Crypto Know-How: How Do Wallets Work?
You may understand the fundamentals of cryptocurrency, even specific coins like bitcoin. But if you really want to get into the crypto scene, the most important aspect you’ll have to learn is the concept of wallets.
Cryptocurrency wallets work much like your own wallet now, but with even more features. It can store a variety of different cryptocurrencies, contains a list of transactions you’ve made, has unlimited space, allows easy sorting between different types of cryptocurrencies you have, can quickly send and receive cryptocurrency, and more.
They have all the utility of a bank with even more capabilities. Your crypto wallet isn’t tied down to restrictive schedules, transactions are almost instant, it’s portable, and easily backed up and restored.
Despite the association with regular wallets, it’s best to think of a cryptocurrency wallet more like a safety deposit box. It works similarly, requiring a digital key to access. This private key takes the form of a hexadecimal code like this:
Once you have it, this key will become the most important thing in your life. You’ll have to take every precaution possible to assure it is always safe from tampering, hidden from everyone else, and still reachable by you. It can be stored digitally in a computer file, but many people also physically write it down on paper (or even better, plastic) and secure it somewhere safe (like a safety deposit box!)
There are also other security options like passwords and two-factor verifications that allow access to your private key depending on the type of wallet, but it’s always best to be safe and store it yourself too because, without it, you can say goodbye to all your hard-earned cryptocurrency.
But how do you actually set up a crypto wallet? Fortunately, you have quite a few different options that can even be used in tandem with each other:
These are the most popular kinds of wallets, as they’re the most accessible to use, requiring no downloading or technical know-how. You just access your wallet via a web domain, like visiting any other website. There are a vast number of these kinds of sites, so do your research and find the one with features that best fit your needs.
These wallets are a little more sophisticated, downloaded right on to your computer. These often allow the user access to mining and the blockchain remote server security. This method allows you the most control over your coins.
This is the most convenient form of a crypto wallet, allowing you to access your cryptocurrency and make transactions through apps available on iPhones, Androids, Windows, and Blackberry phones. There are even a number of backup procedure options for restoring your account, just in case you manage to lose your phone.
A hardware wallet is a purchasable USB device that can physically store your cryptocurrency. You’ll still need to save any passwords and codes however because, without those, your hardware wallet might as well be a paperweight.
A paper wallet is perhaps the simplest type of crypto wallet, but potentially the most secure. A paper wallet is merely a piece of paper (or a card) with your public and private keys on it, usually in a QR code form. This allows you to send and receive funds relatively easily, but you can also store it in a real safety deposit box for maximum security.
Additionally, many coins like Chelle Coin offer their own specific wallet with added features for their particular currency. There’s nothing to stop you from having any number of wallets, so long as you make sure you keep track of all that information.
All in all, cryptocurrency wallets offer high functionality and a multitude of accessibility. They’re the most critical aspect of being a cryptocurrency user, so you’ll want to become very familiar with all the different kinds and how you want to use them.
Just remember to keep your keys and coins safe, or you could become your very own crypto horror story!