As you probably already know, you can’t fold Bitcoin and put it in your pocket. However, having a crypto wallet allows you to hold the keys for your crypto all the time.
This piece of software, but also sometimes a physical device, allows you to receive and send transactions done in crypto. As an owner, you get to carry two types of keys: public and private ones.
New advancements in crypto technology bring plenty of new opportunities for all of us.
For example, thanks to them, we are now able to make payments on most websites, trade, and even collect our game slot online earnings. Therefore, make sure to continue reading if you’d like to learn more about crypto wallets!
How do they Work?
Interestingly, crypto is not actually stored “in” a wallet. Actually, they are stored on the blockchain, and the software just allows you to interact with all the crypto on the blockchain.
Since all transactions are recorded on the blockchain, you have access to all transactions at any given moment. The wallet just allows owners to move coins and stores addresses.
In order to send funds, you need to have the address of the wallet that receives the transaction. From there, all you need to do is to enter the address, number of coins, and send them.
In contrast, if you want to receive funds, you will need a retrieving address, which is also commonly referred to as a “public key”.
There are two main types of wallets in the crypto world – software and hardware-based. Software wallets are basically apps or programs that are made to hold keys. The main difference between these two is that hardware wallets are able to support multiple currencies at once, while software wallets can support just one.
Some people argue that software wallets aren’t completely secure since they are based on the web. That’s why you would generally get a recommendation to buy yourself a small hardware wallet where you can keep your keys off your computer and phone.
They usually feature a USB port that you use to connect to a computer, which provides much more security.
Software wallets can be separated into three main groups. There are mobile wallets, desktop wallets, and web-based wallets.
As the names suggest, web-based wallets are accessed through a browser, mobile wallets are accessed via smartphone, and desktop wallets are self-explanatory.
In general, it is recommended to research all three types in order to get a grasp of which one works best for you.
Pros and Cons
Probably the most important pro to mention regarding wallets, but also crypto in general is that you are the only owner of the money you have. The crypto belongs only to you if you’re the owner of the private keys.
No one can do anything with your crypto and no one can oversee your actions with it. Technically, traditional money is the property of a bank.
Another good thing is that crypto allows you to send transactions whenever you like, to whomever you like. As mentioned above, there is no one who controls the network. This means that stopping a transaction is almost impossible.
On the contrary, crypto, and wallets also have some negative sides. Once you decide to get into it, you have to understand that there will be a huge learning curve in order to understand everything.
Dealing with a whole new financial ecosystem is not an easy thing to grasp. In addition, going crypto also means that you have to hold 100% liability for your actions since you will become your own bank.
Increase in Usage
Over the past few years, we see a big increase in crypto and software wallet users. Slowly, but surely, cryptocurrencies are overtaking traditional money, and we will only see more people getting into it. Perhaps, we will be able to come up with a better version of a wallet, but the technology we have now is also very good.
An increase in usage also means an increase in people who would like to scam others. Therefore, you need to be extra careful with your wallet and keep your keys safe at all times!