What is a Wallet for Cryptocurrency?
A wallet for cryptocurrency is not an actual wallet. It is a software program that stores public and private keys. The software also interacts with blockchain to help users send, receive and monitor their balance. The cryptocurrency wallet, also called a digital wallet, don’t store the cryptocurrency.
To send and receive digital currency, the wallet must be unlocked by matching the private key a public address. If the private and public keys match, the sender’s balance decreases and the receiver’s wallet increases. They don’t actual send or receive digital coins.
Types of Digital Wallets for Cryptocurrency
A cryptocurrency holder has a lot of digital wallets to choose. Wallets are separated by categories according to how the digital currency is accessed. The three categories are: software, hardware and paper.
Software Digital Wallets is Online
For a cryptocurrency holder wanting to use an online wallet, they can choose a desktop, mobile and online. A desktop wallet is installed on a laptop or PC. It can only be accessed on the downloaded device. The desktop wallet is more secure than the other online wallets. However, if a PC or laptop has a virus or gets hacked, the cryptocurrency holder may lose all their money.
A mobile digital wallet is downloaded to the person’s phone. It is an app that is more convenient. The person can use their cryptocurrency immediately at retail stores. An online digital wallet runs on cloud. This means the wallet is accessible from any location and any computing device. Private keys are stores and controlled by a third party. This makes the wallet more vulnerable to theft and cyber-attacks.
Paper Wallets Provide a Higher Level of Security
A paper wallet is a physical printout or copy of a cryptocurrency holder’s private and public keys. The wallet can also refer to securely generated and then printed keys. To spend money, a person must transfer their cryptocurrency from paper to a software wallet. This is called sweeping and can be done by scanning a QR code or private keys.
Hardware is the Security Digital Wallet
A hardware wallet is stored a cryptocurrency holder’s private keys on a device like a USB port. It can be used to make online transactions. The purpose of a hardware wallet is to keep the digital currency offline. This provides greater security because a hacker can’t get access to the currency.
The wallet is compatible with several web interfaces. It can also support various currencies. All the cryptocurrency holder does is insert the device into internet-enabled device or computer. They provide a pin, send currency and confirm.
Wallets for Cryptocurrency are Secure
These wallets are the only way to send, receive and monitor cryptocurrency. The level of security really depends on the type of digital wallet a person uses. Choosing the right service provider also plays an important role in providing security for wallets. Many people who use an online wallet also back up their currency on a hardware wallet, so they don’t lose their money if they are hacked.