What is a Cryptocurrency Wallet?

A cryptocurrency wallet is a way to securely store and access your crypto, as well as a way to send and receive cryptocurrencies like bitcoin or ethereum. A wallet can be an app (for desktop or smartphone) or a physical device; Depends on owner’s preference.

Every wallet has a public and a private key, which allows it to send and receive cryptocurrency. They make a two of one pair. And while you can have any number of public keys, you only have one private key for your wallet. You can share your public key with anyone to receive crypto.

How do Crypto Wallets Work?

A crypto wallet stores the public and private keys required to send, receive, and store cryptocurrency. When you buy cryptocurrency, the company from which you bought it must have given you a wallet to hold the digital coins. It is called hot wallet because it is online and connected to the internet.

“To avoid the risk that hackers could steal your online wallet, you can get a cold wallet that is not connected to the internet,” says Rick Edelman, founder of the Digital Assets Council of Financial Professionals.
Cold wallets are essentially thumb drives or other types of hardware devices. “Once you have one, you can simply transfer your coins from your hot wallet to your cold wallet,” Edelman says.

How Many Types of Crypto Wallets?

They can be specifically categorized into Hot and Cold Wallets. Hot wallets are connected to the internet and can be accessed at any time. These include online cloud wallets, most mobile wallets, software wallets, and crypto exchanges.

Cold wallets do not connect to the internet and allow you to store your crypto offline. Cold wallets include hardware and paper wallets.

Hardware Wallets

A hardware wallet helps strike a balance between security and convenience when storing crypto. Hardware wallets are designed to protect you from online ways of storing your private keys, such as on computers and phones, that can be accessed by hackers. Since your private key never leaves the device, it cannot be hacked. If your hardware wallet is lost or broken, you can access your bitcoins from a new device as long as you know your recovery seed words.

Paper Wallets

Paper wallets are stored on a printed sheet of paper and are one of the most secure options. Crypto can be moved by entering the private key or by scanning the QR code on the paper. Since they are not saved on computer or mobile, they cannot be hacked or stolen digitally. You do not even need to depend on any third party server. User should never take picture of his paper wallet or seed words using his phone.

What are Private Keys and Public Keys?

When we are talking about crypto wallet, it is very important for us to understand, what are these private keys and public keys? As you know, the name of the technology on which crypto currency works is blockchain encryption. This technique requires learning how to use certain key combinations. Which works completely as a password.

Private Keys

The password from which we get any detailed information about our account is called Private Keys. That’s why we can easily say that your ‘private keys’ do the work of giving complete information in the crypto wallet.

Public Keys

The password that is used to enable and identify token or crypto transactions in your account is called Private Keys.

To make it more simple, we explain to you with an example.

You take any payment app, you have a user name in the payment app, from which you receive money in your account.

In the same way, the ‘public key’ in a crypto wallet only works to receive crypto or tokens. That is, you receive tokens through ‘public key’, like you have a password in a payment app, with the help of which you transact.

The password from which you get any detailed information about your account is called the private key. That’s why we can easily say that your ‘private keys’ do the work of giving complete information in the crypto wallet.