Why is the usage of Cryptocurrency wallets growing?
Before long, the concept of hard cash will get antiquated. In this time of digital data and advanced technologies, traditional fiat currency is gradually losing its appeal. Instead, cryptocurrency is gaining more acceptance.
In simple words, cryptocurrency is a virtual digital currency based on blockchain technology. It is a form of exchange at any place in the world and at any time. Bitcoin is the first and most widespread digital cryptocurrency to date.
A cryptocurrency wallet is also called a blockchain wallet. It refers to a digital wallet that stores cryptocurrencies. It also receives and sends digital currency. It includes data of the wallet address, history of the previous transactions, sent and received transactions etc. A crypto wallet is to cryptocurrency that a physical wallet is to fiat money.
How does Blockchain wallet function?
The wallet doesn’t store actual currency as cryptocurrency does not exist in any physical form. Instead, it maintains the transactions carried out. Transactions usually are stored on the blockchain.
Crypto wallets are software programs that process information using a pair of public and private keys. They directly communicate with the blockchain to facilitate users to receive and send cryptocurrency. Users can see their wallet balance and complete other transactions. Also called blockchain wallets, blockchain and cryptocurrency wallets work together to carry out transactions.
Each crypto wallet will have a unique address attached to it, further linked with a private key. The user issues a public key with information on the wallet address to send cryptocurrency to another wallet. The private key of the receiver wallet and the public key issued by the sender’s needs to match to ensure the exchange effectively happens. If there is a match, the transaction gets recorded.
How Blockchain wallet works
The cryptography method of hashing encrypts the private and public keys to a form that machines can understand. It creates an extra layer of security to the present tamper-proof and robust blockchain structure.
Blockchain wallet or cryptocurrency wallet types
Various kinds of wallets are available for use depending upon each user’s requirement.
1. Mobile wallet :
It is the most commonly accepted blockchain wallet. The app can be used
everywhere, like in physical stores, through an application on your mobile device. It saves time and is less complicated and much smaller as compared to desktop wallets. But they are also susceptible to malware damage or mobile viruses. Also, data gets lost when the mobile gets damaged or lost.
2. Desktop wallet :
As its name suggests, you can install this type of crypto wallet on your PC or workstation. The user can access it only from that device. Though this type of wallet assures security, it is also vulnerable to a virus or hacking attack.
3. Web/Online wallet :
It is essentially a web service run online and operated by a third party. However, since it has all your public and private keys, it is the least secure type of crypto wallet.
4. Hardware wallet :
Private and public keys get stored on a USB device. When you need to transfer currencies, you only need to connect to an online interface. But, all transaction records are offline. It is the most secure blockchain wallet.
5. Paper wallet :
You print your private and public keys created by a computer on a piece of paper. To transfer funds whenever you have to make any transactions, you must scan the QR code or enter the key into any software wallet.
The blockchain wallet is a dependable and safe way to exchange cryptocurrencies and gain more popularity in the digital world. From the security viewpoint, there is nothing better than hardware and paper wallets. On the other hand, software wallets need periodic backups and the latest software updates to prevent virus attacks, malware, and hacking.
Software wallets provide an additional layer of protection against potential threats through multi-signature and two-factor authentication methods. Different types of digital currency wallets consider varied kinds of requirements. So pick the right wallet suitable for your needs which is the key to a secure and safe cryptocurrency exchange.
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