A Crypto wallet is a software program, which stores a pair of keys or digital codes to interact with the blockchain. Private and public keys need protection because it offers you access to your crypto wallet and sends, receives, and views balance. It is just like an ATM that offers cash stored inside your bank account or blockchain in the crypto space.
Crypto wallet types
Before you choose a USD coin wallet randomly, visit ZenGo X to gain knowledge about how to choose a suitable one. You will find two categories called cold or hardware wallets and hot or software wallets.
If you choose to store multiple cryptocurrencies in a single wallet, then hardware is the best option. It is the safest alternative but needs a small investment. The hardware wallet is more secure as it holds your private keys offline. You need to plug it into a computer via USB to use it.
Private Key unlocks the crypto wallet and signs your transaction. It is paired with your specific public key and you gain a public wallet address. The private key information is isolated from the computer, so your coins are safe. Your crypto coins stay safe even if there is malware or virus on your computer, of which you are unaware.
Blockchain is a secure public ledger, which keeps track of every cryptocurrency transaction. Crypto coins are digital, so they cannot be contained like fiat coins in a wallet. Your wallet is similar to an email account designed for storing your crypto coins.
Public keys are similar to email addresses and private keys resemble the password used to log in to your email account. Just like you give an email address to contacts for sending messages, you will need to share your wallet address [public key] to send coins. For security reasons, never share your email account password or in terms of crypto the wallet’s password [private keys] with anyone.
A software wallet is ideal for beginners testing cryptocurrency or need convenience to use. There are several software wallets including –
- Desktop wallet – You install the program on your computer.
- Online or web-based wallet – It runs on a cloud server. You can access it from Wi-Fi-capable devices. The cons are that the 3rd party retains control of private keys means your wallet is vulnerable to theft or hacking.
- Mobile wallet – Download the wallet app on your mobile device. Ease of access and even pair it with the desktop wallet. You need to be extra cautious of not losing the backup phrase or mobile device.
Beginner’s mistakes to avoid
Before you use a crypto wallet understand the blockchain trilemma. It includes decentralization, security, and scalability. Each one has its risks and benefits. If you assume that each blockchain has the same security, then it is a wrong and costly mistake. Scalability concentrates on upsides, while security considers how to prevent the downside.
Never use public Wi-Fi, use wallets with plenty of functionalities but with low risks, and detect crypto scams to avoid. In the crypto world, errors are unforgivable. Therefore, triple check transaction inputs or this can cause funds loss forever.