Everything you need to know about crypto wallets Essay

Where do we all keep our cash money? Most of us generally use wallets. Nowadays in general money became something that is not physically tangible, because it became digital. But we all know that digital money also needs someplace to be kept and so the digital wallet was invented for that purpose. Then in 2008, the game of digital fiat money was changed with the creation of the cryptocurrency. Now we all have heard about cryptocurrency wallets, but what they actually are? How can we use them? And how can we have one? You will find answers for these and many other interesting questions connected with crypto wallets in this article.

**What is a cryptocurrency wallet?**

A cryptocurrency wallet is a program that connects with various blockchains and lets users transfer and hold digital currencies. If you want to start working with cryptocurrencies, the crypto wallet is a required thing.

Some of crypto wallets are able to keep various coins and tokens at once, but most of the wallets hold only a few numbers of currencies.

In reality, the crypto wallet doesn’t actually store a currency, it stores something that is called a “private key”. The private key is a hash that consists of 64 characters, which is known only to you and your crypto wallet. The private key has to match with the public key so you will have an opportunity to spend your cryptocurrencies.

**How do wallets work?**

As we already mentioned, crypto wallets don’t store currencies. Actually, cryptocurrencies cannot be stored anywhere materially. Everything that makes cryptocurrencies’ existence real records about transactions on the blockchain.



Instead of storing currency itself, crypto wallet stores private and public keys. Public keys are special cryptocurrency account numbers, that are required for transferring cryptocurrencies and can be shared. When a person wants to send a crypto coin it looks like a simple transaction, but actually, he does not send a coin, he just gives you ownership of that amount of coins. To be able to use this coin your private key must match the public key, which is attached to that currency. If it is so, and keys match your balance will accordingly increase.

**Types of crypto wallets**

Crypto wallets can vary. Every type of wallet provides a user with various ways of storing and accessing cryptocurrencies. There are three big categories of wallets: software, hardware and paper. Software category has subcategories: desktop, mobile and online.


First, let’s descry Software wallets and its subcategories.

**Desktop wallets** are operating on a personal computer. They can only be used from a PC they have been download on. These wallets are considered to be one of the most reliable wallets. However, if someone hacks your computer you may lose your finances.

**Online wallets** work based on a cloud system. Their advantage is that you can use them from any location and any computer or device you want. But as your keys are stored online, your wallet is at risk of hacks.

**Mobile wallets** are applications that run on your mobile phone. This is also easy to use from anywhere in the world. Mobile crypto wallets are commonly simpler and smaller than desktop wallets, cause they have to match the mobile storage.

**Hardware wallets** are storing user’s private key on USB or other hardware devices. Hardware wallets are more protected despite the fact that they are making all transactions online. This is because they store keys offline and it makes them unattainable. This type of wallets can work with various web interfaces and can keep various cryptocurrencies. The transactions are also easy, you just have to connect PC and device with an Internet, enter your pin and confirm the transaction. This is a very good way to easy transfer currency and also keep your resources away from hackers.

**Paper wallets** are on the highest level of protection. A paper wallet is simply a piece of paper, where your keys are written. For making transactions, you just open a software program that lets you use the paper method. This method is often called “sweeping”. You can either manually enter your private key or just scan a QR code.

**How can I create a crypto wallet?**

The very first thing you need to do is decide the type of crypto wallet you want to have. Choose a type of wallet that is both secure and easy to use.

Next thing, that is also very meaningful is to choose a wallet that supports the certain cryptocurrency that you hold. Read about a wallet and learn about it to be sure that it’s trustworthy and secure.

The third step is learning your country’s laws. For example, there are several countries that have banned Bitcoin, like Algeria, Pakistan, Bolivia, etc. Make sure you won’t have problems just because you have a crypto wallet.

The last step is simple, most applications have a guide that helps you create a wallet and use their app. The process looks like creating an email account, it’s simple and fast.

**What do I have to do to keep my wallet secure?**

Every wallet type has its own level of security. Compared to offline versions, online once are much risky. But on the other hand, online wallets can be much attainable and easy-to-use. So here are some tip-steps to make your wallet more secure:

The first and very important thing is back up. You can store a small amount of currency for everyday use on your online wallet and the other part of your funds can be stored offline. Offline storages have a backup option, which lets you be sure that you can restore your wallet if something goes wrong.

Always update your software to have the latest security enhancements. This is not only about the wallet software but about your PC or mobile software as well.

Create more safety layers. The more layers, the better security for your funds. Make sure that any withdrawal of funds requires a password at the beginning. And of course, set a complex password that no one can guess. Use wallets with a good reputation and the once that provides two-factor authentication and additional pin code when the application is opened.

**Should I use multi-currency wallets or single-use wallets?**

The most popular cryptocurrency is the Bitcoin, but there are already thousands of new cryptocurrencies that have a promising future. If you are interested in the crypto world and want to try using several cryptocurrencies, you can start using a multi-currency wallet, which lets you store and transfer a variety of cryptocurrencies.

**Transaction fees**

Of course there are fees, that are taken off when transferring crypto coins, but usually, the percentage is too small and people simply don’t notice that a fee has been taken. Sometime wallet can give you an option of setting your own fee. But there’s one point here if you set a fee lower than average your transaction will have low priority and it will take much longer for you to transfer coins.

How to cite this essay: