Cryptocurrency is digital money that allows a person to pay for products or services and save money. It’s an alternative to spending paper money. A cryptocurrency wallet is a secured digital wallet used to receive, send and store digital currency. To use, send or store digital currency, a person must use a cryptocurrency wallet.
How Do Cryptocurrency Wallets Work?
The cryptocurrency isn’t actually stored in a wallet. Instead, a person receives a secure digital code called a private key. This code isn’t known to anyone else. This shows the person owns a public key. This public key is a public digital code that connects to a specific amount of cryptocurrency. Thus, a person has a wallet that stores public and private keys which allows them to receive and send cryptocurrency. The wallet also doubles as a personal ledger, so a person can keep track of their transactions.
Options for a Cryptocurrency Wallet
Many people wonder how to use ethereum when they are trying to decide which wallet to use. There are a lot of cryptocurrency wallets to choose from depending on the type of currency being stored. For example, cryptocurrency wallets options are:
•Online wallets: An online wallet is web-based. There’s no app to download. Instead, the cryptocurrency is kept on a virtual or real server. This is a hybrid wallet because it allows for encryption of the cryptocurrency private data prior to sending it to an online server. The person controls the wallet with private keys. However, they do not have direct control of the keys.
- Hardware wallets: A hardware wallet is offline. It is built to keep and hold cryptocurrency and secure it. One type of hardware wallet is a USB device. Transactions and data retrieval are made by connecting the hardware wallet to the internet. A hardware wallet is more secure than other forms because it is kept offline. Also, it can’t be hacked.
- Desktop wallets: This is the most common type of cryptocurrency wallet. The wallet is only available via a desktop computer.
- Mobile wallets: A mobile wallet is downloaded on a mobile device. Many people who want instant access to their digital currency will choose this type of wallet. They can send, store and receive money on their mobile device.
- Paper wallets: A paper wallet allows a person to keep their cryptocurrency via a QR code. They can use the QR code to print out their private and public keys. They can receive and send digital currency via the paper wallet. It doesn’t require storing any digital data.Picking The Right Digital WalletIt’s important to pick the right wallet. If a person loses their private key, they lose their money. This can occur with any type of wallet such as a paper wallet, hardware wallet or mobile wallet. Some people use a combination of wallets for security. For example, they may keep a backup hardware wallet, but primarily use a mobile or desktop wallet. Thus, it’s best to prevent a wallet from being hacked or lost.