- Cryptocurrency Wallet
- Why you should use a cryptocurrency wallet?
- How does a crypto wallet work?
- Important features of the crypto wallet
- Different kinds of the crypto wallet
- Can crypto wallet be hacked?
- Are crypto wallets free?
- Can you store all of your cryptocurrencies in your wallet?
- Is crypto wallet anonymous?
- Which crypto wallet has lowest fees?
- What benefits crypto wallet offers you?
A crypto wallet is an application that helps the users of cryptocurrency to store and recover digital assets. With the traditional currency, you do not require a wallet for spending your cash, but it only helps keep all in a single place.
When a user obtains cryptocurrency like bitcoins and other currencies, he/she can easily store in the crypto wallet multiple currencies and from here utilize it for making all transactions.
Here is a more deep definition
A cryptocurrency wallet is an app similar to the one you use on your phone or PC. If you want the visual experience of holding an app, you can buy a device for running the wallet app.
In 2009, the first wallet for cryptocurrency was introduced by Satoshi Nakamoto when the bitcoin protocol was introduced. Bitcoin is one of the most prevalent and extensively used cryptocurrency. But now, several other currencies have been introduced and can be stored in crypto wallet multiple currencies.
“In cryptocurrency investment, long term thinkers are less stressed.” ― Olawale Daniel
When you want to obtain cryptocurrency, either by buying it in currency exchange or getting it as a gift or even as revenue, you can instruct the sender to send it to a unique cryptographic address allotted by your wallet.
You may depict your cryptocurrency kept on the wallet similar to how you store your files on the USB drive. Doing transactions by using a crypto wallet is as easy as scanning the QR code of a retailer or just directing a specified amount of the crypto coin to the public address of the retailer.
Why you should use a cryptocurrency wallet?
- Quick transaction: In a conventional banking system, several problems might arise while doing transactions. For instance, transactions are slow, and then transactions have to go through an intermediary, which means there is a common point of failure. This is the main difference that exists between crypto wallet vs exchange.
- Safety: Other issues might arise while keeping track of every account as well as balances. Data might get jeopardized or corrupted in various systems where all accounts and balances are maintained. But with crypto wallet securities, all these issues are reduced or even eliminated.
- Privacy is well maintained: Every transaction done through a crypt wallet is safe because they are signed cryptographically. You can access the wallet from several web devices, which also includes mobile, where the privacy and identity of an individual are well maintained.
- Affordable: It is easy to obtain a crypto wallet with the lowest fees. They are mostly affordable and can be used by many people.
Thus, we can say that a crypto wallet security is stronger that allows safe and secure transfers and exchange of funds among various parties.
How does a crypto wallet work?
At first, let us know what the private and public keys are and how they are related to a crypto wallet. When you make a cryptocurrency wallet, you are given a private key and a public key associated with your wallet.
When you generate a wallet, a public key is developed, and you can share this public Key with someone you want to obtain funds.
Private Key is the Secret Key. It is the same as the password of your email address. You are not supposed to share it with anyone. You can use this Key for spending your fund. When someone gets access to your private Key, there is a high chance of your account getting compromised. Your whole crypto deposits present in your account might get lost or stolen.
Important features of the crypto wallet
Now when you know how a crypto wallet works, you must know about some of its important features:
- Ease of use: The wallet is very easy to use and is similar to any other wallet or software that you use in your day to day transactions.
- Highly safe: Doing transaction using a wallet is highly safe, and it’s a matter of protecting your private Key. It is highly reliable for payment systems.
- Long term solution: Crypto wallets offer a long term solution for investment purposes because it facilitates international transactions to occur very easily.
- Crypto wallet allows transaction across various cryptocurrencies. This assists you in doing some easy currency conversions. For that, you need to use a crypto wallet that supports all coins.
Different kinds of the crypto wallet
There are two kinds of crypto wallets depending on private keys, i.e. hot wallets and cold wallets.
While hot wallets are similar to the normal wallets with which we carry out our day to day transactions, the cold wallets are the same as a vault where cryptocurrency is stored at a high-security level.
Hot wallets are like normal wallets that we carry for day-to-day transactions, and these wallets are user-friendly. Cold wallets are similar to a vault; they store cryptocurrencies with a high level of security.
Hot wallets are the online wallets using which we can transfer cryptocurrencies very quickly, and they are easily available online. Some of the examples are coinbase, Blockchain.info. Cold wallets are digital offline wallets where all transactions are signed offline and are then it is disclosed online. They are not maintained on the internet but offline to maintain high-level security. Some of the good examples of cold wallets are Trezor and ledger.
The private keys in hot wallets are kept in the cloud for getting fast transactions, but with cold wallets, they are stored in separate hardware that does not connect to the internet.
Further, there are several other crypto wallet types:
Software wallet: It is a kind of application that you can download on any device, or it might be a web-based wallet that you can access online. They can be categorized into
Desktop wallet: These are cold wallets where the private key is stored in offline servers. You can disconnect the wallet from the internet, use it for carrying out some offline transactions and then come back online. They are cost-efficient.
Online wallets: these are other types of hot wallets that runs on the internet. You can get access to this wallet from any device.
Mobile wallets: These are the same as online wallets except that they are developed for only being used in mobile phones.
Hardware wallets: It is a kind of cold storage device similar to a USB that typically stores cryptocurrency users private Key in a secured hardware device. They are safe and less prone to any attacks.
Paper wallets: It is an offline process for keeping your cryptocurrencies. It is printed paper that contains your private Key and Public Key. Since they are highly safe, they are used to store a large amount of cryptocurrency.
Thus, we can see how crypto wallets are beneficial for doing cryptocurrency transactions. This is the reason so many companies nowadays are offering cryptocurrency wallet development services at the best prices.
FAQs (Frequently Asked Questions)
Can crypto wallet be hacked?
Yes, users can easily lose cryptocurrency tokens because of theft, loss of access keys, computer failure and many more reasons. A cold wallet is a safe option for holding cryptocurrency because these wallets are not accessible through the internet. But ease of use is more with hot wallets, therefore people mainly prefer hot wallets.
Are crypto wallets free?
It depends on the wallet. While some are free and other crypto wallets cost you anywhere in between $1 to $200. When you are using a wallet as a part of an exchange, you are more likely to pay a flat fee of some dollars or a small percentage of the full transaction value.
Can you store all of your cryptocurrencies in your wallet?
Yes, it is possible to store all of your cryptocurrencies in a single wallet using a crypto wallet multi-currencies. It is very easy to use a single wallet for multiple currencies then using a different wallet for different currencies. It is important to check with the wallet service provider.
Is crypto wallet anonymous?
No, they are not anonymous. Even if your wallet does not have your name and address, it will still have so much information that people can get access to.
Which crypto wallet has lowest fees?
Hardware wallet generally has lowest fees but if you are looking for a wallet that is completely free, then you can choose paper wallet. If you want negligible security risk, then you should go for paper wallet. You don’t have to pay for also while creating a paper wallet.
What benefits crypto wallet offers you?
A cryptocurrency wallet helps the users to send as well as obtain cryptocurrencies and keep a balance of the same. This type of wallet is required for carrying out various transactions of currencies online as it takes place in the Blockchain technology, that increases security.