Where is it stored?
Similar to an account or a physical wallet, a cryptocurrency wallet is a place to store your coins. They're used to store and send coins from your address to another. These wallets are maintained by third party companies through software applications and can hold a specific currency or multiple. Once you have created a wallet, you will have to keys or digital codes, one public and the other private. These keys are encrypted meaning they appear as a different code than what they really are to unintended users. The public key is what you will use to send and receive coins. The private key is yours to keep personal because it allows access to the wallet and the assets involved.
While sending coins, public keys can be a pain. However some apps allow you to take a picture of a QR code linked to the public key you're sending it to. There is also the Ether Naming Service (ENS), which allows users to send ETH to a johndoe.eth instead of 0c37893...etc. You can read more about the ENS here.
Similar to a bank account app like Chase, wallets allow you to quickly see your funds at a glance. Some wallets allow users to allocate value to different coins on the same blockchain, much like Ethereum.
Wallets are split into two categories, hot storage and cold storage. A hot storage wallet is a maintained online which makes them more vulnerable to hacking than cold storage wallets, which are external and maintained offline.
Digital currency exchanges use a password protected hot storage wallet that users can use to transfer the funds to a cold storage wallet.
Below we will discuss the best wallets:
MyEtherWallet Allows users to generate wallets protected by their own passwords. MyEtherWallet offers various ways to access your wallet. You can also connect external wallets like TREZOR and Ledgers. You can store Ether (ETH) and any token built on Ethereum. MyEtherWallet also allows users to participate in the Ether Naming Service. Which makes it easier to send and receive payments.
Ledger Blue With Ledger Blue, users can use this small handheld device to easily transfer their funds through USB, Bluetooth, or NFC (Near Field Communication).
Ledger Nano S is a small external USB piece that allows you to securely store your cryptocurrencies. They have an application that allows you to easily access your funds on an easy to use interface. There is also an initial passcode for another layer of security.
JAXX allows you to store multiple digital currencies. They offer a desktop extension as well as Chrome and Firefox extensions.
Coinbase allows users to store Bitcoin, Ether and Litecoin in an encrypted wallet that can easily move funds between your bank account, GDAX and Coinbase. They are licensed and insured and offer an easy to use interface for first time investors.