What is a cryptocurrency wallet?
What is a cryptocurrency wallet?
Within the ecosystem that surrounds blockchain technology , we use the term wallet to refer to the virtual wallets that store or store the cryptocurrencies we own. since with the wallet we have complete freedom to send and receive foreign currency autonomously, freely and without intermediaries.
Going a little more in its operation, wallets are encrypted programs that store public and private keys, which fulfill the function of storing the various cryptocurrencies that we have. Usually, the wallets official support only one cryptocurrency; While multi cryptocurrencies can house various types, but these are created by third parties. Through these wallets we can authorize monetary transactions, send or receive cryptocurrencies through blockchains and control our available balance, whenever we want.
To use a virtual wallet, it is not necessary to have great technical knowledge about it; it is enough to know that a wallet is software that stores, sends and receives cryptocurrencies. But, it is always good to understand as best as possible how these technologies are handled and more because we talk about our money.
How does a wallet work?
Although we have only recently compared wallet s to an ordinary wallet, they are very different; The reason is that virtual wallets were not created to store money as such, but instead store public and private keys. To better understand what we mean; Public keys are like the account number that we have in the bank, anyone who owns it can send us money, but they will not be able to access our funds. While private keys are like the PIN with which we can access our bank accounts; therefore, if we share our private key, that person would have direct access to the funds of our wallet.
When a person sends a cryptocurrency, they are not sending money as such, but instead transfer their ownership of the crypto asset to another person; in this way it sends the value of it in the form of a transaction. Once the procedure has been carried out, in order for the destination wallet to register the entry and the recipient can use the sent crypto asset, the private keys must match the destination address.
Types of wallets
We can find a wide variety of purses, but all of them are grouped into two completely different categories. The distinction that exists between the two is based on the level of exposure that private internet keys have. Let's know what these categories are and the types of wallets that exist:
Hot wallets
Hot purses are all those that are always online, through an internet connection and an electronic device; These maintain a permanent connection to the blockchain . The hot wallets that we can find are:
Online Wallet : Also known as web wallet , these store private keys on a server monitored by the service provider company. Its main feature is that it allows users to access their crypto assets from anywhere in the world, provided they have a device with an internet connection. When using this type of wallet, it is vital to be certain of the security of the site, since administrators can access our private keys.
Mobile Wallet : Ideal for those people who constantly carry out cryptocurrency exchanges; either selling, buying or paying in stores. This works by downloading an app on our smartphone, which allows you to pay directly, even using proximity functions such as contact less that some cards have. Although these wallets use simplified payment verification, they are very vulnerable to computer attacks.
Desktop Wallet : As their name indicates, they are wallets that are installed on our computer, storing our private keys on the hard disk . Within the group of wallets that make up hot wallets, this is the safest and is ideal for those who want to trade small amounts of cryptocurrencies.
Cold wallets :
Cold wallets are those that are not connected to the internet and therefore not to the blockchain . The cold wallets that currently exist are:
Paper Wallet : Completely offline and immune to any cyber attack; This type of wallet consists of a printed document that contains the public and private keys, with which we can easily access our wallet. The best way to use the paper wallet is through the generation of QR codes, since we can scan them and make transactions quickly.
Hard Wallet or Physical Wallet : These are USB devices specially designed to provide extra security to offline storage options . The wallets physical security have a chip whose function is to prevent private keys entering the computer, so that, for purse transactions we enter a PIN. These devices are the safest type of wallet that exists, since they are not vulnerable to phishing attacks . The most popular ones are developed by Ledger and Trezor.
Frequent questions
Surely as they have progressed through the reading, some of their doubts will have been clarified, while some more questions will have been asked; perhaps in relation to security, in terms that they did not fully understand or about what is best when we talk about wallets. That is why we will take care of answering your concerns below.
What are the best cryptocurrency wallets?
There is a type of wallet for each person and their choice is a very important aspect in the world of blockchain . To make the best decision, you must take into account the amounts of money that will be handled, your preferences or even the amount of money that you can invest in the wallet itself. Knowing which wallet best suits our lifestyle is as important as knowing when is the right time to acquire cryptocurrencies. Next, we will indicate the most recognized online purses worldwide for their variety, security and efficiency.
Winkpay: winkpay is specialized cryptocurrency wallet with high security.In this platform allows to change more than types of cryptocurrencies.
Binance: It has the largest cryptocurrency exchange in the world in terms of volume; on its platform it is possible to change up to more than 100 types of crypto assets and not only that, it has very low commissions, high performance and high liquidity.
Coinbase: It is the best known worldwide and they trade as brokers in around 32 countries, while they store and transact in more than 190 around the world. Additionally, they accept VISA and MasterCard.
Are the purses safe?
As we mentioned when defining what is a cryptocurrency wallet, wallets are encrypted software or hardwares; this means that its structure has been modified and prepared to be incomprehensible, unless a key is available. As its name implies, Bitcoin, Ethereum, and the other cryptocurrencies base their technology on crypto. Currently, this field aims to find and obtain unbreakable encryption standards for communications that are carried out through electronic equipment. For its part, Bitcoin uses algorithms and protocols that were already established and internationally recognized for their level of information encryption. All these security protocols and the disposition of public and private keys make wallets safe to store crypto assets; But we must always take the appropriate security measures, such as avoiding compromised computers or sharing our passwords.
What are public and private keys?
On a couple of occasions we have mentioned the use of a public and a private key, to carry out transactions from the wallet, but these are also in charge of safeguarding and protecting the stored crypto assets. These keys are randomly generated and no two are the same, so they are 100% secure. By having both keys, it will not matter if the computer or mobile phone from which we access our wallet is damaged or misplaced, since, by reinstalling the program or application of the virtual wallet on our new device and restoring our account by entering our keys, we can access everything again, as if nothing had happened.
It is important to understand that the conservation and ownership of the public and private key give the user absolute control over the crypto assets associated with both the public key and the wallet ; so it is essential that the private keys are never disclosed to third parties or else, it could take control of the wallet and therefore, of the cryptocurrencies stored there. Additionally, we recommend making backup copies of the private keys of the wallets they possess, as well as their seeds.
What is a security seed?
The seed or seeds are a number of everyday words that make the function of private key to being introduced in the correct order within the wallet . The seeds are usually composed of 12 or more words and even if they seem difficult to remember the beginning, it 's much easier to memorize the 52 alphanumeric characters that make up the main private key.
Even though cryptocurrencies are based on systems with very high levels of encryption and security protocols, the reality is that almost everything found online can be hacked at some point; that is why it is essential to know how to correctly choose the wallet in which we will store our cryptocurrencies. Take into consideration the use of cold purses to store funds that you do not want to move in a while or if you want to implement more rigorous security measures; since this way they would avoid attacks, computer formatting or accidental deletions on the computers. Therefore, if investing in large amounts of assets is among your intentions, do not hesitate to make the most appropriate decisions regarding the creation of the best cryptocurrency wallet to send and receive them with all the security that encryption can offer.