Is a wallet for crypto the same as a regular wallet just with some modifications? A flash drive of some sorts? An app, perhaps?
Well, without further distractions, let’s jump right in, and give you a more in-depth look at what a wallet for crypto is, and what you can use it for!
What is a cryptocurrency wallet?
A cryptocurrency wallet, or wallet for crypto, however you’d like to call it, can be a device, or an app which has the ability to store and retrieve public and private keys. Those keys are used to track ownership, or if you are so inclined, to spend and receive cryptocurrencies.
When you think of cryptocurrencies, ninety percent of the times, you think of bitcoin. Well, bitcoin and other cryptocurrencies derived from bitcoin, are stored in a publicly available ledger, which goes by the name blockchain, but you’ve probably heard of that too.
The first wallet for crypto was introduced by Satoshi Nakamoto when the bitcoin protocol was first released, way back in 2009.
A wallet for crypto is something akin to a bank account. It has public and private cryptographic keys.
The former is used when someone wants to transfer money or to make payments to you, and so, it uses that public key as the wallet’s address when making the payment. The latter is the key that allows you – the user, to spend the cryptos that you have in your wallet for crypto.
How many variations exist?
Let’s move on to the types of wallets that you can have.
There are many variations that are out there, either being offline or online, mobile or desktop, on a device, or just something plain, like a paper.
Most common wallets for crypto are, like I mentioned earlier, a device, something which is hardware based, or a digital app.
The public keys are either stored with the user, or somewhere remotely, and the transactions have to be authorised by a third party. Making it harder for those pesky thieves to get their hands on your hard earned cryptos, as they did with Binance just a week ago, which we covered here.
Naturally, since there are so many types of wallets, there are many variations to those.
So let’s breakdown what they are:
Is, as the name suggests, a wallet that you use on your desktop. This one is the most common type of wallet, and is connected directly to the coin of the client.
This one is pretty self-explanatory, it’s a wallet that you use from an app on your smartphone. Even some phone manufacturers are making their own apps, like Samsung, which we previously wrote about!
Now we’re getting somewhere! Online wallet isn’t a downloadable app. Instead, it’s web-based. Meaning, your data is hosted on a real or a virtual server, and not on a device that’s in your possession. You might be concerned now since you’re looking at this and you’re maybe wondering how easy it is for someone to track down your info and steal your stuff. Well, there is a remedy for that. Some online wallets are hybrid, that means that you are allowed to encrypt your private data before it gets to the online server. I’d say that’s a plus!
This type of wallet refers to any wallet that is software-based. These include apps on your phone or desktop or any piece of software that is running on any kind of device which is used for the purpose of being a wallet for crypto.
Okay, this one is for you security enthusiasts out there. Paper wallet refers to a regular old piece of paper that has a QR code printed out on it, for both public and private keys. If you go for this option, you’re able to avoid storing data about your currency elsewhere. But it has one drawback, if you, well, lose the paper, yikes! You can find out more about this kind of wallet if you head over here!
Some of the wallets on this list let you be in control of your private keys, this one is not one of those. These kinds of wallets are used as exchange wallets.
Full Node wallet
With this wallet, you get more control than you would with, for example, a custodial wallet, in a sense that you have control of your private keys. What you also have with the Full Node wallet is a full copy of the blockchain.
Universal, multi-coin, multi-asset wallet, whatever you’d like to call them, basically do the same thing. These kinds of wallets hold addresses from multiple coins. The reason they have many names is that there are a lot of variations on these, and the important note for this is that, they won’t hold literally every crypto asset.
But then again, I’m not really sure that there is such a wallet.
Are your cryptos safe?
There might be a thought crossing your mind right about now when you’re searching for the type of wallet that you want. Maybe “are any of those wallets for crypto safe? “.
The thing is, a wallet for crypto is designed to be secure. Some are more secure than others, or their security simply differs from one to the other.
With that in mind, a wallet for crypto of your choosing should be something that you are comfortable with, and it should reflect your best practices. For example, are you good with usernames and passwords, or are you better with storing things in a secure location?
It all depends on what is best for your specific use case, and your specific situation.
Is your wallet for crypto as anonymous as you’d like it to be?
To answer that, first, you have to take into consideration which crypto is inside of your wallet.
Some cryptos are more anonymous than others. While one may have all of your information on record on its blockchain, the other may not, so it really depends on what is going to be residing in your wallet.
Whichever option you end up going for, the best decision is the one that is made according to your specific needs. So, my advice is to carefully consider what use case scenario you’ll have, research what options are available, and find the wallet that suits you (and your cryptos) the best!