A cryptocurrency is not a regular currency, so we need a particular wallet. But not the leather one. Crypto wallet is a software program that allows crypto owners to hold their crypto safely.
Lots of people use crypto wallets, but there is a reasonable misunderstanding about how they work. Unlike traditional wallets, digital wallets don’t store currency. Digital currencies do not exist anywhere in any physical form. All that exists are records of crypto transactions stored on the blockchain.
The crypto wallet has a lot in common with an e-wallet. The difference is found in its security. The crypto wallets are much harder to hack. However, it is not completely impossible.
The program stores private and public keys and interacts with various blockchain. The wallet allows users to send and receive crypto and monitor their balance.
When someone sends you a digital currency, they are signing off ownership of the coins to your wallet’s address. To be able to spend these coins, your wallet’s private key must match the public address assigned to the currency.
Crypto wallets – quick overview
Cryptocurrency wallets are essential tools for anyone looking to buy, sell, and manage crypto assets securely. They come in various forms, each offering unique features and security levels. The type of wallet you choose depends on your specific needs, whether you’re frequently trading on a crypto exchange or holding long-term investments.
Hot wallets are connected to the internet, making them convenient for quick transactions. You can easily send and receive cryptocurrencies using software wallets on your device or through custodial wallets provided by exchanges. However, being online means they are more vulnerable to hacks.
Cold wallets, on the other hand, are not connected to the internet and provide a higher security level. Hardware wallets, such as USB devices, and paper wallets, which contain a printed public key and a seed phrase, are popular cold storage options. They are ideal for storing large amounts of cryptocurrencies more securely, although they make frequent transactions less convenient.
Whether you prefer the convenience of custodial crypto wallets that manage the security for you, or the control and safety of non-custodial wallets, understanding the different types available helps you make informed decisions in managing your digital assets.
A Desktop Wallet
As you may have already guessed, if you want to use a digital currency, you will need a digital wallet. There are several crypto wallets to choose between.
A desktop wallet is a software you can download to a specific computer or laptop. The wallet can’t be accessed from any other device than that one. The issue is if anyone gets a hold of that device, they will get access to your crypto funds as well. Or, if you ever lose your laptop, the wallet will also be gone.
A Mobile Wallet
A mobile wallet is similar to a desktop wallet, but it is downloadable on a mobile device instead of a desktop. The cons are the same. But there is a vast pro here. You can spend your crypto in physical scored using the QR code on the device.
An Online Wallet
It is the most convenient wallet available. You can access it via any device that has an online connection. Usually, these coins are stored on an exchange platform. And if the platform ever gets hacked, you may lose your crypto savings with the rest of the funds.
A Paper Wallet
Paper wallets are highly secure. The simplicity behind them creates the most security. All you need to do for a safe paper wallet is to print your public and private keys on a piece of paper. Since the keys will no longer be connected to any servers, no one will be able to access them online. Moreover, you can also scan the QR code to use it in stores.
A Hardware Wallet
Hardware wallets are as secure as they get. They are not connected to the internet unless you are trying to transfer funds. You need to enter your private pin directly onto the device, so no hackers will be able to access the wallet without the physical wallet itself.
Remember that storing different cryptocurrencies within the same crypto wallet can be a problem. Some wallets cannot handle more than one type at the same time. If you have more than one currency available, make sure to buy a wallet that can hold as many as possible.
Picking the right wallet for yourself is a big deal if you are planning on trading a reasonable amount. As you would keep your fiat money secure in a bank, you want to keep your crypto safe in a wallet. Choose the most convenient for yourself, as well as secure.
