A cryptocurrency wallet or "crypto wallet" is a tangible or intangible medium that allows you to store, send and receive cryptocurrencies.
Cryptocurrency wallets interact with blockchains for different transactions as digital currencies are not physical currencies.
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| What is a Cryptocurrency Wallet?: eAskme |
It is essential to know that each cryptocurrency has a system that does not communicate with others.
So, for example, it is not possible to send bitcoins to an Ethereum wallet address or send ethers to a Bitcoin wallet address.
Reason for why it is necessary to create a new wallet for each cryptocurrency.
How does a Cryptocurrency wallet work?
A cryptocurrency wallet works like a regular wallet or even a bank account. It is made up of a public key and a private key.
The public key of the wallet: is comparable to a bank identity statement (RIB).
It corresponds to the wallet address on the blockchain and allows payments to be received from other crypto wallets.
- The public key is an email address made up of a series of letters and numbers.
- The private key of the wallet: is considered your password.
The private key is used to access the funds stored in the blockchain, make transactions on your wallet, and confirm an order.
This security key must be kept secret and never be communicated to the public.
By combining your public key and your private key, you create a digital signature that interacts with the blockchain of different cryptocurrencies.
This pairing allows you to check your balance, send, and receive cryptocurrency.
Different types of wallet or cryptocurrency wallet:
There are several types of cryptocurrency wallets with different characteristics and levels of security.
The mobile wallet:
The mobile wallet comes in a downloadable mobile application on a smartphone.
This wallet, considered the easiest to use, has fewer features.
You can use it to shop online or from people who accept cryptocurrency in the physical world.
The mobile wallet also allows you to scan other wallet addresses using a QR code.
The mobile wallet is more exposed to the risks of hacking or the theft of smartphones, so it is recommended not to keep a large amount of cryptocurrency there.
Popular mobile wallets include Jaxx, Edge, Breadwallet, Exodus, and Electrum.
The desktop wallet:
The desktop wallet is the software you install on your personal computer or laptop (available on Windows, Linux, and Mac).
This intermediate wallet (between the offline and online wallets) offers high security against viruses, malware, and other types of hacking.
The owner of this wallet also receives a recovery code when installed to find the data in the event of a computer or IT system failure.
The desktop wallet is also exposed to certain risks of hacking and malware.
You should always have your antivirus up-to-date and an effective firewall.
We can mention Electrum, Jaxx, Exode, and Wasabi Wallet in the desktop wallet class.
The online wallet:
Online wallets or "web wallets" make it possible to store data in the cloud via a website and access it from any connected device (computer, smartphone, or tablet).
This type of wallet is easy to use, practical and accessible everywhere because you will only need an email address and your password to create an account.
The hot wallet:
The hot wallet allows you to store your digital currencies online and access them on a smartphone, computer, or tablet connected to the Internet.
While convenient to use and easy to access, this third-party-controlled wallet remains vulnerable to all types of hackers.
It is ideal for traders who daily speculate on exchange platforms and do not hold large amounts of cryptocurrency there for the long term.
The cold wallet:
The cold wallet or "offline wallet" allows you to store your cryptocurrencies offline, protected from viruses and malware.
This wallet, which can take the form of a paper wallet or a hardware wallet, is considered the most secure because it can be stored offline to prevent hacking.
The downside of the offline wallet is that it is expensive and cannot be used offline.
How to choose a cryptocurrency wallet?
The choice of cryptocurrency wallet depends on the use and the level of security its user seeks.
Some traders who regularly speculate on small amounts prefer online portfolios or hot wallets.
Conclusion:
We have seen what a cryptocurrency wallet or crypto-wallet is its different types, advantages, and disadvantages.
The choice of which type of cryptocurrency wallet to use depends on parameters such as your trading profile, level of security against hacking, ease of use, and ease of connection.
To keep your crypto-currencies for the very long term, it is advisable to use offline wallets or cold wallets (such as the hardware wallet or the paper wallet) for security.
If, on the other hand, you are carrying out speculative operations on cryptocurrencies, it is recommended that you use online wallets or hot wallets, which allow you to make quick buy and sell transactions online.
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