+91 95109 87700
+44 20 3290 7090
Out of most blockchains that have become prevalent in today’s DeFi ecosystem, it is Stellar that has set the benchmark pretty high. Acting more than just a decentralized platform, it focuses on financial inclusiveness by allowing transactions in both fiat and cryptocurrencies. It has become quite popular since its launch, especially amongst traders and investors since they do not have to rely on a third-party finance rail to convert their fiat currencies into digital tokens and vice versa.
What’s more, Stellar supports four multifarious wallets to cater to individual user requirements and offer them the independence to choose one at their convenience. If you plan to create an account in this blockchain platform for trading or investing, it’s imperative to learn about these Stellar wallet types in detail. Only then you will be able to choose the best wallet that meets your needs and allows unhindered access to your digital assets or fiat currencies.
Introducing Stellar Wallet: Brief definition
Before we move on to illustrating Stellar wallet types, let’s first understand what this entity is. It will give you a clear idea and help you decide the right time to create a wallet for your investment or trading purposes. A Stellar wallet is a digital tool or software that allows users to store and manage Lumens (XLM), the native token of the Stellar blockchain. It allows users to perform multiple operations, like buying and selling cryptocurrencies and fiat currencies, transferring ownership of digital assets, and swapping assets with others. In other words, it provides easy access to the global user network of the Stellar blockchain.
It can be leveraged to perform different operations, like:
- Receive or send Lumens from and to other users on the global Stellar network
- Participate in different transactions initiated and executed on the Stellar blockchain, including cross-border and smart contract transactions
- Access different features of the Stellar network, like peer-to-peer sends and many more
Features of Stellar Wallet: What Sets It Different?
Several features make the Stellar wallet standout in the entire DeFi ecosystem, rendering it more useful and accessible than other wallets prevalent in the market. With this being said, we have briefly navigated around the salient characteristics of Stellar Wallet.
1. It comes with a built-in swapping mechanism, which allows users to change their cryptocurrencies from one form to another or from fiat to digital tokens and vice versa. No additional transaction fee is needed to initiate the swapping action.
2. The Stellar wallet types allow users to purchase XLM or Lumens, the native currency of the Stellar network from the chain via credit card. As a result, users won’t have to worry about having enough funds in their traditional bank account to make the purchase.
3. All the Stellar wallets support QR scan reading and evaluation. Owing to this, users can receive or send Lumens easily and within a few clicks. No additional form or extravagant pre-requisite is needed for such transactions.
4. The non-custodial wallet on the Stellar network protects the private keys from being exposed to the outer world. In other words, the private key doesn’t leave this wallet type, ensuring optimal security and encryption.
5. All Stellar wallets are protected by multifaceted security protocols, like password, fingerprint lock, and pin protection. Hence, users can initiate different form of transactions without worrying about exposing their funds to external vulnerabilities.
6. Since Stellar wallets follow decentralized protocols, they maintain anonymity. In other words, users don’t have to provide their identities for KYC verification to use the wallet to send or receive Lumens.
7. Thanks to the built-in currency converter module, The Stellar wallets display the XLM balance report in the local currency based on the user’s geographical location.
Types of Stellar Wallets: Categorization and Illustration
If you want to enter the global network of the Stellar blockchain, one of the most important aspects you should know about is the Stellar wallet types. It will help you decide on the right one for your intent of purpose and ensure no further problems arise once you start trading or investing. In this following discussion, we shall explain the four major types of wallets that are supported on the Stellar blockchain.
Hot Wallet
As the term implies, the hot wallet will always be connected to the internet, allowing the users to access the Stellar blockchain per their convenience. If someone wishes to send you Lumens or any other cryptocurrency on the Stellar network, there won’t be any issue since your wallet will remain active through the internet connection. However, since it remains connected to the internet, there will be constant risks of exposure to different forms of cyber threats, including unethical hacking. That’s why it’s important to choose a hot wallet that offers excellent security and authentication protocols to the users.
Hot wallets can be further categorized into three types, namely:
- Desktop wallet: These utilize a strong encryption protocol to keep the private keys stored securely on the computer’s hard drive. Hence, no third-party application will be needed to store the keys separately.
- Web wallet: Most times, cryptocurrency exchanges offer access to web wallets, thereby providing 24/7 access to the stored assets. These are easy to use and allow users to perform multiple actions, like buying, selling, and swapping of the Lumens.
- Mobile wallet: As the name implies, mobile wallets will be accessible from your phone once you have an internet connection. As a result, you will be able to send or receive Lumens on the go, without relying on your desktop to access your assets.
Cold Wallet
Antagonistic to the hot wallets is the cold wallet, which true to its name doesn’t remain active 24/7. To make it functional and access the Stellar blockchain, you will need to connect it to the internet. A cold wallet offers excellent security and protection against cyberattacks and keeps your assets safe from being exposed to the outer world. So, if you have a large volume of digital assets or wish to maintain optimal security levels, choosing cold wallets over hot ones will be a feasible decision.
Following are the categories of cold wallets you can use on the Stellar blockchain.
- Paper wallets: As the name implies, the private keys associated with the paper wallet will be written down or printed securely on paper, thereby securing the address from external vulnerabilities.
- Hardware wallets: Considered to be a high-tech system, a hardware cold wallet store the private keys in a series of random alphanumeric forms in a physical device, like a USB thumb drive. Once you plug it to a computer or a mobile, you will be able to access your assets.
Custodial Wallet
In the DeFi ecosystem, custodial wallets are known to provide more convenience to the users by delegating the management and safekeeping of the private keys to a third-party entity, like a crypto exchange or wallet provider. As a result, amateur traders and investors won’t have to worry about gaining technical prowess to access their wallets and exchange Lumens or fiat currencies on the Stellar blockchain. However, since the private keys are managed by someone else, your custodial wallet will be exposed to security vulnerabilities and unethical hacking. Also, with a centralized architecture, you may not have optimal control over your funds.
Non-custodial Wallet
If you are willing to take the responsibility of managing your digital assets all by yourself, choosing a non-custodial wallet is the best option. Here, you will have autonomous control over the management and storing of the private keys, thereby ensuring no third-party entity can access your wallet. Also, it is a more secure option since the private keys won’t be stored on any centralized server. On top of everything, these wallets offer direct interaction with different types of decentralized applications and crypto exchanges.
Factors to consider to choose the best Stellar wallet
With so many Stellar wallet types, it can become challenging to choose the right one per your intent. If the choice is wrong, you will struggle with exchange and investment, along with security and protection against external vulnerabilities. So, to help you out, we have mentioned a few factors that you should consider to choose the best Stellar wallet for yourself.
1. Ownership: If you are willing to take ownership and maintain autonomous control over the private keys, choosing a non-custodial wallet seems to be a more feasible idea than the other categories explained above.
2. Ease of use: Hot wallets, like desktop and web wallets, are best suited for newcomers or people with minimal knowledge about private keys and wallet operations as they can be easily accessed through the internet.
3. Security and protection: Both non-custodial and cold wallets offer exceptional security and protection to the users. Firstly, non-custodial wallets will allow users to manage the private keys without the involvement of any third-party entity. On the other hand, cold wallets remain inactive without an internet connection and store the keys on a physical hardware device or printed paper.
4. Authentication systems: Ensure the wallet you choose comes with multiple security and authentication systems, like two-factor authentication, biometric scanners, and many more.
Conclusion
In this article, we have explained the workings and features of the crypto wallets providing unhindered access to the Stellar blockchain. Furthermore, we have also provided a brief description about different Stellar wallet types, based on their ease of accessibility, security and autonomous features, and other factors. So, based on our explanation, you can easily decide the ideal wallet category suitable for your purpose.
