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Digital Wallet Types Explained

Updated: 4 days ago

Digital wallets securely store your money, assets and info to enable digital transactions. But how they keep your data safe differs. Let's compare three wallet types.

Payment Wallets

Wallets like Google Pay, Apple Pay and PayPal simplify spending from your mobile device and computer.

How they keep data secure:

  • Your info is stored on the company's servers protected by passwords and technology like encryption.

  • Backups provided if you lose your device.

  • Uses advanced techniques to detect hacking attempts.

Benefits: Easy to use with large ecosystem of partners. Customer service is available.

Drawbacks: The company owns they keys to your data which means higher risk of data hacks and leaks. Limited control of what and how data is shared.

Profile Wallets

Wallets like YourOwn consolidate your financial and identity information into a profile that enables instant sharing / verification, intelligent insights and data ownership.

How YourOwn keeps your data secure:

  • Your data stays encrypted on your device using a key only you control.

  • You approve what is shared to whom.

  • Audit trail of who, what, when data was shared.

Benefits: You are the only one with access to view your data in the wallet. Simple sharing with any trusted third party with or without a wallet. Customer service is available if issues arise.

Drawbacks: Responsibility of managing a seed phrase. If you lose your seed, you will have to rebuild your profile.

Crypto Wallets

Cryptocurrency wallets like Coinbase Wallet and BitPay allow you to hold and trade digital assets like Bitcoin and NFTs.

How they keep assets secure:

  • You have unique public-private key pairs that authorize transactions.

  • No central party holds your keys. Assets are stored on decentralized blockchain. - you have full control.

  • You access with PINs, passphrases, or biometrics.

Benefits: Complete control of assets. No reliance on institutions.

Drawbacks: Lose your keys and you lose your coins. Requires knowledge of how blockchain based assets work. No consumer protections and limited customer support.

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