Crypto wallets keep your private keys (passwords) safe and accessible by storing them. They also allow the sending, receiving, and spending of cryptocurrencies like Bitcoin and Ethereum.
Crypto wallets keep your private keys (passwords) secure and accessible, allowing you to send and receive cryptocurrencies such as Bitcoin and Ethereum. They come in many forms, ranging from hardware wallets like Ledger (which resembles a USB stick) to mobile apps like Coinbase Wallet, which makes using cryptocurrency simple.
What is the significance of cryptocurrency wallets?
Unlike a traditional wallet, which can hold actual cash, crypto wallets do not technically store your cryptocurrency. Your assets are stored on the blockchain but can only be accessed with a private key. Keys validate your ownership of your digital currency and allow you to conduct transactions. You lose access to your money if you lose your private keys. That is why it is critical to keep your hardware wallet secure or to use a reputable wallet provider such as Coinbase.
How do you use a cryptocurrency wallet?
Crypto wallets range in complexity from simple apps to more complex security solutions. Among the various types of wallets available are:
Keys are written on a physical medium, such as paper, and kept in a secure location. This, of course, makes using your crypto more difficult, because it can only be used on the internet as digital money.
Also known as a Cold Wallet. Keys are stored in a thumb-drive device that is kept in a secure location and is only connected to a computer when you want to use your cryptocurrency. The goal is to strike a balance between security and convenience.
Keys are stored in an app or other software. Look for one that uses two-step encryption. This makes sending, receiving, and utilizing cryptocurrency as simple as using any online bank account.
Each type has its own set of tradeoffs.
Because they are stored offline, paper and hardware wallets are more difficult for malicious users to access; however, they are limited in function and risk being lost or destroyed. Online wallets provided by a major exchange such as Coinbase are the simplest way to get started in crypto and provide a good balance of security and convenience. (Because your private information is online, your protection against hackers is only as good as the security of your wallet provider – so look for features like two-factor verification.)
You can easily access your crypto holdings by using an app like Coinbase Wallet or Exodus.
This allows you to:
- Manage all of your digital assets in one safe location
- Maintain control over your own private keys
- Send and receive cryptocurrency to and from any location on the planet
- Instead of long, hexadecimal “public key” addresses, interact with usernames
- Examine dapps (decentralized finance apps)
- Shop at cryptocurrency-accepting merchants
What is the distinction between Coinbase and Coinbase Wallet?
Coinbase lets you buy and sell cryptocurrency, as well as exchange it for fiat currency and deposit it into a bank account. If all you want to do is invest in Bitcoin or another digital currency, this is all you need. The Coinbase app will securely manage your private key rights.
Coinbase Wallet is a separate app that allows you to store your private keys as well as send, receive, and spend digital money, as well as browse and use DeFi applications. To use Coinbase Wallet, you do not need a Coinbase account.
Whichever crypto wallet you choose, it’s important that you do choose one and do your research before deciding on the one that’s best for you. Read the comments on Twitter, Reddit and Quora or ask a friend which one they recommend.
We only used Coinbase and Exodus, and Ledger, as examples in this article and are not suggesting that these are your only choices. This article is for information purposes only.
I write about blockchain, crypto, NFTs and other disruptive technologies and innovations.