About crypto wallets
A crypto wallet is software with access to your cryptocurrencies. Its function is the same as that of an ordinary wallet where people keep their money and bank cards.
Instead of containing physical items, a crypto wallet stores encryption keys with access to your digital assets. It also serves as an interface that lets you manage your account.
How crypto wallets work
A crypto wallet consists of a set of public addresses and private keys. These are long sequences of characters that provide full access to your account.
A public address is the address of your account on the blockchain network, its unique identifier, which is available to all users. A public address is crucial for you to receive cryptocurrencies from the sender.
A private key, on the other hand, is known only to you and allows you to confirm a transaction.
There is also a seed phrase. It is a series of 12 to 24 words that allows you to recover a forgotten private key.
It is important to remember that without your seed phrase and private key, you will forever lose access to your account
Types of crypto wallets and how to open one
1. Cold (offline storage)
A paper wallet is a sheet of paper containing a seed phrase, a private key, and a QR code to the private key.
Simple steps to create a crypto wallet:
- Find a crypto wallet developer (bitaddress.org is perhaps the most popular one).
- Register.
- Download the file that generates keys.
- Important! Disconnect your device from the Internet and only then generate keys.
- Print your keys on paper and put them in a safe-deposit box.
A hardware wallet is a special device containing the keys to your account. It resembles a flash drive that can store several cryptocurrencies.
Steps to get a hardware wallet:
- Purchase the device, register it on the manufacturer's website, and select a PIN code.
- Receive and write down a seed phrase on a sheet of paper. This way you will be able to restore your wallet in case of loss.
- Install software on your PC to manage your account.
- Connect the device to your PC, run the program, and enter the PIN code.
The Most trusted hardware wallet brands are Trezor, Ledger, and Keepkey.
2. Hot (online storage)
A desktop wallet is software installed on your PC. It can weigh up to several gigabytes as it downloads information on all crypto transactions. Therefore, it would be wiser to download software to a removable SSD drive.
Steps to create a desktop wallet:
- Download software with access to the crypto wallet on your PC.
- Register, activate the wallet, and come up with a PIN code.
- Important! Save the seed phrase on a third-party carrier.
A mobile wallet is an app for your smartphone. In this case, your device serves the function of storing encryption keys. Meanwhile, third-party services keep all transaction data.
In fact, mobile wallets are the lightweight version of desktop wallets. They are available for several types of devices at once, collectively known as software wallets.
The most popular and reliable software wallets are Bitcoin Wallet, Jaxx, Blockchain, and Electrum.
A web wallet is a service that stores your encryption keys on its server.
It is considered the most popular type of hot storage as it offers additional tools for your crypto operations such as investing, trading, borrowing, etc.
It is commonly used by traders and miners who often buy and sell crypto.
