Cryptocurrency Wallets
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Cryptocurrency Wallets: What they are and how do they work?

What Are Cryptocurrency Wallets?

You may have heard about crypto wallets these days, but many people still misunderstand them, as they consider them like a billfold in your purse or back pocket and are used to hold cash and credit cards. Simply put, crypto wallets are fundamentally a kind of digital storage that is designed to store and maintain your digital assets with seamless security.

Cryptocurrency is a highly abstract store of value that does not reflect any physical token equivalent to cash coins and bills. These cryptocurrencies are secured by blockchain, an innovative technology that helps in transferring them securely.

The leading and most popular cryptocurrency in the realm of cryptocurrencies today is Bitcoin (BTC), which is used by most investors and fanatics alike all over the world. So if you already own it, you must have noted that you have received a public key and private key on the BTC blockchain.

What Is the Public Key In Crypto Wallets?

You can consider the public key similar to your bank account number. This means that you can easily share it with anybody, however, it is worth noting that it does not offer access to get your money.

What Is a Private Key In Crypto Wallets?

The private key, on the other hand, is similar to a password for your bank account. If you share it with any other person, there is a surety that they will move away with your money. That said, it is crucial to keep in mind not to share it with any other person.

In the meantime, another key tip to keep in mind is that the private keys to your crypto wallet should never be lost or there is a huge possibility that you would lose access to your crypto. So when you own a cryptocurrency, make sure that the private keys remain with you.

“Coins and tokens are part of a blockchain system in the form of data, and the wallets serve as a means to access them,” says Martin Leinweber, digital asset product strategist at MarketVector Indexes.

How do Crypto Wallets work?

A crypto wallet, as mentioned above, is designed to store public and private keys that are instrumental not only in making transactions but also in storing cryptocurrency.

At the time of the purchase of a cryptocurrency, you can be pretty sure that the source from which you bought it must have provided you with a wallet to hold the digital coins. This wallet is technically termed a ‘hot wallet’ and it is crucial to note that it is online and connected to the internet.

“To avoid the risk that hackers might steal your online wallet, you can get a cold wallet that is not connected to the internet,” quotes Ric Edelman, founder of the Digital Assets Council of Financial Professionals.

Cold wallets are fundamentally thumb drives or hardware devices that have their own importance. “Once you have one, you simply transfer your coins from your hot wallet to your cold wallet,

Ric Edelman – American investor and author

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