What is a cryptocurrency wallet?
I am sure you must have come across that term before but what exactly does it mean?
These days, there is so much talk about cryptocurrency in recent times, even though it has been in existence for a few years now.
You have probably heard about it – even if you haven’t in details.
As expected, there a number of terminologies used with cryptocurrency and cryptocurrency wallet is one of them. So, what is cryptocurrency wallet?
A cryptocurrency wallet is a software program that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency and monitor their balance. If you want to use bitcoins or any other cryptocurrency, you will need to have a digital wallet because that is where you get to control all transactions. When someone sends you Bitcoins or any type of digital currency, the transaction cannot be reversed because they have signed off ownership, there are no real or physical coins but there are published ledgers to show the balance of how
the transaction went.
The transaction is signified merely by a transaction record on the blockchain and a change in balance in your cryptocurrency wallet. There are two forms of wallets, which are the hot and cold wallet. A hot wallet is connected to the internet and used to hold cryptocurrency for everyday transactions. Because of the increased security risk over a cold wallet, a hot wallet should not store large amounts of currency and cold wallets
The Major Types of Cryptocurrency Wallets
There are several types of Crypto wallet that provides different ways to store and access your digital money; it can be categorized into three phases, software, hardware and paper wallet. The software can be online, desktop or mobile
Online: Wallets run on the cloud and are accessible from any computing device in any location. They are more convenient to access and they store your private keys online and are controlled by a third party those ones may steal from you.
Desktop: This wallet is downloaded and installed on a PC or laptop. They are only accessible from the single computer in which they are downloaded. Though the security is high, it is risky if the computer is hacked or gets a virus, you may lose all your funds.
Mobile: Wallets run on an app on your phone and are useful because they can be used anywhere. They are usually much smaller and simpler than desktop wallets because of the limited space available on mobile.
Hardware: These wallets differ from software wallets in that they store a user’s private keys on a hardware device like a USB. Although hardware wallets make transactions online, they are stored offline which delivers increased security. This makes it possible to easily transact while also keeping your money offline and away from danger.
Paper: Paper wallets are easy to use and provide a very high level of security. While the term paper wallet can simply refer to a physical copy or printout of your public and private keys. Using a paper wallet is relatively straightforward. If you want to withdraw or spend currency, all you need to do is transfer funds from your paper wallet to your software wallet. This process, called ‘sweeping,’ can either be done manually by entering your private keys or by scanning the QR code on the paper wallet.
Most of the Cryptocurrency wallet has it’s own advantages and disadvantages and there are tons of Cryptocurrency wallet providers that you can choose from. To choose the right type of Cryptocurrency wallet for your need, you need to:
- Know if you need a multi wallet or single wallet use
- Know if you are going to be an active trader or you are simply going to be using it for investment purposes
- Know how each wallet provider works and what are their terms and conditions
- What method of accessibility they grant you
- How secure the wallet is
No matter what type of wallet you decide to go with, it is important that you pick a wallet provider that is secure and have good accessibility feature.
You need to know the type of wallets that exist but that is just half the battle. If you need to up your game about your knowledge of Cryptocurrency or you simply want to get better, then you need to check out the Crespo Platform where you can learn, copy and trade from the industry professional whales all at your fingertips.