What is a Crypto Wallet?

A crypto wallet is software that provides access to your cryptocurrency. It works in a similar way to a regular wallet where you keep your money and cards. Hence the name.

However, instead of containing physical items, a crypto wallet stores encryption keys necessary for accessing your cryptocurrency assets. It also serves as an interface through which you can manage your account.

How is a Crypto Wallet Structured?

A crypto wallet consists of two parts: public and private encryption keys. These are long sequences of characters that give full access to the account.

Public key is your account’s address in the blockchain network, its unique identifier, accessible to all users. It is necessary for the sender to know exactly which account to transfer to.

Private key, on the other hand, is available only to you. It is necessary for confirming transactions from your side.

In addition to these concepts, there is also a seed phrase which is a random sequence of 12–24 words that can help recover a forgotten private key.

Remember, without the seed phrase and the private key, you will permanently lose access to your account!

What Types of Crypto Wallets Exist and How to Open Them?

1. Cold (offline storage)

Paper wallet is a simple sheet of paper with a seed phrase, private key, and a QR code to the latter.

Creating a wallet is very simple:

• Open one of the wallet creation services (bitaddress.org the most popular).
• Register.
• Download the key-generating file.
• Important! Disconnect the device from the internet and then generate keys.
• Print the keys on paper and store in a safe.

Hardware wallet is a special device that stores the keys to your account. Looks like a USB flash drive. Can store several types of cryptocurrencies.

To open a hardware wallet, you need to:

• Purchase the device and register it on the manufacturer’s website, choosing a PIN code.
• Get and write down on paper the seed phrase, which will allow you to recover the wallet in case of loss.
• Download the key-generating file.
• Connect the device to a PC and enter the PIN code in the program.

The most reliable brands of hardware wallets: Trezor, Ledger, Keepkey.

2. Hot (online storage)

Desktop wallet is software installed on your PC. It can take up several gigabytes as it downloads information on all cryptocurrency transactions. For this reason, we recommend downloading the software onto a removable SSD drive.

To create, you need to:

• Download the wallet access program to your PC.
• Register, activate the wallet, and set up a PIN code.
• Important! Save the seed phrase on an external storage device.

Mobile wallet is an app on your phone. In this case, your device only serves as a storage for encryption keys. Unlike a desktop wallet, all transaction data is stored on external services.

Essentially, mobile wallets are a lighter version of desktop wallets and are available on several types of devices. Together, they form one large class of software wallets.

The most popular and reliable software wallets: Bitcoin Wallet, Jaxx, Blockchain, Electrum.

Web wallet is a service that stores your encryption keys on its server.

It is considered the most popular type of online wallets as it offers additional tools for working with your cryptocurrency asset: investing, trading, loans, etc.

This type of wallet suits those who often buy and sell cryptocurrency, primarily traders and miners.