What is a crypto currency wallet?
A crypto currency wallet is a secure digital wallet used to store, send, and receive digital currency like Bitcoin. Most coins have an official wallet or a few officially recommended third party wallets so I recommend using these to store that particular coin. Crypto currency itself is not actually “stored” in a wallet. Instead, a private key (secure digital code known only to you) is stored that shows ownership of a public key (a public digital code connected to a certain amount of currency). Your wallet stores your private and public keys, allows you to send and receive coins, and also acts as a personal ledger of transactions. Basically, in regards to wallets for crypto currencies, if you own the keys, you own the coins. This is a must in our opinion but can not always be done if a coin is new and has no wallet yet, you will need to wait till it is able to be sent from an exchange. Usually in these cases, you can leave the coins on a trusted exchange until you find a wallet you own the keys to for that coin. If you have to, download the full client wallet from the coin's official website, especially if you have bought a large amount. Binance is a trusted exchange and so far is deemed to be safe to leave funds on.
Wallets are in various forms, being: web wallet, hardware wallet, paper wallet.
A paper wallet is a wallet you store on your computer etc. The coin's private key can be printed on a piece of paper. Paper wallets are a form of hardware wallet(cold storage) and essentially a bearer instrument, meaning whoever holds them has access to both the coin's private key and the address. These types of wallet I recommend as you own the private keys.
A hardware wallet is another form of cold storage just like a paper wallet as the coins are stored offline.
Hardware wallets are in two parts, one connected device and one disconnected.
The connected wallet holds the public keys and performs all the functions of a standard wallet by choosing which transactions to sign. However it can’t sign it as the offline device holds the private key.
The next step is to connect the device which is usually done via a USB port or via a QR-code. With the USB method, the transaction is sent to the now connected offline device signed, sent back to the wallet and then fed into the coin's network for verification and inclusion in the blockchain. With the QR code method the coin transaction is assembled by the online software and a QR code is generated, this is then scanned by the offline device which in turn generates a signed transaction QR code which is then scanned back into the online software and sent off to the coin's network for verification.
A web wallet is managed by third parties. They hold the private keys and the public keys of the user, meaning that the process of accessing crypto currency is minimal making it easy for new users to use as you don’t have to download the full client or acquaint yourself with various forms and methods inherent in wallet software.
The trade off though is that the third party is responsible for maintaining the integrity of your wallet and keeping secret the private keys meaning you need to trust them as they could just run off with your money and there is no guarantees on getting it back.
Some of these wallet providers are reliable whereas some are not so much.
There have been numerous cases where certain online web wallets have been compromised, being Mt Gox followed by Bitstamp and many many others.
I recommend that if you are investing large amounts of money (in your eyes whatever is a lot of money) to a hardware wallet as it is the safest, especially if for long term storage. For most users though a paper wallet is more than enough to store your coins in. As far as web wallets go, I only use certain sites for these and only because that coin may not have a decent wallet out yet to transfer the coins to. Hardware wallets currently are unable to store all types of coins so paper wallets are a necessity for other crypto currencies.
As with all wallets please ensure you keep a copy of your keys. Print them out, write your password on it for that wallet and put in a safe. Always do a backup of your wallet if possible. I don't want to hear about you being the next person who loses $1million because you threw your keys away. Once again, I cannot stress the importance of these keys and your passwords to your respective wallets.
MyEtherWallet is an Ethereum based paper wallet that is highly recommended to store any Ethereum or Ethereum based coins. This wallet is also used to buy into ICO's using Ethereum.