A TRUE Crypto Currency and Bitcoin wallet is a software application that you download and install onto your desktop and/or device. It provides a sequential “string” of 12 to 24 words unique and extremely private to you known as pass or private “Keys”. These allow you to receive, store and send Bitcoin and Crypto Currencies. Think of it like a real-world wallet, but instead of holding cash and cards, it holds your private keys that enable Bitcoin and digital currency transactions to happen.
I’m sure you’ve noticed that I wrote the word “TRUE” when defining what this type of digital wallet is; Why have I done this?
Not your keys, not your crypto
There are many different crypto exchanges, decentralized platforms, and companies that assign you what they call wallets which s can be very confusing to someone who’s new to the cryptoverse.
This also opens you up to unintended risk and potential loss and It doesn’t need to be this way.
What these exchanges and companies call “wallets”, are simply accounts that mimic true bitcoin and crypto wallets.
They allow you to have custody and control over receiving, holding and sending but they maintain control over your account as well as the private keys.
In other words, the private keys belong to them, not you. This means that your crypto isn’t your crypto. they have custodial control over your assets. The good news is that it’s not some sort of evil plot, it’s just how these very complex centralized businesses need to operate to function.
What matters to you is that you understand the difference so you are able to manage your risk appropriately
How do they work?
As any crypto-savvy individual knows, your private keys are what grant you access to your digital money. They act as proof of ownership and allow you to make transactions with your coins. This is why losing your private keys means losing access to your money. It’s important to take measures to protect them.
When you set up a wallet, you’re given a unique “seed” of 12-24 words that you can use to restore your wallet if it’s ever lost or stolen. You can think of it like a master password for your cryptocurrencies.
When you want to send some crypto to someone, you use your software wallet to generate a public key, which is sort of like an email address that anyone can send crypto to. To spend it, you use your private key, which is like your password.
The software handles all of this for you automatically, making it easy for even total beginners to get started with cryptocurrencies.
Thanks to wallets, the blockchain is accessible to everyone. When cryptocurrency was first introduced, sending cryptocurrency was a manual task that required entering long keys. Today, the software does most of it for you.
So whether you’re looking to store Bitcoin, Ethereum, Litecoin, or any other type of cryptocurrency, you’ll need a wallet.
By keeping your private keys safe and easily accessible, crypto wallets make it possible for you to use cryptocurrency without having to be a tech expert. And that’s why we love them!
Crypto wallets are like the safety deposit boxes of the digital world: they keep your private keys, the passwords that give you access to your cryptocurrencies, safe and accessible. There are different wallets with varying levels of security risk built in.
They come in many forms, from hardware wallets like Ledger (which looks like a USB stick) to mobile apps like Coinbase or Exodus wallets . When it comes to wallets, there are a few different types that you should know about.
The first main distinction is between custodial and non-custodial wallets.
Custodial wallets
are ones where a third party stores your keys for you – this could be something like a company that provides enterprise-level data security. On the other hand,
Noncustodial wallets
Are ones where you’re responsible for securing your own keys. Most cryptocurrency wallets on devices fall into this latter category.
There are also differences between hot and cold wallets.
Hot wallets
have some kind of connection to the internet – or to a device that does. Generally referred to as desktop wallets, mobile wallets or web wallets, a hot wallet is used to store crypto either being send to a crypto exchange or to cold storage (the best crypto wallet).
You’ll often find hot wallets being used for multiple and smaller amounts of bitcoin and cryptocurrency that need to be accessible more frequently, whereas cold wallets are generally used for larger amounts that can be less readily accessed.
Cold wallets
On the other hand, have no such direct internet connection. You’ll find that the device has software that interacts with it but there is no direct link to the network connection. It’s a physical device designed for only you to keep your crypto holdings stored offline.
And then, finally, there are software, hardware, and paper wallets.
Software wallets
Are digital and exist only on devices like computers or phones.
Hardware wallets
Are physical devices – like USB drives – that can store cryptocurrency offline.
And
Paper wallets…
Well, they’re exactly what they sound like! You can generate a paper wallet by printing out your public and private keys on a piece of paper.
Some are designed for specific cryptocurrencies like the Bitcoin-only “exodus wallet” or the Cardano-only “Yoroi” wallet, while others can be used for multiple types of digital currency.
And just like a real-world wallet, you can keep your cryptocurrency wallet with you on your phone, tablet, or computer.
Crypto wallets are important because they store your private keys. Your private keys prove your ownership of your digital money and allow you to make transactions. If you lose your private keys, you lose access to your money.
That’s why it’s important to keep your hardware wallet safe or use a trusted wallet provider like Coinbase.
This can include using a hardware wallet or trusting a reputable wallet provider like Coinbase. By taking these precautions, you can help ensure that you don’t lose access to your hard-earned crypto.
So those are the main types of wallets that you need to know about. Now let’s take a brief look at some of the best wallets out there.
{ledger wallet}
Ledger is a French company that produces hardware cryptocurrency wallets. Ledger’s flagship product is the Ledger Nano S, a USB-connected device that stores and manages private keys. Ledger also offers the Ledger Blue, aBluetooth-enabled device that supports multiple cryptocurrencies.
{exodus wallet}
Exodus is a software wallet that enables you to store, manage, and exchange multiple cryptocurrencies on your computer. Exodus is available for Windows, macOS, and Linux.
{coinbase wallet}
Coinbase is a custodial wallet provider that offers software wallets for both mobile and desktop devices. Coinbase also operates the Coinbase Pro exchange for trading cryptocurrencies.
{yoroi wallet}
Yoroi is a software wallet for the Cardano cryptocurrency that is available for mobile and desktop devices. Yoroi is developed by Emurgo, a Cardano development studio.
{metamask wallet}
MetaMask is a software wallet that enables you to store, manage, and exchange Ethereum-based tokens on your computer. MetaMask is available for Chrome, Firefox, Brave, and Edge.
In Closing
Cryptocurrency wallets are devices or programs that store your private keys and allow you to access your coins. There are several different types of wallets, each with its own features and levels of security.
Many cryptocurrency wallets can be used to store keys for different cryptocurrencies. Some wallets are offline while others are online.
Some wallets are more secure than others. Cryptocurrency wallets typically have a public key (the wallet address) and your private keys needed to sign cryptocurrency transactions.
Anyone who knows the private key can control the coins associated with that address. When choosing a cryptocurrency wallet, it is important to consider how you will use it and how much security you need. So there you have it! Now you know what a cryptocurrency wallet is and how it works.
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FAQ's
Just get off Zero for now. Stack sats and we can revisit this question in 5 years
If a volcano erupts while you’re mining, you won’t be thinking about this question.
If you want to use Bitcoin or any other crypto currency, you will need to have a digital wallet. Crypto currencies are stored in digital wallets and can be used to purchase goods and services, or exchanged for other currencies.
A public key is a cryptographic code that allows a user to receive crypto currencies into his or her account. The public key is used to encrypt the message and it can be shared with anyone.
A private key is a cryptographic code that allows a user to spend his or her cryptocurrencies. The private key is used to sign transactions and it should never be shared with anyone.
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**DISCLAIMER**
I am not a Financial Adviser,
This is not financial advice,
But if you want to loose all of your money
There are many of them out there who would suffice.
If you’re looking for knowledge and insight
You’ve come to the right place
I’m not a financial advisor
So you’re money’s in a safe space.
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