What are wallets (cryptocurrency wallets) and what is their importance?
The ‘ wallets’ (cryptocurrency wallets) play an important role in technological advances. We cannot forget that Bitcoin and other cryptographic systems work completely decentralized. And that is where the importance of the ‘wallets’ lies, since they allow absolute control to the user who acquires them. The ‘ wallets’ (cryptocurrency wallets) allow you to check your balance, operate with cryptocurrencies or view the operations executed. 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 instead of containing money, they store keys. Today, 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 cryptocurrency , choosing how to store it is crucial. Hence, the need to choose safe and reliable ” wallets” (cryptocurrency wallets) .
What is a cryptocurrency Wallet?
A ‘ wallet’ (cryptocurrency wallet) just like the normal wallet that you probably carry in your pocket or bag now is mainly used to store virtual currencies. Unlike its traditional counterpart, however, it also allows for transactions, i.e. sending and receiving funds . In practice, a cryptocurrency wallet is a file that contains private keys and addresses to make transfers. Keys are unique strings of characters (passwords) that are used to confirm operations performed.
Addresses are strings of 25 to 34 digits or characters that identify the user of a specific network (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’ (cryptocurrency wallet ) that can be through your computer or your mobile.
How do cryptocurrency wallets work?
There is no doubt that ‘ walle’t (cryptocurrency wallets) provide security to users through blockchain encryption techniques. The ‘wallets’ are highly developed in terms of technology, since they use cryptographic security mechanisms to sign, access and encrypt transactions, blocks and their chaining. This allows the ‘ wallet’ to carry out movements of value between users without third parties being involved in the process. In other words, it decentralizes management and offers its participants a record book that remains secure and reliable over time.
However, the ‘wallets’ are made up of a public key that is 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 extremely important , which is made up of a series of cryptographically generated numbers. What allows confirming the exit transactions and mobilizing the funds exclusively by the owner . In conclusion, in the ‘wallet’ both keys are related, since the public one is always generated from the private one.
Are wallets (cryptocurrency wallets) really 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. This gives the user the security that there is no possibility of another user intervening in their funds and vice versa. Another point in favor of the security of ‘ wallets’ (cryptocurrency wallets ) is that the addresses are made up of combined numbers and letters , which does not reveal the identity of the user .
However, just as there are innumerable aspects of the ‘ wallet’ (cryptocurrency wallet) to be safe, it must be taken into account that there are many types of wallets available. This variety in digital wallets means that some are not as safe as others and each one has its own 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 on a regular basis.
What is the utility of wallets (cryptocurrency wallets)?
The use of ‘wallets’ , portfolio, wallet or digital purse is essential when managing cryptocurrencies. In this way, we can say that 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. This is possible because they can be managed through an app or through a kind of ‘pendrive’, where the public and private keys will be stored and managed.
On the other hand, a difference in its utility with respect to money that is exchanged in cash or at ATMs is the way in which the ‘wallets’ are managed. That is , through records in the blockchain, through interconnected block chain nodes around the world. For example, you can use a ‘ wallet’ (cryptocurrency wallet) instead of using a physical card for purchases either online, in apps or in physical stores.
How to choose the best cryptocurrency 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. For the choice of the ‘wallet’ (cryptocurrency wallet ) depends on the number of transactions and operation that 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 you want to generate, among other aspects.
‘ Cold Wallet ‘ or ‘wallets’ without internet connection, also known as cold wallet, is considered one of the safest. This is because it cannot be obstructed by hackers, since 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 ‘wallets’ with an internet connection that reside in 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 (cryptocurrency wallets) on the market?
There is a wide variety of ‘ wallets’ (cryptocurrency wallets) for cryptocurrencies that compete 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, since 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 password management app and compatibility with a wide range of cryptocurrencies.
On the web and app we also find a variety of wallets. Although software wallets are not as secure as hardware ones, they can be downloaded for free. Among them is Mycelium, which is a mobile application that, in addition to being simple , is notorious. This is because it is one of the first to be part of the cryptocurrency wallet market. Similarly, Copay offers attractive privacy settings. It is practical, simple and considered the best wallet for Android.