallets, they do not have a mechanism like USB or Bluetooth connectivity that hackers may exploit. Instead, they have a camera to scan QR codes that perform set up and sign transactions. So far, there haven’t been any reports of an air-gapped cold wallet being compromised. Though, if you manage to do so, please notify us (for academic purposes, of course!).
Software wallets can be either desktop or mobile based. They can also be broken down into custodial and non-custodial wallets. Custodial wallets are those crypto wallets that are controlled by a third-party provider. Meanwhile, non-custodial wallets allow you to have full custody. Non-custodial wallets follow the core principle of decentralization, in which the owner has complete control over their assets. iOWN Wallet is an example of a non-custodial wallet.
If you have recently started crypto trading, you can opt for a crypto wallet hosted on an exchange or one that has backing from an exchange. For the former, you can opt for the wallets that are the default ones when you start trading on platforms like Binance or Coinbase Exchange.
Wallets like Coinbase, Binance (Trust Wallet), and iOWN belong to the latter category. This also helps if you prefer trading on a regular basis.
These wallets offer support for multiple cryptocurrencies and NFTs. They also allow you to trade quickly.
For cold wallets, the most important tip is to never share the paraphrase. Additionally, make sure you make a note of your paraphrase on a paper. Keep this paper in a secure location.