Cryptocurrencies have become a sensation in the tech world. Cryptocurrency has made the headlines severally and blockchain tech is slowly getting implemented around the world hence, more users have delved in the realm of digital assets. With the adaptation of cryptos to choose from growing regularly, it was only a matter of before the invention of cryptowallets. Before you decide to go on big-time with digital assets, you need to get a specific wallet to store them into.
A cryptocurrency wallet is a computer program that stores private and public keys. It is in tandem with various blockchain for different users to enable them to send or receive digital currency and monitor their balance as well. To use Bitcoin or any other cryptocurrency, one will need to have a digital wallet. Many use cryptowallets but not all understand how they function. They are unlike the regular physical wallets or pockets which we put legal tender. A digital wallet like cryptowallet does not store currency. The digital assets do not exist physically like money but exist in records of transaction data that are stored on a blockchain. What the cryptocurrency wallets do is store private or public keys and interface with various blockchain. The said key provides access to users’ digital information.
A transfer of bitcoin from one party to another essentially signs off ownership of the coins to the other party’s wallet address which yields an increase on their balance. But this does not take effect without using the key to unlock funds. To spend those coins and unlock the funds, the private key that protects the wallet must match the public address the currency is assigned to. If the public and private keys match, the balance in your digital wallet will increase, and the senders will decrease accordingly.
Different wallets provide different ways to store and access digital currency. Wallets are into – software, hardware, and paper wallets.
Software wallets can be a desktop, mobile or online.
Desktop: The very first cryptowallet that was born back in 2009. These are only accessible from the single computer in which they are downloaded. The wallets can be downloaded and installed on a PC or laptop. This type of wallet offers one of the highest levels of security.
Online: these wallets run on the cloud and are accessible from any computing device in any location. Online wallets are more convenient to access; online wallets store your private keys online and are controlled by a third party
Mobile: these are in the form of applications that run on Mobile devices. This type is very handy as they can be used anywhere including retail stores. Limited space available on a mobile device means mobile wallets are usually much smaller and simpler than the desktop wallet.
Hardware wallets store a user’s private keys on a hardware device like a USB. They differ from software wallets but still make transactions online after which they are stored offline. This connotes high security. Hardware wallets are compatible with several web interfaces and can support different currencies; it just depends on which one you decide to use.
Paper wallets are easy to use and provide a considerable high level of security. The term ‘paper wallet’ could be a physical copy or printout your wallet key, just like any paper document. it can also be a piece of software used to securely generate a pair of keys which are then printed.
To transfer currency from a paper wallet, one would transfer funds through the software from the address on the paper wallet. It is done in reverse order to receive funds in a paper wallet. The process is often referred to as ‘sweeping.’
Security of cryptowallet
The degree of how secure a wallet varies. The level of security is dependent on the type of wallet you use and the service provider. It is logically more risky to have your funds online than offline. Online wallets can expose users to possible vulnerabilities in the wallet platform; vulnerabilities that hackers may take advantage of. Offline wallets cannot be hacked as they aren’t connected to an online network and don’t rely on a third party for security. Diligent security precautions need to be implemented and followed when using any wallet. Even though the crypto wallets are riskier, the contents of a physical wallet can still get lost or stolen.
Be sure to make your wallet or wallets as safe as possible. It is wise to store currency in small amounts for daily or weekly use. Leave the vast majority of your funds in a high-security environment. Back your wallet up with Cold or offline storage options this protects against computer failures and allows one to recover one’s wallet if lost or stolen.
Use extra security layers. For instance, setting long and complex passwords and ensuring any withdrawal of funds requires a password is a start. Use wallets with a good reputation and tight security like two-factor authentication or additional pin code requirements to access wallets. There are wallets that have an option of multiple signatories (two authorized persons for access to a wallet), these are also a good choice.
One wallet, different Cryptos
There is good news for people that may want to use more than one cryptocurrency. There is no need to set up a separate wallet for each currency. The options of single and multi-currency wallets exist. It may be more convenient to set up a multi-currency wallet which enables you to use several currencies from the same wallet.
As to what type of cryptocurrency wallet is good or the best, I would say one should make a choice according to individual needs and preferences. In other words, choosing a wallet requires a clear understanding of your goals as there are several types of them available. All in all, it is pertinent to have a cryptowallet if you use cryptocurrencies, soak in all the information you need and use them as a guide.
Credits- John Frigo of Best price Nutrition, RachelBusch of Wachsman, blockgeeks, Alex montana of Cell frame, cryptocynicalJOIN OUR COMMUNITY