In this article we are going to review not only the main idea of cryptocurrency wallets but we're going to go into how they actually work , their types as well as some of the best ones to choose from; so first off what is a cryptocurrency wallet ? , well in the most basic form :
-crypto wallet : are simple programs software or systems that enable the storage of public and private keys technically the private key is your password but we'll get to that later the usage of these public and private keys allows the user to send receive and also monitor their assets , before we continue let's talk a little bit about private and public keys so whenever you have a wallet you actually have two keys there is a *public key that you can share with your friends so that they can pay you but there's also a *private key you do not want anyone else to have that private key so think about it like this your public key is actually also your address kind of like a paypal email anyone with that public address can send you money just like if they had your paypal email however your private key is the password to your email if you share this with someone they can have complete and total access to your money now with your public key you can only receive transactions but with your private key you can send them.
So let's move on how to store these keys in three different wallet styles the first type of wallet you can put your currency into is a :
-Software wallet : now these wallets are usually online based exchanges like coinbase or binance are great examples of a software or online based wallet the public and private keys are stored on their servers and they let you access them through your account now it is important to know that they could technically spend your crypto because a private key or the password is on their servers .
next up we have a hardware wallet :
So if you don't trust your information with a company or being online in itself you can actually opt into using a hardware wallet these wallets are basically usb sticks that store your public and private keys for you you can unplug them and then basically no one has access to them but these wallets usually have a very secure process of getting into them for example the ledger live uses a 24 key phrase system to enter into its system and there is no recovery process if you forget them for example if you forget those 24 phrases your crypto is gone forever but this is a double-sided sword though nobody is going to be hacking into your crypto unless they get access to the ledger and know the password to get into it one thing to know here is that these physical devices can start to get a little bit pricey i actually bought mine for around 90$ a few months ago .
finally we have a paper wallet :
So the last wallet you can use for crypto would be a paper wallet and this wallet would consist of your private and public keys and maybe qr codes that are used to facilitate cryptocurrency transactions basically your public and private keys are literally written down on paper you can think of this like using cash to debit cards though one of the largest problems with this method is the ability to lose or destroy the piece of paper if on purpose or by accident now this is the most secure way to store your crypto but it's also the least practical which means you should really only use this if you have a large sum of money that you want to protect but not access it very often because you'd be typing in that private key every time you want to make a transaction and as we near the end of this article i want to ask the question are crypto wallets secure ? so another thing you need to know about wallets is that we classify them in the two categories hot and cold :
-A hot wallet is : one that is connected to the internet whether it's through another company or your own computer and it can be accessed online or through an application.
-A cold wallet on the other hand : is one that has to be connected to a computer like the usb method or having it written down on paper we call these offline wallets so now that we know these two basic types we can discuss if they are secure if you're using a hot wallet it'll always be vulnerable to online attacks and hackers are always trying to find the best new way to access a system once your private key is public you can practically kiss your bitcoin goodbye however if you're using a cold wallet the biggest vulnerability is either losing it or forgetting the pass phrases it really depends on the applications for example if you're mining crypto and you want to immediately send that crypto somewhere you can use a wallet like coinbase but if you're investing hundreds of thousands of dollars you may want to invest in a ledger live that way you can unplug the usb and ensure that no hackers can get access to your private keys i hope you guys have really enjoyed this article it was kind of a shorter one but we know that it'll help some people out there.