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What’s a Crypto Wallet? Secure Storage of Cryptocurrency

Crypto Wallet

Cryptocurrency performs the same functions as fiat money and has similar properties. Digital coins can be earned, spent, exchanged, and accumulated. This means that the valuable asset must be kept and protected from thieves. For these purposes, crypto wallets have been developed.

What Is a Crypto Wallet

A crypto wallet is a specialized software that is installed on a computer or provided by third parties through a website or mobile application. The program contains a private key. The crypto wallet displays your balance and provides the ability to make payment transactions in any direction.

The private key is a secret code that generates your signature confirming the right to use the cryptocurrency stored in the wallet. The private key is stored either on your computer or on a third-party remote server.

Types of Crypto Wallets

At the place of physical location, programs for storing cryptocurrencies are divided into several types:

  • Desktop wallets
  • Mobile applications;
  • Online wallets;
  • Special devices;
  • Paper wallets.

In addition, a distinction is made between heavy and light desktop wallets. Heavy wallets involve downloading the entire blockchain and updating regularly. The lightweight program stores only the history of your transactions, and it takes all the rest of the information on third-party resources.

Desktop Crypto Wallets

The main advantage of desktop software is that your assets are kept as secure as possible. The program creates an account and generates a private key for storing funds and managing the account.

The main disadvantage of desktop programs is the need to download the entire blockchain history at the first start. This requires about 10 GB of free disk space and a lot of time. However, this is a relative disadvantage, since in this case the entire wallet code is available only to you, and third-party access to it is completely excluded.

When choosing a desktop crypto wallet, pay attention to the currencies that it supports, since, in addition to highly specialized programs, there are already multicurrency ones, with the ability to open several accounts in different cryptocurrencies.

Mobile Applications

A special mobile application is installed on your smartphone. Obviously, you can now use your account at any time and anywhere in the world. Mobile applications do not download the entire history of the blockchain, but at the same time, they are much inferior in security to desktop programs.

Electronic Web Wallets

Many reputable exchanges offer this service. It is important to know that there are two types of such software, some work on the network, and some serve as a link between your accounts, accessible from a computer and a smartphone.

This way you can access your funds from any device. At the same time, they are stored on a third-party server and can be stolen by cybercriminals.

Specialized Devices

A hardware wallet is a microchip embedded in a small device like a flash drive. Such a device can be connected to a computer or smartphone. It can store several cryptocurrencies, and the functionality often provides for the possibility of internal exchange of cryptocurrencies. With multiple accounts, you can exchange Doge to Shib or other coins available on the device without using third-party services.

The hardware wallet is invulnerable to cybercriminals, but if it is lost or damaged, it will be impossible to restore access to assets.

Paper Wallet

This is a printed document that contains your public and private keys. Additionally, QR codes can be applied to it for quick scanning of keys. The main disadvantage of a paper wallet is the media’s susceptibility to physical wear and tear and the risk of losing the document without the possibility of recovery.

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