A Crypto Wallet is a device that lets you store and transfer cryptocurrency. It stores the private and public keys of users. The wallet doesn’t mean it in the same way the physical wallet holds cash. The crypto wallet holds the private key to make transactions and it shows the balance in your addresses by reading the public ledger.
The term Key is a group of long strings with not recognized characters. The public key allows receiving the cryptocurrency transactions while the private key proves the ownership of the respective public key. The public key is open to anyone whereas the private key remains secure and secret.
For instance, the public key is like a bank account and the private key is the password or pin of the account. Public keys are used to encrypt data. Encrypted data is decrypted using the private key.
There are two categories of crypto wallets. One is a hardware wallet and the other is a software wallet. Software wallets are like desktop programs or browser extensions and it helps people to send, receive and store crypto.
Hardware wallets are physical devices that are plugged into the computer and it has the same purpose as software wallets.
Software wallets are called hot wallets and hardware wallets are called cold wallets.
It is a device that stores crypto offline. You can plug in a hardware wallet from a USB port which is considered to be more secure. It interacts with computers in ways like a web-like interface, application, or separate software wallet. It tends to be more complicated to use when compared to the software wallet.
It is a computer program that stores crypto online. These are unique in that they may change to different cryptocurrencies but the hardware wallet is mostly the same for many currencies. Software wallets are used on the web and are considered to be less secure when compared to hardware wallets. The software wallet application can be installed on either phones or laptops. It has three main types such as web-based wallets, desktop wallets, and mobile wallets.
As we have seen before, crypto wallets are needed to store, receive and send digital assets like cryptocurrencies. These wallets are necessary for interacting with the blockchain. If you lose your wallet, you can’t access or interact with the blockchain. Unless you back up you will lose the wallet permanently.
The wallet holds the keys like a private key. To perform transactions you need to verify the address via those private keys that have some specific codes.
First, we’ll explain the merits or advantages of the crypto wallet.
Here are some demerits of Crypto Wallets,