Your Quick and Easy Guide to Digital Wallets

October 21 , 2020

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Technology makes life easier in so many ways. Perhaps the most impactful way technology shapes our daily lives lies in how we interact with money and finances.  Digital banking transactions are happening all around us. Even if you aren’t aware of what a digital wallet is, you’ve most likely made use of one. However, if you’re here, that means you’ve probably got some questions about digital wallets (or e-wallets, as they’re sometimes called), so let’s get into it.

What is a digital wallet?

A digital wallet, or e-wallet, is exactly what it sounds like: a digital version of a wallet. An e-wallet allows you to store digitized copies of your credit cards on your phone within an app. Think of the app as the wallet, and just like your leather-worn pocketbook, inside are your credit cards. Simple, right?

But how do you go about actually getting one, and what type of digital wallet is right for you?

What are the types of digital wallets?

You have multiple options when it comes to choosing which digital wallet is right for you. 

Mobile wallets

Mobile digital wallets are an easy way to access your information on the go and are what you’d use in a physical store. Chances are, there is one already natively installed on your phone. If you’re an Apple user, Apple Pay is most likely your app of choice. For one, it’s simple to use (just press on the power button twice) and it’s already on your phone. The same goes for Android users. Google Pay and Samsung Pay are easy apps for all your digital card needs. 

mobile wallet examples

Online wallets

There are also digital wallets that you wouldn’t necessarily use to check out at the grocery store, but can be fully utilized if you need to pay someone back for dinner or make a purchase through an online e-commerce retailer. These are classified as online digital wallets, like Venmo, Paypal, and Zelle. You’d use Venmo or Zelle for the former and Paypal for the latter.

online wallet examples

Desktop wallets

Desktop wallets are just what they sound like — digital wallets that exist on your computer’s desktop. Unlike the previous wallets, these don’t store your credit card information, rather, they store the private keys for cryptocurrency. Desktop wallets are considered “hot wallets” in the world of cryptocurrency because they’re connected to the internet, meaning they should be used primarily for those who deal in small amounts in Bitcoins. Popular desktop wallets include Electrum, Exodus, and Bitcoin Core, just to name a few.

desktop wallet examples

Hardware wallets

Hardware wallets are often credited as being the most secure way to store cryptocurrency, meaning they are your go-to if you happen to have a lot of it. These wallets store the private keys for your cryptocurrency on an actual physical device, like a USB or hard drive. Ledger, Trezor, and KeepKey are some hardware wallets that are used by both beginners and more experienced users.

hardware wallet examples

Paper wallets

A paper wallet is quite literally a piece of paper. However, this guy is still digital thanks to the keys and QR codes that make cryptocurrency transactions possible. This digital wallet was at its peak during the early days of Bitcoin, however, most users today favor other options. While hosting many security benefits, paper wallets are only good so long as the user can keep them safe–seeing as they are just paper. Bitcoinpaperwallet.com and paperwallet.bitcoin.com are two good options for creating paper wallets.

paper wallet examples

How does a digital wallet work?

Now that we’ve covered where your digital cards are stored, let’s get to the actual how-to. 

Mobile wallet

These are typically used for when you’re physically in a store. We’re all familiar with retailer’s POS, or point-of-sale system, where you swipe or insert your card, sign, enter your PIN, and transact.. However, with a digital wallet, you don’t need to do any of that. If you see an image on the POS that looks like a sideways wifi symbol, all you need to do is authorize the payment (we’ll get to what that means in a second), hold your phone close to the transmitter, and voila! You’ve just made a payment! 

Online wallet

These are used, just as they say, online. When shopping on a website, you no longer will need to enter in all your information every time. Instead, if you see the PayPal option, all you need to do is select and authorize and you’re good to go. Or, if you’d like to send money to a specific person, you can open the Venmo app and your contacts are ready and waiting for you to pay them (or to pay you!). 

Desktop wallet

Like online wallets, desktop wallets need an internet connection, however, your information is only stored on your personal computer. Exodus is often cited as the most user-friendly program for Bitcoin users, so if you’re brand new to the world of cryptocurrency, this one could be for you. However, when it comes to the full package of safety and effectiveness, Electrum is one of the most popular programs on the market. You’ll probably want to hold off on this one for a bit though if you’re a beginner, as it has a steep learning curve!

Hardware wallet

As we’ve already covered, hardware wallets are physical devices that you connect to your computer. To use, all you need to do is connect, enter your PIN, and send your cryptocurrency. What many like about hardware wallets is the fact that your private keys stay on the device. Essentially, this means that whatever transaction you’re participating in remains on the wallet itself instead of the computer.

Paper wallets

In order to get your hands on a paper wallet, you’ll need to go to a wallet generator website. Once there, unique keys and QR codes will be created just for you. (Pro-tip: disconnect your internet while this process is happening for maximum security!) Paper wallets store your cryptocurrency, but in order to access those funds through the keys and QR codes, you’ll still need a wallet that connects to the internet. 

Now, that’s all easy and fun, but is it safe?

Are digital wallets safe?

You’re not alone in asking this. It seems a bit too good to be true, and also, in the case of mobile wallets, what if my phone gets stolen or gets hacked? No need to worry, friends. Digital wallets are actually more secure than physical wallets. This is because when you enter your data into one of these apps, the information is both encrypted and tokenized. This essentially means that even if a hacker got into your data all they would see is a bunch of useless code. No one apart from those authorized can get into your business. 

Now, let’s talk about authorization. Every time you want to use your digital wallet, you either need to supply a fingerprint, Face ID, PIN, or, in the case of Venmo and PayPal, your personal login information. Easy and safe — the best combination.

Ready to learn more? Financial institutions are teaming up with e-commerce merchants to revolutionize how we transact at the point-of-sale.

Footnotes

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Katie Casady

With a degree from Colorado State University in English and a passion for writing, Katie has spent her career creating research-based content for tech and agriculture companies.

Your Quick and Easy Guide to Digital Wallets

Posted by Katie Casady on October 21 , 2020
Katie Casady
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Your Quick and Easy Guide to Digital Wallets

Technology makes life easier in so many ways. Perhaps the most impactful way technology shapes our daily lives lies in how we interact with money and finances.  Digital banking transactions are happening all around us., Even if you aren’t aware of what a digital wallet is, you’ve most likely made use of one. However, if you’re here, that means you’ve probably got some questions about digital wallets (or e-wallets, as they’re sometimes called), so let’s get into it.

What is a digital wallet?

A digital wallet, or e-wallet, is exactly what it sounds like: a digital version of a wallet. An e-wallet allows you to store digitized copies of your credit cards on your phone within an app. Think of the app as the wallet, and just like your leather-worn pocketbook, inside are your credit cards. Simple, right?

But how do you go about actually getting one, and what type of digital wallet is right for you?

What are the types of digital wallets?

You have multiple options when it comes to choosing which digital wallet is right for you.

Mobile wallets

Mobile digital wallets are an easy way to access your information on the go and are what you’d use in a physical store. Chances are, there is one already natively installed on your phone. If you’re an Apple user, Apple Pay is most likely your app of choice. For one, it’s simple to use (just press on the power button twice) and it’s already on your phone. The same goes for Android users. Google Pay and Samsung Pay are easy apps for all your digital card needs. Make Online or Contactless Payments - Google PaySamsung Pay Announces Important New Support for Marketers - Mobile  Marketing WatchApple Pay - Apple

Online wallets

There are also digital wallets that you wouldn’t necessarily use to check out at the grocery store, but can be fully utilized if you need to pay someone back for dinner or make a purchase through an online e-commerce retailer. . These are classified as online digital wallets, like Venmo, Paypal, and Zelle. You’d use Venmo or Zelle for the former and Paypal for the latter.

Zelle® - Pacific NW Federal Credit UnionPayPal Is Now Accepted On The Switch eShop | NintendoSoupBranding - Venmo

Desktop wallets

Desktop wallets are just what they sound like — digital wallets that exist on your computer’s desktop. Unlike the previous wallets, these don’t store your credit card information, rather, they store the private keys for cryptocurrency. Desktop wallets are considered “hot wallets” in the world of cryptocurrency because they’re connected to the internet, meaning they should be used primarily for those who deal in small amounts in Bitcoins. Popular desktop wallets include Electrum, Exodus, and Bitcoin Core, just to name a few.

File:Bitcoin.svg - Wikimedia CommonsGitHub - blackspike/BS-Electrum-Icons: Flat alternative icon set for the  Electrum Bitcoin clientExodus Review | PCMag

Hardware wallets

Hardware wallets are often credited as being the most secure way to store cryptocurrency, meaning they are your go-to if you happen to have a lot of it. These wallets store the private keys for your cryptocurrency on an actual physical device, like a USB or hard drive. Ledger, Trezor, and KeepKey are some hardware wallets that are used by both beginners and more experienced users.

TREZOR Review - The Original Bitcoin Hardware Wallet | CryptoRunnerAxis Wallet에 있는 Hayan Park님의 핀Keepkey Wallet Review - Hardware Wallet - Top 10 Best Bitcoin Wallets

Paper wallets

A paper wallet is quite literally a piece of paper. However, this guy is still digital thanks to the keys and QR codes that make cryptocurrency transactions possible. This digital wallet was at its peak during the early days of Bitcoin, however, most users today favor other options. While hosting many security benefits, paper wallets are only good so long as the user can keep them safe–seeing as they are just paper. Bitcoinpaperwallet.com and paperwallet.bitcoin.com are two good options for creating paper wallets.

How does a digital wallet work?

Now that we’ve covered where your digital cards are stored, let’s get to the actual how-to.

Mobile wallet

These are typically used for when you’re physically in a store. We’re all familiar with retailer’s POS, or point-of-sale system, where you swipe or insert your card, sign, enter your PIN, and transact.. However, with a digital wallet, you don’t need to do any of that. If you see an image on the POS that looks like a sideways wifi symbol, all you need to do is authorize the payment (we’ll get to what that means in a second), hold your phone close to the transmitter, and voila! You’ve just made a payment!

Online wallet

These are used, just as they say, online. When shopping on a website, you no longer will need to enter in all your information every time. Instead, if you see the PayPal option, all you need to do is select and authorize and you’re good to go. Or, if you’d like to send money to a specific person, you can open the Venmo app and your contacts are ready and waiting for you to pay them (or to pay you!).

Desktop wallet

Like online wallets, desktop wallets need an internet connection, however, your information is only stored on your personal computer. Exodus is often cited as the most user-friendly program for Bitcoin users, so if you’re brand new to the world of cryptocurrency, this one could be for you. However, when it comes to the full package of safety and effectiveness, Electrum is one of the most popular programs on the market. You’ll probably want to hold off on this one for a bit though if you’re a beginner, as it has a steep learning curve!

Hardware wallet

As we’ve already covered, hardware wallets are physical devices that you connect to your computer. To use, all you need to do is connect, enter your PIN, and send your cryptocurrency. What many like about hardware wallets is the fact that your private keys stay on the device. Essentially, this means that whatever transaction you’re participating in remains on the wallet itself instead of the computer.

Paper wallets

In order to get your hands on a paper wallet, you’ll need to go to a wallet generator website. Once there, unique keys and QR codes will be created just for you. (Pro-tip: disconnect your internet while this process is happening for maximum security!) Paper wallets store your cryptocurrency, but in order to access those funds through the keys and QR codes, you’ll still need a wallet that connects to the internet.

Now, that’s all easy and fun, but is it safe?

Are digital wallets safe?

You’re not alone in asking this. It seems a bit too good to be true, and also, in the case of mobile wallets, what if my phone gets stolen or gets hacked? No need to worry, friends. Digital wallets are actually more secure than physical wallets. This is because when you enter your data into one of these apps, the information is both encrypted and tokenized. This essentially means that even if a hacker got into your data all they would see is a bunch of useless code. No one apart from those authorized can get into your business.

Now, let’s talk about authorization. Every time you want to use your digital wallet, you either need to supply a fingerprint, Face ID, PIN, or, in the case of Venmo and PayPal, your personal login information. Easy and safe — the best combination.

Ready to learn more? Financial institutions are teaming up with e-commerce merchants to revolutionize how we transact at the point-of-sale.

Topics: Insight