Cryptocurrency wallets are a secure digital wallet used for sending, receiving and storing digital currency like Bitcoin (BTC), Ethereum (ETH) and many others. It’s essential for digital asset management, especially if you own a significant number of coins.
If you’re not too keen on details of how digital currency transactions work, here’s a quick rundown of the essentials:
Public Address + Private Key
A wallet consists of a public address and a private key. The wallet’s public address is like an email inbox – you can generate as many as you want, and they don’t require any personal information.
How to Send Digital Currency Through Crypto Wallets
- You generate a new public address (wallet) – this is like sending an email to yourself
- Your payee sends coins to your wallet
- You monitor the incoming transaction on the blockchain, and once confirmed it means that your payer has paid you successfully
- Success! This process is called a “Digital Currency Transaction”.
Crypto wallets are different to bank accounts – you don’t need any personal information to generate a wallet, and you control its private key completely, because it’s based on blockchain technology.
That means your public address is like your email inbox, but the private key is like your full email login details. If someone gets hold of that, they can access everything you need to send, receive and monitor your email. It’s not a good idea to share that information with anyone you don’t trust 100%.
If you’re a long-term investor in digital currency, it might be a good idea to store most of your coins on a Hardware Wallet – it acts like a USB device (like your mobile phone) but holds your private keys for you securely on the device.
Private keys are generated on the hardware wallet and never exposed to your computer or internet connection, which makes it more secure than an online wallet (your public address is like your email inbox on the cloud).
Online wallets are easy to set up and can be accessed on any machine using a password you choose. They’re more insecure than hardware wallets though, because they need to be connected to the internet (imagine losing that USB device and someone sending all your email to spam).
While online wallets are more vulnerable, they make it easier for new users to get started.
Are Crypto Wallets Safe?
Crypto wallets are secure, but only if you take the time to set them up properly for digital asset management. It’s not like online banking when you can be 100% certain that your funds are safe because someone has verified it themselves (like when the bank verifies your deposit). Cryptocurrency is much different – there’s no 3rd party holding your public address and verifying that everything is OK. You have to do it yourself!
Quick Tips for Basic Crypto Wallet Security
- Make your password long and complicated, not just a series of random words.
- Don’t keep all your coins in one place, but split them up into multiple wallets (2 or 3) from different providers.
- Store them in cold storage (offline)
- Delete the wallet software once it’s done its job, and only download it again when you’re ready to use it.
Key Coin Assets: The Safest Way to Build Wealth in Crypto
Crypto wallets are just one of the many types of digital asset management solution you can use on the blockchain. It can be quite confusing for beginners, so don’t hesitate to reach out to us here at Key Coin Assets if you want expert guidance on wallets, coins, ICOs, and more.