By AML Safe on The Capital
With the advent of cryptocurrency, the modern world has changed. The new alternative to the usual money (digital money) has become so popular that many countries have recognized it and started implementing it (USA, Canada, Australia, EU, etc.). In some places, you can use cryptocurrency to pay for a product or service. As a means of payment, it is accepted and used by such popular companies as Amazon, Subway, and Microsoft. Cryptocurrency attracts shareholders, investors and all people who see it as a freedom and opportunity.
After all, the main feature of digital money is that it does not obey any Bank, but exists independently. However, to conduct financial transactions with cryptocurrency, you need to get a crypto wallet. Users have questions about what it is, how to choose it, and what to do. This is exactly what we will talk about in this article.
What is a crypto wallet?
A crypto wallet is a space for storing your digital savings. You can use it to transfer funds to other users. Wallets exist in the form of programs and online applications that store the history of transactions. Based on this, there are two components of any crypto wallet:
Public key. This is a so-called wallet address that is visible to everyone. You can compare it with the card number.
Private key. This is actually something like a password that opens access to your savings.
In the world of cryptocurrency, money is not fixed for a certain person. Anyone who has access to the private key from the wallet has all the funds stored there. Therefore, when choosing a wallet, the main aspect is reliability.
Cryptically are divided into two types: “hot” and “cold”. The hot wallet differs in that the currency is handled on an external service. Private keys are stored on the same device (laptop, phone) as the money management app.
This type of crypto wallet includes:
Online wallet. It is an Internet service that the user logs in to via the Internet. The work is done online.
Paper wallet. A special site generates the user’s keys, they are printed out and stored on paper in the form of a QR code. Information about keys is immediately deleted from the site.
Exchange wallet. It operates online on a specific exchange, but only with the currencies that the exchange specializes in.
Software wallet. It is a program that will be downloaded on your computer. The software wallet is divided into “thick” (contains the chain of the entire blockchain network, therefore it weighs a lot and takes a long time to load) and “thin” (interacts with the blockchain network, which is stored on a remote service)
Cold wallet means downloading a specific program to your computer or phone. Private keys to the address where the money is stored are stored on an external device (such as a flash drive).
This wallet is called:
Hardware wallet. It is a removable storage medium where the program with your wallet is stored. Here the main thing is not to lose the carrier and not to forget the password.
Which one to choose?
To choose the right crypto wallet, you need to determine the purpose and frequency of use. If you plan to use it for private and not very large transfers, then an online wallet is suitable. Security is average, but the speed of operations is excellent. If, on the contrary, the amount is large and transfers are frequent, then a cold thin wallet will do. Hardware and paper wallets are good for storing large amounts of money, where long-term security is important. A software thick wallet is suitable for savings.
When choosing a wallet, pay attention to its security, convenience, and functionality.
As we understand, there are many different types of crypto wallets. When choosing it, you start from the criteria that are important to you. But you should understand that in the world of cryptocurrency, you are responsible for your money. Therefore, in addition to a good wallet, do not forget to regularly update your antivirus system and create backup copies of keys. Then everything will be fine!
Ⓒ AML Safe
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