What is a cryptocurrency wallet?

In order to use any cryptocurrency and make electronic transactions, you‘ll need to have a “wallet”. A cryptocurrency wallet is a software program that stores the public and private keys. It interacts with the blockchain and enables you to send and receive cryptocurrency.

There are two major categories of these wallets: hot and cold.

Hot cryptocurrency wallets are connected to the Internet while cold ones aren‘t.

Hot wallets are practical for a day-to-day use whereas cold ones are more suitable for long term resources. Therefore, hot wallets are more susceptible to security issues and hacking because of their connection to the internet while cold wallets are safer.
Cryptocurrency is represented by its public key in the blockchain and in order to use it, the private key is required. So, when the private key is lost, the cryptocurrency is also lost. That‘s why it is so important to choose your wallet type according to your use and preferences.

Web wallet:
This is an online-based hot wallet. It stores your private keys on a server and requires a third party. You can access your wallet and make transactions very quickly from any device with an internet connection and a browser. Therefore, it‘s very practical for daily transactions. However, that third party can access your data which represents a huge risk. Exchanges and online wallets are basically “honeypots” for hackers. These cases happen, and you have probably heard of Mt. Gox‘s bankruptcy in 2014.

Desktop wallet:
This is a software that you install on your computer which stores your private keys on your hard drive. It‘s still exposed to internet security issues if your computer is connected to the internet. But if it isn‘t, this is considered to be a safe cold storage option.

Mobile wallet:
This is a mobile phone app that you install to manage your private keys. It has more features than the web wallet such as QR code scanning and on-the-go payment because you‘d be making transactions from your mobile phone. Yet, it also is exposed to hacking risks.

Paper wallet:
This is a document that contains your private keys. Although it is one of the most secure cryptocurrency wallets, it is more difficult to use and requires more effort.

Hardware wallet:
These are hardware devices designed for cryptocurrency storage long-term (private and public keys) and can connect to a computer or a mobile phone through ports (USB for example). These wallets use 2-factor authentication known as 2fa and are very secure because the keys are stored on a physical device.

 

This diversity of wallet types gives each one the possibility to choose what fits them best. Hopefully now you have an idea about which wallet type to use! We suggest using our SaTT wallet among others that you can find down below, you will definitely like it. Good luck with your crypto journey!

 

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