What You Need to Know About Crypto Wallets and How they Differ

What is a cryptocurrency wallet? In essence, it is a program that stores private and public keys and also interacts with various blockchains. Meaning, cryptocurrency is stored in the wallet in the form of transaction records. A wallet is needed to store, exchange, and perform transactions with cryptocurrencies, each currency appears with a unique crypto index there.

How is a cryptocurrency wallet funded?

The sender transfers ownership of the cryptocurrencies to you. In order to access them, the private key stored in your wallet must match the public key to which the digital currency is linked. Once this happens, a record appears on the blockchain that the transaction has been completed. Nowadays you can buy cryptocurrency freely on any crypto exchange in a fast and secure way.

What are the types of cryptocurrency wallets?

Software wallets are the most used nowadays, and they are divided into desktop, mobile and online ones.

For desktop devices

This is a program that can be downloaded to a desktop computer or laptop. The wallet can only be accessed from the device where it is installed. Desktop wallets come in "thin" and "thick" versions. The former involves downloading only the software to run the wallet, and transaction information is stored on another server. In the case of the latter, both the program and the blockchain are downloaded to your computer.

For mobile devices

Their scheme of operation is the same as that of PC wallets, except that you can always carry your smartphone or tablet with you. Considered rather vulnerable: they are often hacked.

Online wallets

Online wallets work in the cloud or on certain web resources (e.g., cryptocurrency exchanges), and can be accessed from any device connected to the Internet.

Hardware wallets

These are cryptocurrency wallets, where transactions are performed online, but the private keys are stored on a physical medium (for example, a flash drive).
The Ledger Nano S is a popular low cost hardware wallet

To use them is simple: you need to connect the medium to a computer with access to the Internet, enter your PIN-code and make the necessary actions.

Paper wallets

Paper wallets are considered the most secure. They are generated by a special program. The private and public keys are printed on paper – in the form of a QR code or a set of numbers and letters. In order to make any manipulations with the wallet, you need to scan the code or enter the keys yourself.

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