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Frequently Asked Questions
A cryptocurrency wallet is a media program used to store software programs, devices, services, or public and private keys.
Unlike physical wallets, crypto wallets do not store cryptocurrencies. Instead, it’s like a keyring that stores the public and private keys needed to access cryptocurrencies.
What is a personal key?
Private keys are stored in cryptocurrency wallets. Private keys use encryption to ensure security when accessing cryptocurrencies. In other words, the private key can help you find a completely secure cryptocurrency. The private key is similar to the PIN of a bank account, and anyone with access to the private key is solely responsible for protecting their funds. Private keys should not be shared publicly.
What is your public address?
Cryptocurrency wallets also store public addresses. The public address uses an asymmetric key encryption algorithm to convert the message into an unreadable format. Decryption encryption algorithms are used with different but matching private keys, and the combination of private key and public address allows secure communication. A public address is like a bank account number. It can be shared publicly whenever you want to get funding.
Do you need multiple crypto wallets?
nope, not needed. You can store and trade multiple cryptocurrencies using a digital wallet. Many digital wallets support multi-currency/multi-currency options, so you don’t need a separate crypto wallet to invest in each cryptocurrency.
How does the wallet work?
When people send you Bitcoin (BTC) or other cryptocurrencies, they transfer access to their coins from their wallet address to you. These digital currencies are attached to public addresses.
To access these transferred cryptocurrencies or funds, the private key in the wallet must match the public address associated with the received cryptocurrency.
If the public address and private key match, the digital currency received will be updated in the digital wallet. The sender’s digital wallet balance will be updated as the crypto balance decreases.
Types of cryptocurrency wallets
Crypto wallets usually have two separate parts: hot storage and cold storage. The main difference between the two wallets is ease of use and storage security.
Hot storage crypto wallets are digital wallets that are stored on your computing device and connected to the Internet. The advantage of using a hot wallet is that the wallet can be easily and quickly accessed.
Hot deposit wallet type:
Desktop Wallet is software that you download and install on your computer. You will not be able to access the password from any computer or device other than the computer or device containing the password. In terms of security, if your computer gets hacked, you will lose all your passwords. Examples of desktop wallets are Exodus, Jaxx, Atomic and Electrum.
Online/Exchange Base/Cloud Wallet
Online wallets are web-based wallets that store digital currencies and all other details in the cloud. You can access these wallets anytime, anywhere using any computing device. Third parties handle online wallets, security and other processes. Online wallets are at risk of being stolen and vulnerable due to the involvement of third parties. Online wallets store private keys on third-party servers. This is called a storage wallet.
Mobile Wallet is another hot storage wallet that can be used on Android and iOS devices. Mobile wallets allow you to store keys on your phone and instantly pay, send, receive, trade and even invest in cryptocurrencies. Mobile wallets are the best way to carry digital currency easily and comfortably.
Some mobile wallets are non-custodial wallets. A non-custodial wallet means managing public addresses and private keys. This is a more secure measure than trusting a centralized fund manager, but it also means that if you lose your private keys, you will not be able to access your funds, so you need to protect your private keys.
Unlike hot wallets, cold wallets allow you to access digital currencies without an internet connection.
Cold wallets are hardware or paper. These are often compared to savings accounts because they can be used to store cryptocurrencies over the long term.
Cold wallets have lower security risks than hot wallets because they are not connected to the Internet, but users need to be careful to protect password storage.