What is a Crypto Wallet?

 

“Crypto currencies may hold long-term promise, particularly if the innovation promotes a faster, more secure and more efficient payment system” -Ben Bernanke.

 

We have been using physical wallets to carry out our money, coins, flat paper currencies and even plastic currencies too. But now due to the digital modes which are gaining popularity are changing the human behavior by enabling us to maintain our cash and assets. Banks and other financial Institutions also are offering digital wallets to ease and secure our access to the valuable assets. Crypto do the same thing by maintaining our digital assets like coin, NFTs, etc. Just like we need a wallet to protect our cash and credit cards, we should also know where we should go to store our crypto. Here’s what you need to know about cryptocurrency wallets, and how to decide which storage option is right for you.

What is a crypto Wallet?

Like a regular wallet stores physical currency, a crypto currency wallet is a place to store your digital currency be it a Bitcoin or Ether or Dogecoin or any other token. These currencies are secured using private keys, and you can store these keys in a different way, all of which are called – Wallets. It is a type of wallet that holds our identity and information that we can use to connect with decentralized assets. Before explaining more about crypto wallet, it is important to understand that what is private key and public key in context to crypto wallet.

What are Private Keys and Public Keys?

Crypto currency is based on encryption technologies which uses a combination of keys – a public key which is used to identify the block of tokens and a private key to access them. In a simplified term public key on crypto wallet allows you to have tokens and private keys are the passwords that allows you to have different services related to the transaction. Both have equal importance in the context of crypto wallets.

 

Types of Crypto Wallets:

 

There are mainly two kinds of crypto wallet: “Cold Wallet” and “Hot Wallet”.

Cold Wallet:  It is a type of wallet that is offline- which means it does not share connection with the Internet. This is a hardware device that contains our identity and other network connection details permanently in it. It is the most secure form of crypto wallet Implementation, but it is costly and has low user experience. It needs secured device too. But if the wallet is damaged then you access the keys, the coins are also hard to recur back.

Hot Wallet:  Hot wallet are connected to the Internet making it more accessible to use to buy or to sell cryptocurrency. The most common Implementation of hot wallet are” Custodian Wallet” and “Non-Custodian Wallet”. Hot wallets can be used through different ways such as desktop Client, mobile client, and web browser. These wallets are more vulnerable to hackers than the cold wallets but are more accessible and user-friendly than the cold wallets.

How to setup a digital wallet?

You can find many digital wallets online even many exchanges have their own wallets such as Exodus and Mycelium. Setting up and using these app is as simple as the online service. First you need to create the account, login, and then follow the on-screen instructions to transfer your crypto currency to these wallets from other storage.

Wrapping up:

Each wallet has their pros and cons and selecting one type of wallet depends on the app use case as each provides a different kind of security and the end user experience. But a combination of hot wallets for quick trading and cold wallets to secure the bulk of crypto currencies would be better for traders.

 

Source:(https://www.talentica.com/blogs/things-to-know-before-you-select-a-crypto-wallet/)

 

 

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