Without cryptocurrency wallets, we will not be able to access, store, send or receive digital currencies such as Bitcoin, Ethereum, Litecoin, and much more. Bitcoin was primarily created as a decentralized currency to give people the full control over their own money. It is necessary to have your own cryptocurrency wallet for storing and managing your crypto assets.
What is cryptocurrency wallet?
Unlike a physical wallet, cryptocurrency wallet is a software program that enables you to store the private and public keys and interacts with various blockchains to allow users to send, receive, and monitor digital currencies. Actually, the digital currencies are only records of transactions stored on the blockchain.
How it works?
When someone sends cryptocurrency to another no actual coin exchange takes place but the sender signs off the ownership of the coins to the receiver’s wallet address. The receiver can only spend these coins if they have the private keys that match with the public address the currency is assigned to. When the public and private keys matches, the digital wallet balance increases.
Types of cryptocurrency wallets
There are three types of cryptocurrency wallets that are in use — software, hardware, and paper wallets.
Software wallets — software wallets are available in three forms: Desktop wallets (the wallets that are installed on a laptop or a PC, and can be accessed from a single computer. They are highly secure, but any unfortunate virus attack might wipe out them out or render them inaccessible), Online wallets (the wallets that run on the cloud and can be accessed from any device; your keys are stored online), Mobile wallets (the wallets that run on an application present on your smartphone; they are convenient than the desktop wallets as they can be used anywhere on the go).
Hardware wallets are compact physical storage devices like the USB which is used for storing the private keys. They impart an enhanced security to the keys as they enable offline storage. These wallets can be used for different digital currencies as well.
Paper wallet is a piece of software that securely generates the keys that are ready to be printed. While transferring currencies on your paper wallet, you just transfer coins from your software wallet to the public address of your paper wallet.
There are many places on the web browsers, as well as the app stores where you can get yourself a secure cryptocurrency wallet as per you needs and usage. You can download them from online stores as well.
How to secure your cryptocurrency wallet?
The security of a cryptocurrency wallet depends on the wallet type and service providers e.g. the online wallets have more risks than the offline wallets as they may fall prey to hackers. The most important thing about any type of cryptocurrency wallet is that the user should never forget or lose their keys because losing it will mean you can never ever access your cryptocurrencies. Hence you must always keep your software up to date, back up your wallet and add additional security keys.
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