What is a Cryptocurrency Wallet?
What is a crypto currency wallet? It is a software program for storing public and private keys and interacts with different blockchain to allow users to send and receive online currency and also monitor their balance.
Although there are so many people that use digital currency wallets today, there is still a lot of confusion on how they work. As opposed to traditional wallets, online wallets do not store currency. These currencies are neither stored anywhere nor do they exist in any physical form. It is only the records of transactions that exist and are stored on blockchain.
When someone sends you cryptocurrency, they are signing off ownership of those coins to the address of your wallet. The private key in your wallet has to match the public address the currency is assigned to if you want to spend the coins and unlock funds.
If the private and public keys match, your digital wallet balance will increase while the sender’s balance will decrease. So do not expect a real exchange of actual coins. The proof of the transaction is its record on blockchain and the change in balance in the wallet.
Various types of wallets offer different ways to access and store your online currency. There are three distinct categories of wallets; paper, hardware, and software. Software wallets are online, mobile or desktop.
How secure your wallet is, depends on its type (hardware, online, desktop, mobile, paper) and your service provider. It is riskier to store currency on a web server compared to offline since offline wallets cannot be hacked. However, regardless of the wallet you are using, you should be careful because if you lose your private keys, you lose your money as well. In another case, you can be scammed.
1. Backup your wallet. Only store small amounts online and keep the rest in a highly secured environment.
2. Update your software regularly (both on your mobile and computer).
3. Add extra security layers.
Bitcoin is the most popular cryptocurrency, but many others (alt-coins) have come a long way. If you would like to have a variety of digital currencies, you can do so without having a different wallet for each one. There are multi-currency wallets that allow you to have several currencies in the same wallet.
Some transactions require you to pay a fee while others don’t. Alternatively, you can set your fee. Either way, the fees are usually too small.
Wallets are pseudonymous. Your wallet is tied to your identity, but your identity is not public. However, your wallet address can trace back to your identity.
There are many options for you. But you need to know how you are going to use it first before making a decision.
The following are examples of great wallets that you may want to try out.
• Bread wallet—it is available on Google Play and the App-store.
• Mycelium—this one offers you total control over your bitcoins.
• Exodus—still new and only available on the desktop.
• Copay—it provides a multi-signature feature and you people/partners can funds.
• Jaxx—for people looking for a multi-currency wallet.
• Ledger Nano
• Green Address
• Blockchain (dot) Info