A cryptocurrency wallet is software that stores your private and public keys while interacting with various blockchains, it enables users to send and receive digital currency and monitor their balance.
If you want to use Bitcoin or any other cryptocurrency you will need to have a digital wallet millions of people use cryptocurrency wallets but there is considerable misunderstanding about how they work unlike traditional pocket wallets.
Your wallets address
Digital wallets don’t actually store any currency in fact the currencies don’t get stored in any single location or exist anywhere in a physical form all that exists are records of transactions stored on the blockchain, when a person sends you cryptocurrency they’re essentially signing off ownership of their coins to your wallets address.
There is no actual exchange of physical coins the transaction is signified by the transaction record on the blockchain and a change in balance in your cryptocurrency wallet, there are several types of wallets that provide different ways to store and access your digital currency wallets can be broken down into three categories software hardware and paper software wallets, are downloaded and installed on a PC laptop or mobile device, they’re only accessible from the device on which they’re downloaded software wallets offer a high level of security, however if your computer or device is hacked or gets a virus there is the possibility that your wallet will be compromised.
Hardware wallets make transactions
Hardware wallets differ from software wallets in that they store a user’s private keys on a hardware device like a USB thumb drive although hardware wallets make transactions online they are stored offline which delivers increased security making a transaction with them is easy – users simply plug in their device to any Internet enabled computer enter a pin send currency and confirm paper wallets are easy to use and provide a very high level of security.
Bitcoin Paper Wallet
A paper wallet can simply refer to a physical copy or print out of your public and private keys it can also refer to a piece of software that is used to securely generate a pair of keys which are then printed transferring Bitcoin or any other currency to your paper wallet is accomplished by the transfer of funds from a software wallet to the public address shown on your paper wallet.
Funds offline wallets
If you want to withdraw or spend currency all you need to do is transfer funds from your paper wallet back to your software wallet different wallet types are secured to varying degrees a web server is a riskier environment to keep your currency compared to offline online wallets expose users to any vulnerabilities in the wallet platform that can be exploited to steal your funds offline wallets on the other hand cannot be hacked because they simply aren’t connected to an online network and don’t rely on a third for security.
Small amounts of currency
No matter which wallet you use losing your private keys means losing your money if your wallet is hacked or you send money to a scammer there’s no way to reclaim lost currency or reverse the transaction you should store only small amounts of currency for everyday use online and keep the majority of your funds in a secure environment.
Offline storage options like ledger Nano or paper wallets will protect you against computer failures and allow you to recover your wallet. Should it be lost try to keep all of your software up to date so that you have the latest security enhancements available, you should regularly update not only your wallet software but the software on your computer or mobile device, the more layers of security the better setting complex passwords as well as ensuring any movement of funds requires a password is a good start that have a good reputation and provide extra security layers.
Like two-factor authentication and pin code requirements although bitcoin is the most well known and popular digital currency hundreds of new crypto currencies have emerged each with distinctive ecosystems and infrastructure if you’re interested in using many crypto currencies the good news is that you don’t need to set up a separate wallet for each many wallets have support for several currencies you just have to choose the right one for you so which one is right for you.