What is a Crypto Wallet?

If you want to get involved in the world of cryptocurrencies, you will need a crypto wallet in order to do so. 

What is a Crypto Wallet?

A crypto wallet is a program or application which is programmed to hold or store the keys that enable you to access your cryptocurrencies. Because cryptocurrencies are fully digital, they don’t actually physically sit in your crypto wallet. What is in your wallet is an encrypted message which contains the location of the cryptocurrency you own on the blockchain. You can use a crypto wallet to send, receive, and spend cryptocurrencies like Bitcoin and Litecoin. 

Types of Crypto Wallets

There are a few different types of crypto wallets on the market. Below are the most common types.

Hardware Wallet

A hardware wallet is similar to a flashdrive, and needs to be plugged into your computer to work. This wallet stores your coins offline and is generally considered the safest wallet type as it can’t be hacked, this is what is known as a cold wallet. 

Software Wallet

A software wallet can also be called an online wallet, and it refers to an app or online wallet which you only need the internet in order to access. These wallets are slightly less safe than a hardware wallet as they can be hacked, however they are usually more user-friendly, and less likely to be lost. 

Exchange Wallet

Whenever you buy cryptocurrency on an exchange such as Coinbase or Binance, the exchange will provide you with a wallet on their platform to store your cryptocurrency. This is the least secure wallet of the three, as exchanges are often subject to hacks, and owners of exchanges have been known to disappear and take user funds with them. Exchange wallets are also known as hot wallets. 

How Do You Use A Crypto Wallet?

How you use a crypto wallet will somewhat depend on the type of wallet you decide to have. But the general use of a crypto wallet is the same across the board. If you wish to receive a cryptocurrency, you will reference your wallets public key or public address. You can give this address to a friend, and they can send you cryptocurrency with just that address. It is okay to share this address as it doesn’t allow access to your coins. 

If you are sending cryptocurrency to a friend, you will need their public address as well as your private key. This private key is an address which references the location of your cryptocurrency on the blockchain and it is what you will use to log into your chosen wallet. As the title indicates, this address should be kept private, because if someone steals it, they can steal your cryptocurrency. The wallet you have chosen will walk you through the sending process with your friend’s public key, and within a matter of minutes your friend will receive the cryptocurrency you sent!

Navigating the world of cryptocurrency wallets can be difficult, so if you need more information about cryptocurrencies and stablecoins, visit our blog.