The world of cryptocurrency has more things to offer than you can grasp. But one of the most important things that you need to know about in this world of emerging cryptocurrency trends, is the crypto wallet. So, if you are also questioning the meaning of these wallets, how do the crypto wallets work and why you need them, you are reading the right thing! Let’s start with getting you introduced to it.
What Is A Crypto Wallet?
When you think about a crypto wallet, think about it as the first thing you will need if you need to dabble around in cryptocurrency or bitcoins. More than acting as an actual wallet, think of it as a bank account, which you will require to store your coins and helps you to send them to others when you need to. Essentially, a crypto wallet helps you to store bitcoins and other such coins and send it to others. It acts as your personal interface for Bitcoin network just like a bank account is for your regular, physical money.
How Does Crypto Wallets Work?
The crypto wallets are in general applications (app), device and a website that works at managing the private keys which is important when it comes to storing and transacting virtual and digital currency.
The wallets consist private keys and they have secret codes embedded in them that will allow the wallet holders which is you, to spend your coins. In reality, these coins that are secured are accessible only using the private keys and that is what you need to spend them.
Since the coins you are storing is not the physical form of money, you are not actually storing them in a physical wallet. These wallets have a unique address which you can think of it as an equivalent to a bank account number. That means that if you are sharing this with someone, you are not really risking your coins, but you can use this number for transactional purposes. So, if you share your wallet number with someone, they can use it for transferring funds to your wallet.
No two crypto wallet addresses are same and there is no harm to share your wallet address if necessary, which is one of the pros of cryptocurrency world. Just like most of the numbers it uses a combination of upper-case and lower-case letters and numbers. For instance, here is the wallet address of Satoshi Nakamoto, famously known as the Bitcoin creator. It is: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa
Types of Crypto Wallets
There are a lot of types of crypto wallets for you to choose from and go with the one that meets your personal needs. You will get different advantages from different types of wallet. Here are some of the most popular ones out there when it comes to cryptocurrency wallet.
- Hardware wallet
Hardware wallets are the best option you can choose when it comes to the best security in crypto wallets. This is actually a physical form of device or a wallet as it implies which you can use to store your public and private crypto keys. The best thing about this wallet is that you don’t need it to be connected to the internet unless you are transferring funds.
- Online wallet
Also known as the web wallet, the online wallet offers the most convenience when it comes to usability and accessibility of the wallet. However, the biggest con if this wallet is that it is also the least secure form of crypto wallets. This is more like storing your coins on a cryptocurrency exchange which means that they are stored on a central server so if it gets hacked, your coins can diminish. That is why it is always advised to only keep a small amount of coins when using online crypto wallets.
- Desktop wallet
Desktop wallets are classified as the one that gives you a decent combination of convenience and security. These wallets are different in the way that you need to download them from a specific computer or laptop and then you can only access the wallet from that particular device where you downloaded them from. But the con here is if a hacker gets a hold of your device, your coins are open to threat.
- Paper wallet
These are also considered to be one of the easiest and most underrated cryptocurrency wallets out there. For you to secure your funds, all you have to do is to print the public and private keys on a piece of paper. This is because that these keys are not connected to any servers which means that for anyone to gain access, they need to have physical paper. You can share the funds by entering the keys to a web wallet or print the QR code and that’s all you need!
- Mobile Wallet
Another type of crypto wallet is the mobile wallet which is somewhat similar to the desktop wallet which means that it is downloaded directly to your mobile device. So, all you need to do here is to download a mobile app which allows you to transfer the coins by scanning a QR code.
We really hope that this guide helped you to acquire some information about cryptocurrency wallets. If you read everything mentioned above, you will have knowledge on how the crypto wallets work and about the different types of crypto wallets in the market.
The main thing to take from this information here is for you to make sure that you now know how to keep your coins secure by following the necessary security measures with the adaption of crypto wallets.