What is Wallet?
Wallet plays an important role in technological advances in cryptocurrency. We cannot forget that Bitcoin and other cryptographic systems work completely decentralized. That is where the importance of wallets lies since they allow absolute control to the user who acquires them. The wallets will enable you to make a balance inquiry, operate with cryptocurrencies, or view the executed operations. The security that wallets have, unlike banks, is that they allow the user to sign transactions with full control of their private keys.
In this sense, wallets will continue to evolve in this technological era. Although they are compared to common wallets, their difference lies in their storage since they store keys instead of containing money. Nowadays, the use of virtual currencies is frequent in society, and this mechanism is necessary to take full advantage of the advantages offered by crypto assets. For this reason, when it comes to cryptocurrencies, choosing how to store them is crucial. Hence, choosing a safe and reliable wallet is necessary.
What is a Cryptocurrency Wallet?
Like the normal wallet you probably carry in your pocket or bag now, a wallet is mainly used to store cryptocurrencies. However, unlike its traditional counterpart, it also allows transactions, sending, and receiving funds. In practice, a cryptocurrency wallet is a file that contains private keys and addresses for transfers. Keys are unique character strings (passwords) used to confirm operations performed.
Addresses are strings of 25 to 34 digits or characters that identify a specific network user (for example, the Bitcoin network). They serve a similar function to bank account numbers: you provide them so someone can send you funds. The difference is that you can use a different one for each transaction. You can store your virtual funds in different ways depending on the type of wallet through your computer or mobile.
How do cryptocurrency wallets work?
There is no doubt that the wallet provides security to users through blockchain encryption techniques. Wallets are highly developed in technology since they use cryptographic security mechanisms to sign, access, and encrypt transactions, blocks, and chaining. It allows user value movements to be carried out in the wallet without third parties intervening. In other words, it decentralizes management and offers its participants a record book that remains secure and reliable over time.
The wallets are made up of a public key used to receive cryptocurrencies. This key is made up of an address of numbers and letters. As its name indicates, it is public, so it can be shared with other users. Likewise, the private key is of the highest importance, consisting of a series of cryptographically generated numbers. It allows confirmation of outgoing transactions and mobilization of funds exclusively by the owner. In conclusion, both keys are related to the wallet since the public one is always generated from the private one.
Are wallets safe?
One of the most important aspects and the objective of a wallet is its security. Since they are digital files, no two addresses are identical. It guarantees no possibility of another user intervening in their funds and vice versa. Another point in favor of a wallet's security is that the addresses are made up of combined numbers and letters, which do not reveal the user's identity.
However, just as there are numerous aspects of the wallet to be safe, it must be taken into account that many types of wallets are available. This variety in digital wallets means that some are not as safe as others, and each has its risks. Therefore, it is necessary to adopt security measures to protect cryptocurrencies. For example, a desktop or mobile wallet will be vulnerable if it is not backed up regularly.
What is the utility of the wallet?
A wallet is essential when managing cryptocurrencies. It is a digital tool to store, send, and receive crypto assets such as bitcoin between users. The wallets can be both through software and hardware. It is possible because they can be managed through an app or hardware, where the public and private keys will be stored and managed.
On the other hand, a difference in its usefulness for the money exchanged in cash or through ATMs is how the wallets are managed. That is, through records in the blockchain, through interconnected blockchain nodes around the world. For example, you can use a wallet instead of a physical card for online purchases, apps, or physical stores.
How to choose the best wallet?
It is usually a recurring question by users, but it should be noted that, just as there are many types of cryptocurrencies, the universe of wallets is also extensive. The choice of the wallet depends on the number of transactions and operations you want to carry out and how much money is handled. However, the choice also varies in terms of the user's needs regarding privacy, freedom of transfer, commissions, or level of security that they wish to generate, among other aspects.
'Cold Wallet' without an internet connection is estimated as one of the safest. Hackers cannot access it as they are not hosted on the web. Despite the above, it also has risks. Since a virtual copy is not found in the cloud, it can be lost. Another option is 'Hot Wallet' or an internet connection based on programs designed to manage cryptocurrencies from computers and mobile devices. These provide ease of management. However, it is advisable to reinforce security with passwords.
What are the most important wallets on the market?
There is a wide variety of cryptocurrency wallets competing in the market. These services are based on offline and web applications. Offline you can find Ledger Nano S. This is one of the most popular and secure hardware wallets for its security, as it is compatible with more than 1,500 cryptocurrencies. Likewise, it is worth highlighting Trezor, the world's first Bitcoin hardware wallet. Its popularity lies in its application to manage passwords and compatibility with many cryptocurrencies.
We also find a variety of wallets on the web and app. Although software wallets are not as secure as hardware wallets, they can be downloaded for free. Among them is Trust Wallet, a mobile application that has fame and is simple. It is because it is one of the first to be part of the cryptocurrency wallet market. Similarly, Exodus offers attractive privacy settings. It is practical, simple, and considered the best wallet for Bitcoin.