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A crypto wallet is a device, physical medium, program, or service that stores public keys and private keys.
The wallet has its own unique public address (public key) to which you can receive cryptocurrency. Eg as you can send a message to your email address or funds to your IBAN account that you use in the bank.
Each cryptocurrency has its own blockchain, it is currently not possible to send one type of cryptocurrency to an address of another type, eg Bitcoin cannot be sent to the Ethereum wallet address and vice versa.
Example of a Bitcoin public address
Example Ethereum public address
Basically, a crypto wallet is equal to a bank account. Allows you to receive coins, store and send to others. In order to store and do business with bitcoins, one must own a Bitcoin wallet.
When opening a bitcoin wallet, the system will generate your public key (address) and the private key that needs to be stored (written down). Wallet opening is free and unlimited. The keys consist of a combination of numbers and letters, only the owner of the wallet, ie. private key can manage wallet or authenticate transactions. The keys are not related to your data (name, address and other personal data).
You can think of a private key as a kind of password that needs to be kept in a safe place. The private key unlocks your cryptocurrency on the blockchain, and it is up to you to decide how you want to store your private keys.
With a Bitcoin wallet, not a single bitcoin is stored on a local computer or somewhere in a bank, but everything is stored (recorded) digitally in the general ledger, known as the Bitcoin blockchain.
There are various software and hardware wallets that contain several types of crypto wallets, store public and private keys in a backup phrase (12.18 or 24 word backup) for wallet recovery. The phrase should be written on paper or on safety steel plates (capsules) and kept in a secret and safe place. In case you lose or change your device, you can always do a wallet recovery with the phrase.
Types of Wallets
Currently there are a lot of wallet types available and some of the most popular are:
Wallet on exchange offices and stock exchanges (Coinbase, Binance, etc.)
The most popular exchange office among users is Coinbase, one of the largest crypto exchange offices in the world. Companies like Coinbase have done a great thing by introducing large numbers of users to the ecosystem.
It is easy to use, you need to register and verify your account in order to be able to buy cryptocurrencies.
Coinbase stores private keys for you, in case you forget your login information, you will be asked to verify your access account. It is important to remember that the one who controls your private keys also controls the crypto wallet associated with them.
Coinbase has a web and mobile page and an app available on Android and iOS devices. There are various bonus programs where you can earn cryptocurrencies if you learn about them.
Desktop Wallet (Electrum, Exodus, etc.)
Electrum is a Bitcoin wallet for Mac, Linux and Windows operating systems, created in November 2011.
Electrum is not a crypto wallet for users who are just getting acquainted with the blockchain system, but is intended for cryptocurrency traders and investors who already know how blockchain works.
Mobile Wallets (TrustWallet, ZenGo, Exodus, etc.)
Trust is currently one of the best crypto wallets for iPhone and Android devices. The software is open source and gives the user complete control over his private keys.
Imagine web and mobile wallets like your wallet today. Use it to save money, but not life savings. They are great if you make frequent payments, but they are not a good choice for secure cryptocurrency storage.
A hardware wallet is a physical device designed exclusively for secure (offline) storage of cryptocurrencies.
The private key is stored on the device itself, which must always be connected to a computer, phone or tablet in order to manage your cryptocurrencies.
Unlike insecure devices connected to the Internet, with wallet hardware the private key never leaves the device, and to confirm the transaction it is necessary to press a button on the device itself.
Hardware wallets are not as free as online wallets but are currently the best and safest way to store cryptocurrencies.
The two most popular manufacturers are Trezor and Ledger.
Backups in the Form of a Steel Capsule and Plate
Steel capsules and plates are literally a piece of indestructible stainless steel that you can use to store your private keys or backups. This is a good choice if you are worried that you may lose paper copies (e.g. if you live in an area with major floods, fires or earthquakes).
Steel wallets are interesting because they can be used as a “paper wallet” or as a copy for any type of crypto wallet in case they are lost, stolen or destroyed.
Setting up a paper wallet is for advanced users only. If you place a paper wallet incorrectly, the result can be a loss of funds. Proceed at your own risk.
Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of EGG Finance. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.