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Crypto Wallet 101: the Basics and How It Works

Coins and banknotes are slowly becoming obsolete. As technology rapidly develops on a global scale, money is also going digital. That’s right; in recent years several cryptocurrencies have appeared. They made headlines around the world and raised a whole plethora of questions. Naturally, cryptocurrencies need a specially designated place to be stored. And that’s a crypto wallet.

If all of this sounds foreign to you, you’re in luck. The following paragraphs will be dedicated to the basics of the crypto wallet tech. We’ll explore the different types, see how they work, and more. We’ll try our best to demystify the subject and make the readers realize how understandable and interesting it is.

Source: https://pixabay.com/photos/leather-wallet-business-cards-visa-3080553/

Defining the Crypto Wallet

To illustrate, let’s compare the wallet for cryptocurrencies with a traditional wallet that lies somewhere in your pockets. If you have to describe it to a three-year-old, you’d probably say that a wallet is a place where you, usually, store your coins and physical money. You can do that in piggy banks, too.

The crypto wallet is, basically, the same. It stores all the cryptocurrencies you currently own. Plus, you can receive as well as send cryptocurrencies. FYI, there are now more than a thousand and five hundred such currencies.

Wallet Address

This address is similar to the bank account number. In what sense, you may ask? You give the wallet address to the person/entity that wants to give you cryptocurrencies. The wallet address is unique to each user. Moreover, it’s a combination of numbers as well as letters – both lower and upper case.

Keys

In the world of crypto wallets, there are two keys – public and private. The private key is something like your bank account password. Only you know it to access your wallet. The public key, on the other hand, is a so-called hash version of the private key.

Types of Crypto Wallets

Each crypto wallet kind has its characteristics and capabilities. And there are numerous types of these wallets. We’ll list some of the most popular ones.

  • Online crypto wallet – It’s very easy to access and use as it’s located on the web. However, it’s considered to be one of the least protected ones.
  • Desktop crypto wallet – This wallet is downloaded on a PC. It’s fairly safe, too.
  • Hardware crypto wallet – It’s easily one of the safest from the bunch.Basically, this way you physically store your private and public keys in the device.
  • Mobile crypto wallet – Obviously, it’s similar to the desktop one. You install this wallet on your phone and use it. QR codes also play a role in this wallet.

Final Words

Before we wrap this up, we’d like to address the issue of security. With so many hackers and unethical individuals, you should always think of that. Some ways to achieve the desired protection are adding multiple layers of security like two-factor authentication, having the latest version as well as multi-signatures, backing up, and more.

We’re interested to know: are you positive regarding cryptocurrency wallets?

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