Being a cryptocurrency trader, there is one thing everyone needs, whether they are registered at any exchange or independently working; that thing is – A WALLET. So let’s find out-
What is a Cryptocurrency Wallet?
A cryptocurrency wallet is a medium required to conduct blockchain transactions. It is not somewhere to store your coins, rather a place that contains both public and private keys, which help you to send or receive the crypto-currency by generating necessary information through blockchain networks.
Main features of cryptocurrency
Private key- it is a secret key generated for the owner which should never be shared with anyone. Even if your gadgets (that contain your wallet) are compromised, with your private key, all is safe. Only you can take your funds out, so no worries. It allows you to send money.
Public key- Just like the private key, a public key is also a cryptographic code that allows you to receive money. Both the keys are alphanumeric. The public key is not owner-specific like a private key.
· Both the keys contain blockchain addresses where your crypto-currency is stored. And both keys are stored in your wallet. A unique set of public and private keys is generated for each transaction.
Types of cryptocurrency wallets
Hot Wallets- A wallet that is connected to the internet is called a ‘hot wallet’. Simply put, suppose you deposited money into your exchange’s wallet to start trading (day to day and short term), well, that would be a ‘hot wallet’. It is extremely user-friendly, convenient to use, and accessible at all times but risky.
Cold Wallets- No connectivity to the internet-‘cold wallet’. Suppose you deposited money into your United Exchange wallet for long-term use and trading which is hack-proof and offline, that would be called a ‘cold wallet’. These provide ultimate security and amazing tool for ‘Holders’.
Hardware wallets- These are typically build to store addresses and public and private keys. These wallets can be considered as an ultimate tool for cold storage and look much like a USB stick. But remember to remember the ‘seed code’.
Web-Wallets- Typically a software/hot wallet, because it is connected to the internet. Without having to install or download anything particular, user can easily access their web wallets. Not only the browser-based wallet providers but the exchange wallets are also included in this category. These are rather riskier kinds of wallets to be used.
Desktop Wallets- These are software that you download and install locally on your computer. These fall under the category of ‘cold storage’ and all you need is a good antivirus system and regular update on your computer.
Mobile Wallets- Just like desktop wallets, these are installable software for mobile/smartphones and come with encryption. These are excellent tools for day-to-day trading but might fall prone to malware infections/hacking.
Paper Wallets- These wallets exhibit as the prime example of ‘cold wallets’. These are ultra-secure and not in any way possible, prone to any type of cyber-attacks. The paper contains information such as – wallet address and public and private keys and comes with a physically printed QR –Code for ease of access. But some problems come along with paper wallets such as- they might tear easily, theft, you can’t send partial funds and hence, are non-reusable.
Given above is a brief summary of different types of wallets. I hope, you find it useful. We recommend going for cold wallets since they ensure the safety and security of your valuable funds and make them hack-resistant and there are exchanges out-there such as- United Exchange, which gives top priority to your funds and stores them in cold wallets.
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