Written by - Ankita Ghosh
Uploaded on - 30/01/2022
A cryptocurrency wallet is an application that serves as your crypto wallet. It is known as a wallet as it is used similarly to a wallet you put your cash and cards in. Instead of holding these physical objects, it keeps the passkeys you use to sign up for your cryptocurrency transactions and provides the interface that allows you to access your crypto.
The first wallet was owned by Bitcoin's developer, Satoshi Nakamoto. The second wallet belonged to Hal Finney, who corresponded with Nakamoto and reportedly was the first to run the Bitcoin client software wallet. Nakamoto sent him 10 bitcoin as a test, and the cryptocurrency craze began.
Cryptocurrency wallets are software applications on computers or mobile devices such as phones or tablets. They use an internet connection to access the blockchain network of the cryptocurrency you're using.
Cryptocurrencies are not "stored" anywhere - they are bits of data stored in a database. These fragments of data are scattered throughout the database; the wallet finds all of the bits related to your public address and sums up the amount in the app's interface.
Sending and receiving cryptocurrency is much easier using these apps. You can send or receive cryptocurrency from your wallet using many methods. Typically, you enter the recipient's wallet address, select an amount to send, sign the transaction using your private key, add an amount to pay the transaction fee, and send it. Receiving is even easier—the sender enters your address and follows the same routine. You accept the payment, and the job is done.
Two main types of wallets ~
Custodial wallets are hosted by a third party that stores your keys for you. This could be a company that provides business-class data security systems, businesses use to preserve and secure data. Some cryptocurrency exchanges offer custodial wallets to their customers.
Non Custodial wallets are wallets in which you take responsibility for securing your keys. This is the type of cryptocurrency wallet on most devices. Two subcategories of wallets ~
Three subcategories of wallets ~
Wallet security is important, as cryptocurrencies are high-value targets for hackers. Some safeguards include encrypting the wallet with a strong password, using two-factor authentication for trading, and storing any large amounts you have offline.
There are various wallets to choose from with many options. It is best to read as many reviews as possible to find one that fits your needs while ensuring that your keys are secure.
The most secure crypto wallet is the one that has no connection on its own or to a device with internet access. It also should not deny you access to your crypto because the custodian has financial issues. Many so-called "secure" wallets have wireless connection technology that can be accessed by determined cybercriminals.
Yes. You cannot access your cryptocurrency without your private keys and an interface that accesses a blockchain. All wallets can store keys, but only hot wallets can access the blockchain, so it's important to keep your keys off your hot wallet until you need them.