Crypto wallet: what is it and how to choose it

Crypto wallet: what is it and how to choose it

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Choosing a crypto wallet is an important stage of preparation for earning money on virtual assets. The safety of your funds depends on the degree of its safety and reliability. We will tell you which crypto wallet to choose , what to pay attention to when choosing.

What is a crypto wallet ?

It is important to understand that the virtual asset is stored in the blockchain , not in a cryptocurrency wallet. In this case, the wallet is used to store the private key that gives access to the crypt. The wallet works by analogy with a bank card: the money is not actually stored on the card, but on a bank account, and the card only acts as a key to the account.

After you have created a crypto – wallet , it will store two keys, an open and a closed one. The key is a code of numbers and letters. The open code acts as a crypto wallet identifier or an address in the blockchain . Ego can be disclosed to other people if they are going to transfer cryptocurrency to your account. The closed or private key must be secret, because it is used to confirm operations, without it you cannot get access to cryptocurrency .

There is also a seed phrase – a random set of words (from 12 to 24), with the help of which the user can recover a lost private key. If the user has forgotten both the closed password and the password , the user will no longer be able to access his cryptocurrency , and it will not be possible to restore his ego.

Types of wallets for cryptocurrency

Crypto wallets are cold and hot. Cold ones work autonomously, without connecting to the Internet, and hot ones work online. The cold type has a physical medium that can be stored in any safe place for you.

Let’s consider the main types of crypto wallets :

  1. Apparatus This is a cool type of wallet, it is a flash drive . As additional protection, it can have a fingerprint reader on the body or ask for a passphrase when using it. The hardware wallet does not connect to the Internet, so it cannot be hacked online, but there is always a risk of losing it.

  2. Paper Another type of cold wallets. You need to create a crypto wallet of this type on special services, where users can generate a private code, print it, specify the required number of copies. It is important that the services that generate the code work offline , so when creating a private key, the data cannot get into the network.

  3. Software. This type of crypto wallet is an application that can be installed on a smartphone, tablet, laptop or desktop computer. The application can be used in any place, at any convenient time, it is always with you. Online wallets are easy to use, work quickly, and are convenient, but they are less reliable than hardware wallets.

  4. Custodial . These are special services that store open and closed user codes on their servers. The user can access the custodial service through a login and password. Wallets of this type often have a number of additional functions, for example, through them you can invest in cryptocurrency , sell or buy it, borrow, purchase futures contracts. Custodial services include all cryptocurrency exchanges. The advantage of this type is wide functionality and convenience, and the disadvantages are the risk of hacker attacks, the need to undergo verification and the presence of a service commission.

How to choose the best crypto wallet

The main selection criterion is safety. Often the easiest wallets to use have the lowest level of security, they provide easy access to private keys and are attractive to fraudsters. It is also worth studying the rating of crypto wallets by manufacturers if you choose a hardware option.

Wallets with quick registration and easy access to funds are a suitable option for those who plan to make frequent transactions for small amounts. If your goal is investment and storage saved in a crypto, you should choose the most reliable option, even if it is not the most convenient to use.

learn more about the rules for storing cryptocurrency on the Crypto course Crew and in our community. We will tell you how to open a crypto wallet in Ukraine and safely earn money on digital assets.