WHAT ARE DIGITAL WALLETS?
Digital wallets are financial accounts that allow you to store funds, make transactions, and track payments.
WHAT KINDS OF WALLETS ARE THERE?
Hardware wallets: On hardware wallets, you can store your private key on a hardware device. Although the transactions are made online, they are stored offline. This gives major security.
Online wallets: Since they run on the cloud, they are accessible from any device. Although online wallets are easy to use, your private key is controlled by a third party. This makes them more at risk of hacking attacks.
Desktop wallets: These wallets are downloaded on a PC and can only be accessed from the device they are installed. Desktop wallets are one of the most secure kinds of wallets. The only risk comes from viruses or a hacking attack on your computer.
Mobile wallets: You can use them through an app on your phone. They are simpler, but also much smaller than other wallets. This depends on the space available on your mobile device.
Paper wallets: This method was very popular in the first years of cryptocurrency. The term “paper” refers to a paper printout of your public and private keys. To make transactions, you will need a software wallet where you can transfer funds to the address of your paper wallet. This is called sweeping.
HOW DO THEY WORK?
Digital wallets don’t store any physical currency. They are software programs that store your public key (a code made of letters and numbers, which is where the transactions are deposited to or received from) and private key (a sort of a personal password).
If you choose a hardware wallet, you must purchase a physical device. It will allow you to make your transactions from a device exclusively in your possession.
If you choose a software wallet, you can open one on different platforms online.
- You have to choose which one is ideal for you and for the type of currency you will be using.
- You must complete a sign-up form and set up your password.
- Now you can store the cryptocurrency and make your transactions.