Cryptocurrency wallet is one of the most important topics in the world of cryptocurrency, which is related to how to store cryptocurrencies in software and hardware billfold crypto. In this article, we first get acquainted with different Digital currency storages and then examine their types, advantages and disadvantages separately.
What is a cryptocurrency wallet?
A cryptocurrency wallet is a billfold crypto that, in software or hardware, allows the holder to store, withdraw and manage digital assets.
Most of these software ones are free and any user can create a billfold crypto to store assets without having to pay any fees. Each e-wal·let has a public and private key.
How to create a crypto wallet?
Cryptocurrency wallet contains a private key that identifies the ownership of your assets. Such storage methods are very secure but still vulnerable to hacker attacks, the safest digital currency billfold is the one you made yourself.
If you want to make a billfold crypto, you can use one of the services that help you in this regard. Of course, check the information before using it. There should be a button like “create wallet” or something like that. Then you need to create a password (it is better to create a password, which you have never used before).
Then watch the instruction of each e-wal·let that you try to install carefully and be careful of the private key of your Digital currency storage, do not share it with anyone.
Private key wallet
It is a unique key that is created when you make wallet. This key is a combination of numbers and letters produced by the bip39 standard. It should be noted that your private key is a confidential code and you should keep it in a safe place and not give it to anyone else. If you forget or lose your private key, you will not be able to access your assets again.
Today many e-wal·lets use seed phrase instead of private key, which does the same thing.
Seed phrase: Depending on the type of billfold crypto, it is a set of 12 or 24 words in a special order that is produced by the bip38 standard. Mentioned tips for private key, are true for seed phrase too.
Public key wallet
The public key is like your bank card number. So you can share it with people who want to deposit cryptocurrency in your Digital currency storage. Each of the currencies in your wallet or exchange account has a public key on a specific network that is used for depositing that currency.
Types of cryptocurrency wallets
Digital currency storages can be divided into two general types, hot wallets and cold wallets. Hot wallets are directly connected to the Internet but cold Digital currency storages are offline and do not have access to internet.
Hot wallets include mobile wallets, web Digital currency storages and desktop wallets. In the following, we are going to examine each of them.
Mobile wallets are offered in the form of an application on the mobile phone and are easily available at any time. This is both an advantage and a disadvantage because the mobile phone is always connected to the Internet and various malware can damage the phone. Therefore, security issues must be considered.
Most of these e-wal·lets give you the seed phrase or private key. As long as you take good care of this security code, there is no risk to your assets. Remember to write down your security code on a piece of paper so that you can return your billfold crypto if the didital cash app becomes unavailable on your mobile phone for any reason.
Mobile wallets are very secure because they were developed by the Bitcoin Foundation. Some of these billfold crypto include Trust wallet, SafePal, coinomi, Atomic wallet, Metamsk, Exodus and My Ether Wallet.
Web wallets are online softwares that store public and private keys and interact with blockchain, without installation on the computer.
In this type of billfold crypto, your private key is at the disposal of the website owner, and in fact, using this Digital currency storage means that you trust the mentioned site, because it can easily access your property. Web Digital currency storages are the worst kind of wallets. The security of these e-wal·let is very low and they are very likely to be hacked. These wallets are not recommended.
These wallets are installed on your computer and register your currencies on the network. Desktop wallets are installed on Windows, Macintosh and Linux. Make sure you have a backup of your e-wal·let so that you do not lose access to your currencies when something goes wrong with your computer.
These Digital currency storages also have their advantages and disadvantages. One of the benefits of these Digital currency storages is the Possession of the private key, which increases the security of the e-wal·let. However, due to the installation on the computer and its connection to the Internet, if your computer becomes infected, your billfold crypto can be hacked. You can prevent such problems by using an active antivirus and a strong password.
Also, these billfolds crypto often have the ability to activate two factor authentication, which increases the security of the Digital currency storage. Many of them also have a mobile version. Jaxx, coinomi, Exodus, Atomic and Electrum are examples of desktop e-wal·lets.
As mentioned, hot wallets which provide users with a private key are more secure than the other group. Exchange wallets and some web ones keep the private key. This is one of the reasons that you must not hodl your assets in the exchanges. You must be careful to use legal and safe exchanges for trading.
These Digital currency storages include two types of paper and hardware wallets. Since cold Digital currency storages are offline and not connected to the network, users’ assets will be protected from any network problems, such as blockchain attacks. Another advantage of these e-wal·lets is that, unlike hot wallets, they are not influenced by the regulations of the countries. These billfolds crypto are the best place to store digital assets.
Digital currency exchanges also have two types of hot and cold wallets. They store large amounts of cryptocurrencies inside the cold e-wal·lets and keep only a small part that responds to users trading, inside the hotDigital currency storages.
When the exchange website is attacked by hackers, only the currencies which exist inside the hot billfold crypto are affected, and of course the exchange itself is responsible for compensating the damages, so once again the importance of a large and safe exchange becomes clear. however these exchanges can not be hacked so easily.
How serious is the risk of hacking of wallets?
Wallet hacking is a very important issue that is constantly considered by cryptocurrency users. But can cryptocurrency wallets be hacked so easily?
The answer is no. As long as you use an authentic billfold crypto which provides you with a private key and you protect it well, you are safe from loosing money. In fact, malwares and viruses can not easily access your e-wal·let. Although the probability of this is not zero. So you should always apply security tips. If you use the most secure Digital currency storage without following security tips, you will be in danger of losing your money again.