Last updated on June 15, 2019
A wallet is a software mechanism which is used to securely send, receive, store digital assets such as Bitcoin, Ethereum, Litecoin, etc. There is a different kind of cryptocurrency wallet allow transacting with related blockchain straight-forward using the private and public key. These wallets the same as a traditional bank but wallet funds completely controlled by its user.
How does wallet works
Using wallet directly we can transact with blockchain secure way. When generating the new cryptocurrency wallet, there are two different key which is private and public key. When we want to transact with blockchain need a private key. Using this private key we can enter the wallet, check and update the wallet and send funds from the wallet where the private key should not disclose to the public. A public key is used to receive the funds to the wallet where this key can disclose to the public.
Type of cryptocurrency wallets
The web wallet or Online wallet: These kinds of wallets directly run on online internet servers. This wallet type may control the private and public key by wallet user or third parties. These wallets may connect directly to the internet and the major risk involved in phishing attacks. To prevent phishing attacks, We should check the original domain and should aware of malicious emails from the hackers. Most popular bitcoin web wallets are Blockchain.com wallet and Coinbase wallet.
Desktop wallet: This downloadable software program run on PC, Mac, Linux OS. Regularly update should make to secure and sync with blockchain and It is a painful task. The desktop wallet has good security compared with web wallets because it is not directly connected to the internet but still phishing attacks can come. Most popular bitcoin desktop wallets are Electrum, Bitpay, Bitcoin core.
Mobile wallet: This type of wallets like a mobile app which is running on Android and iOS devices. This wallet is easy to use and QR can be used to send funds from the wallet easily. Most popular bitcoin wallet apps are BTC.com wallet, Jaxx, Bitpay, Mycelium.
Hardware wallet: This is a physical device which stores various type of digital assets. If we need to transact, need to connect the device to the PC or Mac through the USB port. Private key securely stored on this device and It takes greater security. Trezor is the most popular hardware wallet out there.
Paper wallet: This is a paper where private and public key print on it as a QR code or as text. These two addresses can generate through online web services and print it on paper. A paper wallet is the most secure wallet among others but also, It can lose. We can generate bitcoin paper wallet through Bitcoinpaperwallet website.
Wallet security facts
- Don’t lose private key: If you lose private key eventually lose all funds on it. Please consider storing your private key secure location
- If you use an online wallet, check domain address before taking any actions on your wallet then you can avoid phishing attacks
- Update the wallet as soon as possible
- Don’t keep a lot of funds which you don’t own private key such as exchanges. If hack happens on exchanges and your funds go danger also, turn on two-factor authentication
Multi-currency wallets support more than one digital assets where users can transact one ecosystem. There is no private key for this kind wallet and wallet access through a unique password or key phrase. This key phrase should keep securely.
Conclusion: Cryptocurrency wallet play a major role in this emerging industry. The primary function of the wallet is sending, receiving and storing digital assets secure way. In this article has discussed very few details of wallets, wallets functions, and wallets types and how to use securely in simply way.