Cryptocurrency Wallet Types
There are many crypto wallets in this world. Some of them are what is known as a custodial. Some are lightweight. And some, well only one, is known as a full node.
So what do these wallet terms mean? Well, the bitcoin blockchain is over three hundred gigabytes in size, according to ycharts.com, as of now. That is an enormous size. Full node wallets, known as core wallets, download the entire blockchain. This is more secure and prevents people from being bamboozled about the true value of their wallet, but is also inconvenient. The blockchain can take weeks to install for some people. The full node also is secure because it only stores your private keys on your hard drive. It does not send those precious keys anywhere.
Due to the cumbersome size of the blockchain, lightweight wallets were invented. They use remote servers for blockchain information, but like full node wallets, store private keys locally on your computer.
And there is one more category yet: the custodial wallet. Custodial wallets are by far the most convenient. You only have to create an account on a website, no downloads required. You can also access your funds anywhere and do not have to worry about having to secure a wallet on your computer. In addition, custodial wallets are usually provided by the same companies as cryptocurrency exchanges. This means that it is easy to convert crypto in custodial wallets into fiat money, like the dollar, money that is still more useful in day to day life.
But that does not mean that custodial wallets are more secure. Custodial wallets are susceptible to hacking because they store large amounts of cryptocurrencies in a place that is connected to the internet. Custodial wallets like MtGox have been hacked in the past and have lost the money of all their users.
In this review we are comparing two wallets, Atomic Wallet, and Electrum. Both of the wallets are lightweight, they store the private key locally on your computer but do not store the blockchain themselves. So we will give them both 1 point. Electrum is only for bitcoin and litecoin (as far as I know), but Atomic Wallet has over one hundred of the biggest cryptocurrencies including, of course, bitcoin and litecoin. So Atomic Wallet has 2 points and Electrum has 1 point.
Atomic Wallet is one of the most user friendly wallets in existence. Its graphical user interface is very well designed and looks good. It is also pretty easy to get to the sending and receiving page.
In addition to its user friendliness, Atomic Wallet has another very good feature. It has a built in cryptocurrency exchange, or swap. It allows you to exchange one cryptocurrency for another without even leaving the wallet. That is a very convenient function. However, I would advise you to not use this function. It does the whole transaction by itself, including taking the crypto out of your wallet and sending you the new cryptocurrency. It is a little disconcerting to allow a computer program to send your crypto to some random address to say the least. What is the guarantee that it will send the right amount or that you will ever get your money back in the form of another currency? But since the whole process of the swap is automated, the computer sets the network fee. Once I swapped bitcoin for tether, a stablecoin whose value is always equal to one United States dollar. The whole transaction was went through satisfactorily, except for one thing. The fee was exorbitantly high, around ten percent. It was horrible. I lost some bitcoin to the miners. The worst part was that it was totally unnecessary; Atomic Wallet does not charge a notable fee for their so called Atomic Swaps. Atomic Wallet derives all of your wallet’s private keys from a twelve word seed phrase, a mnemonic, that you can memorize and use to recover your coins if need be. That is very good, as it lessens the impact of a hardware failure on your cryptocurrency holdings. Lastly, Atomic Wallet allows you to buy cryptocurrency with your credit card using an interface located inside of the wallet. It sends the crypto directly to your wallet. This is convenient, but the fees are high: five percent plus ten dollars. So, I would not really recommend it. So, Atomic Wallet now has 6 points. Let’s hear what a user has to say about Atomic Wallet:
Electrum is not the most user friendly. Beginners may have some trouble with learning to use it. It has no frills in the department of looks, it is just designed for functionality.
But, it has some features that Atomic Wallet does not. One: multisignature wallets can be created with Electrum. What is a multisignature wallet? Well it is a wallet that requires multiple private keys, or multiple wallets to sign a transaction in order to spend the bitcoin. This is useful for companies that want to have multiple people involved when transferring large sums of bitcoin. Two: Electrum allows seed extensions. This means that you can add your own phrase to the end of the random, computer generated, twelve word seed. This allows the wallet to be rendered even more secure and is also good if you think that the wallet might have maliciously given you a twelve word seed that someone else already knows. Three: Electrum allows you to create multiple bitcoin addresses for receiving, something essential to maintain privacy. Using a different address for every transaction ensures that nobody can link multiple addresses and transactions together. Shockingly, Atomic Wallet does not support this, to my knowledge. Fourth: Electrum allows you to see where your coins are in the blockchain, a list of transactions, a list of your addresses and many more things. It is very informative. Electrum’s minimalism can be nice too. And lastly, Electrum is a reputable wallet that has been for a long time. It is used by many people and is generally trusted. So that should count for 2 points. So now electrum has 7 points. Here is what one customer says:
Overall, Atomic Wallet is a good wallet for beginners, and electrum is good for more experienced folks. But they both are good and secure wallets. They both can be encrypted with a password, and Atomic Wallet Requires it. So that adds one point. The final score is 8 points for electrum and 7 for Atomic Wallet. Although Atomic Wallet has many interesting features, those features have their drawbacks. Electrum’s features are all good. Just make sure to verify that your download is authentic, there are many malicious lookalikes out there. Electrum wins.