What Is A Cryptocurrency Wallet?
Cryptocurrency, digital, virtual, e-wallet- there are many different names for a cryptocurrency wallet. It is a wallet to hold digital currency. It is a software program in which private and public keys are stored. The software communicates with different blockchain so that users can send and receive cryptocurrency, as well as monitor their balances. Because the cryptocurrency is virtual money a digital wallet, also called a cryptocurrency wallet, is necessary.
With the popularity of the cryptocurrencies, there are millions of wallets; however, not everyone is familiar with how they work. They are not a material item like a real wallet that you can carry in your pocket and store your dollar bills. They are digital wallets to store digital currencies. For instance, suppose you own a Bitcoin. You store the Bitcoin in your cryptocurrency wallet, and when you send or receive cryptocurrency, it is done through your wallet. Your wallet has an address, which all transactions using your coin go through. The use of keys helps to protect the wallet as it is necessary for them to match the public address the currency is assigned to. Because there is no “real” money transactions record on the blockchain and a change in the balance of your cryptocurrency wallet.
What Is A Cryptocurrency Wallet? There Are Different Types
There are various wallet types that cryptocurrency holders can use. The three categories are software, hardware, and paper.
Desktop – PC and laptop computer users can download a wallet on their computer, which will only be accessible from the computer that they are downloaded to. While the security level of the desktop wallets is high, they can be hacked if the computer is hacked, or hit with a virus, which could cost the owner their cryptocurrency.
Online – Private keys are stored online when an online wallet is the choice of a wallet, and a third party controls the wallets. This type of wallet carries a bigger risk of being hacked and the currency stolen.
Mobile – Mobile wallets are an app that runs on your mobile phone. The wallets go with you where you and your phone go, and can be used at places including retail stores. Typically, this is a smaller type of wallet and one that is less complex than a desktop wallet due to its limited space.
Hardware – Hardware wallets are different than software wallets as the private keys are stored on hardware devices such as a USB. They are high-security wallets and ones that are less vulnerable to attacks since they are kept offline; however, transactions are still made online. Various currencies are supported by the hardware wallets. To use a hardware wallet the device which it is stored on needs to be plugged into the computer, a pin must be entered, and a transaction can then be made and verified.
Our favorite is the Ledge Nano S –
PLEASE NOTE: Don't buy any hardware wallets from Ebay etc. Only purchase directly from the manufacturer and make sure it's COMPLETELY SEALED!
Paper – A paper wallet is likely the easiest to use and provides a high level of security. It is used to refer to both a physical copy of the private and public keys of the currency holder and referred to like software that is used to generate keys, and once the keys are securely generated, the owner of the keys can then print them out. When transferring cryptocurrencies to the wallet, it is done by transferring funds from the software wallet to the public address shown on the paper wallet. When spending or withdrawing cryptocurrency, the funds are transferred from the paper wallet to the software wallet.
Wallets can be hacked. They are secure, but there are different levels of security as there are different types of wallets. Wallets are vulnerable to hackers and virus’. However, offline wallets cannot be hacked. Once a currency is lost, there is no way to reclaim the currency. Wallets, however, can be backed up and stored offline. Wallets should also be kept up to date by updating software for the best security breakthroughs out there. Adding extra security such as complex passwords will also raise the level of security of the wallet.
Also, cryptocurrency wallets are not associated with a name or physical address but associated with a wallet address with all transactions being stored publicly and prominently on the blockchain.
Why is this so important. You want to keep your investments safe. This is the one of the KEY things you need to do!