What Is A Cryptocurrency Wallet?
Updated: May 10, 2021
In our previous post, we just touched on the topic of cryptocurrency wallet or virtual wallet, so we thought it would be a great thing to dig a little deeper and throw some light on the idea of Cryptocurrency wallet in a little more detailed manner.
If you have been paying a little bit of attention to the world of cryptocurrency, you must have heard many people talking of the thing called Cryptocurrency Wallet or Virtual Wallet. So what is the hell is this thing called Cryptocurrency Wallet?. A Cryptocurrency wallet is a special address that can be used to receive cryptocurrency tokens like Bitcoin, Litecoin, Ethereum, Ripple, etc. Idea-wise, it is very much similar to a postal address or maybe even an email address. Every cryptocurrency token out in the market has its own type of wallet and is not usually compatible with each other which means that you can't send Ripple to a bitcoin address for example.
An interesting thing about cryptocurrency wallets is that anyone can have as many wallets as they wish and there is no way to find the person using an address. Most of the blockchains available in the market make the address information, history of the transactions done on the address, and amount of cryptocurrency it holds publicly accessible. So everyone can read what's is there in the address but only the owner can do the transactions.
Cryptocurrency on a given address is used with the help of a private key which means that tokens or cryptocurrency are sent from address A to address B after signing the transaction with this private key, after which it is sent to the blockchain network for confirmation of the transaction. Remember that in cryptocurrency, assets are not transferred like the normal banking system. To understand simply, let's consider a person A who has $100, and person A transfers $100 to person B in front of 100 witnesses, now the witnesses will inform every new transaction that person B has $100 and person A has $0. If some witness makes a false claim, the witnesses will take it into account and correct the false witness. To understand in detail you can check how blockchain works.
Since you have some idea of the cryptocurrency wallet now, let's find out the different ways to get your crypto wallet. There are four main ways to get your crypto wallet:
2) Use a hardware solution like Ledger Nano X, which is basically a USB stick-like device that holds your private key and can accommodate multiple addresses for different types of cryptocurrencies.
3) Create your own key and address with the help of the software tool of the crypto token which is of your interest. For example Electrum for Bitcoin and Mist for Ethereum.
4) Use third-party app-based crypto wallets like AtomicWallet etc.
Opening an account on a crypto exchange is the easiest way to get your crypto wallet or virtual address but it also has some shortcomings for example if the exchange gets hacked or closed your assets will be gone. One more thing to keep in mind while using a crypto exchange is that these exchanges keep your wallet's private key to themselves which means you are not really in full control of your wallet. So you have to be careful while choosing the exchanges you want to deal with.
We hope that this post has provided you with enough information to get started with the cryptocurrency wallet and encouraged you to explore more about them.
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