What is crypto wallet


What is a crypto wallet

A cryptocurrency wallet is a device,physical medium, program or a service which stores the public and/or private keysfor cryptocurrency transactions. In addition to this basic function of storing the keys, a cryptocurrency wallet more often also offers the functionality of encrypting and/or signing information.


Understanding Blockchain Wallet

E-wallets allow individuals to store cryptocurrencies. In the case of Blockchain Wallet, users can manage their balances of two cryptocurrencies: bitcoin and ether. Creating an e-wallet with Blockchain Wallet is free, and the account setup process is done online. Individuals must provide an email address and password that will be used to manage the account, and the system will send an automated email requesting that the account be verified.


Once the wallet is created, the user is provided with a Wallet ID, which is a unique identifier similar to a bank account number. Wallet holders can access their e-wallet by logging into the Blockchain website, or by downloading and accessing a mobile application.


The Blockchain Wallet interface shows the current wallet balance for both bitcoin and ether tokens and displays the user’s most recent transactions. Users can also click on the cryptocurrency balance, and it will display the value of the funds in the fiat or local currency of the user.


How do cryptocurrency wallets work?

Contrary to popular belief, crypto wallets don't truly store cryptocurrencies. Instead, they provide the tools required to interact with a blockchain. In other terms, these wallets can generate the necessary information to send and receive cryptocurrency via blockchain transactions. Among other things, such information consists of one or more pairs of public and private keys.


The wallet also includes an address, which is an alphanumeric identifier that is generated based on the public and private keys. Such an address is, in essence, a specific "location" on the blockchain to which coins can be sent to. This means you can share your address with others to receive funds, but you should never disclose your private key to anyone. 


The private key gives access to your cryptocurrencies, regardless of which wallet you use. So even if your computer or smartphone gets compromised, you can still access your funds on another device – as long as you have the corresponding private key (or seed phrase). Note that the coins never truly leave the blockchain, they are just transferred from one address to another.


Multi-currency or single-currency wallet use

Although Bitcoin is by far the most well-known and popular digital currency, hundreds of new cryptocurrencies (referred to as altcoins) have emerged, each with distinctive ecosystems and infrastructure. If you’re interested in using a variety of cryptocurrencies, the good news is, you don’t need to set up a separate wallet for each currency. Instead of using a cryptocurrency wallet that supports a single currency, it may be more convenient to set up a multi-currency wallet which enables you to use several currencies from the same wallet.


Types of crypto wallet:

The main types of wallets you can choose from include:

•Paper wallets:

 Keys are written on a physical medium like paper and stored in a safe place. This of course makes using your crypto harder, because as digital money it can only be used on the internet.   

Pros of Paper Wallets

•A non-technical method of storing your 
crypto tokens.

•Offline storage and are not susceptible to any malware, virus, or hacks.

Cons of paper Wallets

•Difficult to use for daily trading.

•If you lose or misplace the piece of paper, you subsequently lose your coins.

•It is a less convenient method.

•Hardware wallets:

 Keys are stored in a thumb-drive device that is kept in a safe place and only connected to a computer when you want to use your crypto. The idea is to try to balance security and convenience

Pros of Hardware Wallets

•They offer the most secure ways to store cryptocurrency.

•Hardware wallets provide the option of backup and recovery in case the device is lost or misplaced.

•They enable security through PIN passwords so funds cannot be retrieved even if the device is stolen.

Cons of Hardware Wallets

•They are more costly in comparison to other methods of cryptocurrency storage.

•They have limited accessibility, as the hardware cryptocurrency wallet needs to be connected to a laptop or desktop in order to perform transactions or access funds. That said, some hardware wallets now give the option to connect via Bluetooth or through a smartphone application.

Hardware crypto wallet for exmple:

Ledger Hardware Wallets 

Bitcoin Wallets in a Nutshell 

TREZOR Hardware Wallets


•Desktop Wallets

Desktop wallets are basically software programs installed on your computer. They support various operating systems including Windows and Mac. A user can install the wallet software on their laptop to enable cryptocurrency transactions.

 In a desktop wallet, cryptocurrency assets are not stored online but instead on your hardware device. However, if a malware or virus disrupts your hard drive, your cryptocurrency tokens are at risk.

Pros of Desktop Wallets

•Simple, easy, and convenient to use on desktop or laptop.

•Cryptocurrency tokens are not stored online.

•Better accessibility to cryptocurrencies along with the security of coins.

Cons of Desktop Wallets

•Softwares need constant updating.

•Susceptible to virus and malware, if infected on your hard drive,

•If your hard drive crashes and coins are not backed up, you may lose your crypto assets.


Desktop crypto wallet for exmple

Wasabi

Specter

Exodus


•Mobile Wallets

As the name suggests, mobile wallets allow you to store your digital currencies on your smartphone devices. They are one of the popular options for storing your crypto funds as they allow greater accessibility.

However, these wallets are also connected to the internet and are susceptible to hacks/attacks. Many prominent cryptocurrencies offer to store private keys on mobile wallets available on Android or iOS. However, you may not receive iOS options for less popular crypto tokens.

Pros of Mobile Wallets

•You can access your crypto on-the-go.

•It is easy to trade crypto using your smartphone device.

•You can have access to features like QR codes.

Cons of Mobile Wallets

•It is a less secure mode of storing your cryptocurrencies.

•Your crypto-funds are at risk in the event that your mobile phone is stolen.


Mobile crypto wallet for exmple

Trust

Atomic 

Exodus


Collected from:

Wikipedia, Coinbase, Cryptohopper, Benzinga

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