Cryptocurrency has brought about major disruption in the financial realm, challenging traditional finance system in many life-altering ways. For effective storage of the digital assets called cryptocurrency is the Crypto Wallet. In this article, we will cover what Crypto wallets mean, the types, uses and more.
If you intend to participate in anything relating to cryptocurrency, you must have good knowledge of what Crypto wallets are and how to effectively use and secure them. Think of Crypto wallets as bank accounts used to save your Fiat money. Crypto wallets also store the private keys which serve as security to protect your digital funds.
Basically, Crypto wallets are tools used to
1. Receive
2. Store, or
3. Send
your digital currency, such as Aza Gems, Bitcoin, Solana, Ton, Ethereum, or any other digital currency or token. Without a wallet, you cannot participate fully in the blockchain / cryptocurrency ecosystem. The wallet is the basic tool needed for your operations.
In essence, you need a Crypto Wallet to assess many blockchain or crypto platforms and programs like airdrops, mining pools, crypto exchanges, and ultimately the storage of your coins or tokens.
HOW CRYPTO WALLETS WORK
A crypto wallet is not like the physical wallet where you keep your physical bank notes. No. Instead, wallets give you access to your digital assets that are stored on the blockchain network. Wallets are your primary gateway to the crypto realm. And they contain a pair of keys in order to perform thus role effectively:
1. Public key
2. Private key
The public key is your wallet address on a blockchain network which you can share publicly in order to receive funds in form of digital currency into it. Think of the public key are your normal bank account number. Just that on this case, it's bit just all numbers, it contains a combination of numbers and letters, length from 10 to 16 digits depending on the blockchain network. Sometimes, a wallet may issue different wallet addresses per network. Fir example networks like Bitcoin, Ethereum or BNB Chain may have different addresses in same wallet. But it is becoming a norm now to have multi-asset and multi-network public wallet address whereby your wallet address remains same for several cryptos or networks. This depends on your wallet. Study it carefully.
ATTENTION: Make sure you always copy and paste wallet addresses accurately because any error leads to irreversible losses. No room for error.
The Private Key is the hidden key used to authenticate you to have access to your assets in your wallet. This key comes into play when approving transactions on your wallet, for example, when you want to send out Cryptocurrency or when you want to grant apps access to connect to your wallet. Once authenticated, the transaction is approved and executed.
ATTENTION: Be careful of platforms or apps requesting to connect to your wallet. Untrusted, fraudulent or malicious apps or platforms can steal or wipe out all your assets once you grant access. Make sure you verify and trust all connections. Also, read between the lines! When in doubt, disconnect immediately.
TYPES OF CRYPTO WALLETS
There are two major types of crypto wallets:
1. Software wallet (Crypto wallet app)
2. Cold Wallet (Hardware wallet)
WALLET APPS (SOFTWARE)
The software apps are wallet applications that you install on your smartphone or computers. They are easy to use and give you convenient access to your cryptocurrency. Examples are TrustWallet, Metamask, OKX Wallet, Phantom, Uniswap, and Ton wallets.
The installed apps are the most commonly used apps and they allow you to store, send, receive or even trade your crypto from the comfort of your phone or computer. The extent of what you can do depends on the particular app.
Security of software wallet apps are lower than hardwaccold wallets, hence the need for effective security measures such as:
SECURING WALLET APPS
1. Strong passwords
2. 2-Factor Authentication
3. Biometrics
4. Secure seedphrase backed up OFFLINE! Don't ever share your seedphrase
5. Allow ONLY TRUSTED connections to your wallet apps.
6. Keep device secure. Do not install untrusted apps on your phone or computer that has your wallet apps.
7. Use different wallets for different activities: use an operations wallet with minimal balance for activities like connecting and airdrops. Use a less accessed wallet for storage.
COLD WALLETS (HARDWARE)
The cold or hardware wallets are physical devices specially developed for OFFLINE storage of Crypto private keys. They can be in form of hardware drives or USB devices which you can connect with your computer.
They are not subject to hacking and are limited in what they can be used for other than storage. Hence they are recommended for storing large amount of digital assets. They are considered one of the most secure ways of storing digital currency. Examples are Trezor and Ledger.
WRAPPING IT UP
As a web3, blockchain or crypto newbie or pro, crypto wallets are a must-have to effectively manage your crypto assets and for many operations. Security is of great importance, so we recommend the above mentioned tips in order to have safe online experiences.
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