What Is A Crypto Wallet?
A cryptocurrency wallet is a software program that stores private and public keys. These keys are strings of cryptographic characters which are needed, to complete transfers of bitcoin to or from the wallet.
How Do A Crypto Wallets Work?
When a person sends you bitcoins or other digital currencies, they are essentially signing off ownership of the coins to your wallet’s address. To be able to spend those coins and unlock the funds, the private key stored in your wallet, must match the public address assigned to the currency. If public and private keys match, then you'll see an increase in your balance, and the decrease for the senders accordingly. Since cryptos currencies exist in the digital space, physical transactions are all recorded on the blockchain.
Know Your Wallet
There are several types of wallets that provide different ways to store and access your digital currency. Wallets can be broken down into four distinct categories – software, hardware, and paper.
Types Of Crypto Wallets:
Paper Wallet
A paper wallet refers to a printed piece of paper; containing private keys and QR codes; used to facilitate cryptocurrency transactions. Paper wallets were considered the best method of storing bitcoins, between 2011 and 2016, since they couldn't be hacked. In today's time, paper wallets are best used for copying seed phrases - a unique 12 or 24 random word sentence - generated by various online wallets.
Hardware Wallet
A hardware wallet secures a user's private keys on a physical device, similar in appearance to a usb stick. Hardware wallets are a relatively new tech, and for the time being, have maintained a good track record, for protecting privacy and digital coins. These wallet are best used to store cryptocurrency, and not to trade. Holding crypto, like Bitcoin, in a hardware wallet won't add or decrease its value.
Desktop Wallet
Desktop wallets are installed on a desktop computer, and provide users with open-ended controls over their wallet. These wallets have multiple functions; providing an address to store a private keys, send and receive cryptos, and exchange other popular currencies.
Mobile/Web Wallet
Mobile or Web wallets facilitate crypto transactions from anywhere, on any browser or mobile device. These wallets are a convenient way to make in-store payments, but run the risk of contracting malware, or hackers.
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