Cryptocurrency Wallets are regarded as an vital part of crypto universe. In the earlier article series we understood the basic understanding of cryptocurrencies, what different type of technology they offer. In this article we would understand the basics of cryptocurrency wallets, its different emerging types.
Cryptocurrency Wallets or Bitcoin Wallets
Cryptocurrency wallets are the wallets that store your private key. They keep the crypto safe and accessible. They can grant you to send, receive and spend cryptocurrencies. Cryptocurrency wallets provides safety to the cryptocurrency. For transaction purpose cryptocurrency wallets stored. Cryptocurrencies have private keys and public keys. The holdings that are stored in the blockchain can be assessed by using the private keys.
The public key is the key that allows you to receive all the crypto transactions that are taking place. With the private key cryptographic code paired. The private key has all the power to unlock the transactions. Once the transactions are unlocked anyone can transfer transactions to the public key. The public key that receives the transaction is usually regarded as the address that is a shortened form of the public key. One can share the public key without hesitation in mind. For illustration a donation page has been developed for the content-creators or charities with the public key that has crypto address online. The private key required to unlock and access the donated funds.
Private key: –
There is one crucial advice that don’t share the private key with anyone. The private key has the capacity to prove the ownership. It also can spend the funds associated with the public key. Private key is astronomically large number. The number is large for the good reason. The wallet secured with a password that is the private key. The private key plays a major role at the time of login. Once the process of login finished the users send cryptocurrencies without any password. At the time of login these keys required. after login into the wallet user can send crypto without a password or pin. A lot of pressure involved in opening the wallet. It gives more security to the password and the pin provided. At the time of account opening of the wallet the time set.
Additionally, the users are given the right to change there wallet providers with the help of using the private keys. Users can change wallet providers using private keys. Nominal fees charged to users. But the users can change there wallet provider. It requires some fees but there is an option for the user to change wallet provider.
There are 4 main types of Cryptocurrency wallets:-
- Custodial and
The Coinbase, Cryptonator, Coinomi regarded as the top online cryptocurrency wallets. These wallets provide an online or app user interface for using the different cryptocurrencies that are available in the wallet. They make sending, receiving andusing your crypto as using any payment system, online bank account etc.
The offline cryptocurrency wallets are the physical wallets that comes in the form of pendrive. It also comes in the form of SSD like hardware. The hardware can store the cryptocurrencies in them. In the case of offline wallet, when computer disconnected at the same time the hardware not connected to any device. Offline wallet regarded as the most secured wallet.
Paper wallet is the form of offline wallets. The key written on physical medium like paper. This ofcourse makes using your cryptocurrencies harder. Because as a digital money it can only be used through the help of internet.
Custodial Cryptocurrency Wallets
Additionally, the right to control the wallet keys given to another party. In other words, the users trust the third party in securing the funds. The wallet providers handles custodial crypto wallets. The wallet provider does not give full control over the wallet. Exchange controls the crypto exchanges. Custodial wallets do not share the private keys of individual accounts.
The good thing is users don’t have to worry about private keys hardware wallets anything. The bad thing is less secure in the terms of hacking.
Non-Custodial Cryptocurrency Wallets
Non-Custodial crypto wallets mean wallet provider gives all control of wallets to the user with private keys. Users can change wallet providers using private keys. The good thing is security. The security improved when the private keys stored offline. The bad thing is if the user forgets private keys, then all funds can be lost no one can recover funds from those accounts.
In offline wallets, there is an issue that if the user forgets private keys or passwords accessing those wallets then they cannot be used or open. The multiple cases involved where people forget private keys and passwords lost and so the money lost. There is no chance of recovery. So, keep passwords and private keys.
By accessing private keys different types of hacks committed. If anyone accesses the user’s private keys then the hacker can change wallet provider or if 2-factor authentication is not applied hacker can spend all cryptos.
In coming articles we will learn about crypto exchange and their types.