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Basic Cryptocurrency, Understanding the Crypto Wallet and How It Works

Crypto wallet or cryptocurrency wallet is software that allows you to save, send, and receive digital assets. Similar to fiat currency that has a bank to store the money, a cryptocurrency wallet will enable you to do a similar thing. When users want to send or receive Bitcoins to their account, they will save it first in the cryptocurrency wallet and use it to make a transaction in the future. The main difference in using this cryptocurrency wallet is that you do not need a third-party to manage your account as a bank does. A cryptocurrency wallet is a primary key to cryptocurrency transactions. It has a similar role as a key in a blockchain car. Without this, the car will not run. Besides, without the wallet, there will be No. prove of ownership of the digital assets. More information click here: https://www.crypto.nl.

If you are still vague about what cryptocurrency wallets actually are, this article will explain to you about how cryptocurrency wallets work, how does it manage digital currency, and how to bolster cryptocurrency wallet security.

What a crypto wallet does

Source: computerworld.com

A cryptocurrency wallet is not only focused on tracking the encryption keys for any digital transactions but also saves addresses on the blockchain in which the assets stay. Once the owner lost their address on the wallet, it also means that they lost their digital assets, based on the maven security of Linux Foundation’s Hyperledger Project, David Huseby. Basically, there are two types of wallets. Those are hardware and software, which are also known as the hot and cold storage wallet. Hot wallets allow you to access your assets through the internet service such as Coinbase, Binance, and so on. This further action of this is managing the users’ wallet on the mobile or computer device. You can also print out the keys as QR codes by using the paper wallet generators.

Differs to hot storage wallet, cold wallet storage allows you to download and store the key by offline on a USB or a smartphone. If you want to do this, you can use Dash QT and Exodus.io because those two applications are the most popular cold storage wallet. Besides, cold storage can be in the form of a device that you can buy, which inside the device has already installed a certain software. You can get this kind of device from Ledger or Trezor.

If you still confused to choose the best cryptocurrency wallet for you, here is the list of the best cryptocurrency wallet that you can use to manage your digital assets:

  • Exodus

This cryptocurrency wallet software provides a service that can store several types of coins such as Litecoin, Bitcoin, Dash, and many more. What makes Exodus placed as the best cryptocurrency wallet is that Exodus user-friendly. You can identify the latest market information and the coin value. Moreover, Exodus allows you to sell and buy the cryptocurrencies inside your own wallet by using their tool called ShapeShift API.

  • Bread Wallet

If you own Bitcoin and want to access it on your mobile phone, then use the Bread Wallet. The Bread Wallet creator claims that it is highly secured because it is directly connected to the Bitcoin blockchain. No need to worry if you are a beginner as this application is easy to use. You can also create a QR code of your wallet address in case you want to send your assets to other and you can even use Bitcoin to pay your real expenses in the real world. Even BreadWallet is totally free, and you can only use Bitcoin in this wallet.

How does it manage digital currency

Source: infinitywallet.io

Even a cryptocurrency wallet has a similar role as a bank account in a fiat currency, and its slights are different in the case of storing the assets. Digital assets are not saved in a physical wallet as digital assets are abstract and have no physical form. Rather than that, the blockchain has the transaction records of your digital assets that have to manage the funds either for the public or private key. If you are still confused about it, let’s pay attention to the explanations below.

If you own a crypto wallet, there will be an address on it. The address is similar to the bank account number in traditional currency. You do not need to be insecure if someone has already known your address, as it may be necessary in case they want to send digital assets to your account. In the cryptocurrency world, you can give your address, and it is impossible to have the exact same wallet address with other people in the world. Besides, you can make as many as wallet addresses as there are no limitations to it. If you never know how Bitcoin address seems like, below is the example of the Bitcoin address that is believed owns by the Bitcoin creator, Satoshi Nakamoto:

1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa

The address is very complicated and consists of letters, numbers, upper case, and lowercase. With the blockchains’ transparency, you can take a look at the amount of money in a certain cryptocurrency wallet. One thing that you need to know is that the crypto address has no ‘name’ on it, and no one knows who the people behind the wallet is. That is why blockchain is called pseudonymous.

How to bolster crypto wallet security

Source: smartdatacollective.com

Having digital assets will not always be safe as they can be attacked by scams or other malware. In some cases, you need to convert your digital assets to fiat money to store your keys on the cold wallet. Then, you need to make a copy of the keys and store it in a deposit box or another highly-secured place. Besides converting your digital assets, enhancing your wallet security can be done by creating two-step authentication before accessing your wallet.

Another thing you need to consider is installing your wallet on your mobile phone. Experienced hackers can steal your SIM identity and access your wallet through the mobile phone. That is why maximizing your mobile phone security is crucial or if you think that installing on your mobile phone is too risky, use it on the desktop then.

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