Friday, April 19, 2019

How Do Cryptocurrency Wallets Work?

The importance of banks can never be underestimated as they do quite an amazing job saving our money and valuables for us, keep track of how assets are moved in and out of their institutions and lots more.

Digital currencies also need a form of storage, but because they are digital and aren’t regulated the way fiat currencies are, they can’t be stored in a bank. Without a form of storage, the idea of cryptocurrency wouldn’t have materialized into what it is today. Because of this, cryptocurrency wallets were formed so end users can easily adopt digital currencies.

With this, cryptocurrency wallets afford users with the ability to access, receive, send, store and track the digital currencies they possess whether bitcoin, Ethereum or any other crypto asset.

What are Cryptocurrency Wallets?

Cryptocurrency wallets could be thought of as the physical wallet anyone carries around except that the owners have to do the balance and record management by themselves. Since cryptocurrencies are digital, same as their wallets, the major advantage of this is that a lot of digital currencies can be stored in them without having to worry about space.

Aside that, these currencies are clearly defined, separated and calculated so there would be no mix up. A ledger balance is also kept to keep track of how these currencies are received or spent. Most wallets even provide a note that the user can make use of for personal documentation.

Cryptocurrency Wallets Explained

Crypto wallets work just like the way safety deposit boxes work. Every crypto wallet has a secret key given to only the owner for access to the wallet. In the event of this key getting in the wrong hands, all the valuable cryptocurrencies stored in the wallet could be lost.

The key used for accessing the wallets are called private keys or master keys and are usually in hexadecimal notation containing alphanumeric characters. A typical example of this is “2940447a4ed5eef9f46bcc185cb2f21d2a8bffcde5418156a9d1a44aa137558”. It is highly recommended that this is stored in another safe digital drive, printed out or saved as an image.

It is also pertinent to note that this isn’t to be shared with someone else but kept somewhere safe that can easily be retrieved when the need arises.

Choosing a Cryptocurrency Wallet?

There are several cryptocurrency wallets all over the internet best known for their unique properties. Some have better security features, varying transaction time, fees and support for different cryptocurrencies. Some even offer the option to shapeshift currencies – conversion of a cryptocurrency to another that the wallet supports.

Very popular cryptocurrency wallets are MyEtherWallet – Web Wallet, imToken Mobile Wallet and Trezor Hardware Wallet – this, unlike other strict web or mobile-based wallet comes with a USB device which works together with a web-based wallet for more security.

In summary, cryptocurrency wallets are digital safeboxes for safeguarding your tokens and can be created via the web or on a mobile phone, making them easy to manage and access.

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