Cryptocurrency wallets are secure digital wallets, which store public and private keys and communicate with a range of blockchain to allow users to monitor their balance, send and receive digital currency such as Bitcoin. You should have a digital wallet if you need to use Bitcoin or some other cryptocurrency.

How a Cryptocurrency Wallet works

Cryptocurrency itself isn’t actually “stored” in a wallet. Rather, secure digital code identified only to you and your wallet (private key) is stored, which will show ownership of a public digital code linked to a specific amount of currency (public key). The wallet stores your public and private keys and plays the role of a personal ledger of transactions, and also lets you send and receive coins as well.

Types of cryptocurrency wallets

Hardware wallets

These vary from software wallets because they use hardware gadget such as a USB to store the private keys of a user. Though hardware wallets make transactions on the internet, they offer increased security since they are stored offline. Blockchain and bitcoin accountants from IBA Group state that these wallets can support different currencies and can be compatible with a number of web interfaces; it simply depends on which type you choose to use. What’s more, it’s easy to make a transaction. Users just connect their gadget to any Internet-enabled gadget or computer, enter a pin, send the currency and then confirm. It’s easy to transact with hardware wallets while also ensuring your money stays offline and away from danger.

Desktop wallets

A laptop or PC is used to download and install these Desktop wallets. You can only access these wallets from the single computer where they are downloaded. These wallets provide you with one of the highest security levels, but if your PC gets a virus or is hacked, there’s the likelihood that you might lose all your money.

Mobile wallets

These run on an app on your mobile phone and are beneficial since you can use them anywhere, which includes retail stores. They are often easier and smaller than desktop ones due to the restricted space offered on a mobile.

Online wallets

They run on the cloud, and you can access them from any location using any computing device. While online wallets are easier to access, they store your private keys on the internet and are managed by a third party, making them more at risk of theft and hacking attacks.

Paper wallets

These are user-friendly and offer the highest security level. While the term paper wallet can easily suggest a printout or physical copy of your private and public keys, it may also refer to a piece of software that’s used to safely create a pair of keys that are then printed.

If you intend to spend or withdraw currency, all you have to to do is transfer to your software wallet from your paper wallet. This procedure, commonly called ‘sweeping,’ can either be performed by scanning the QR code on the paper wallet or by entering your private keys.