A cryptocurrency wallet is software that maintains the track of secret keys (Public and Private) that’s used to digitally sign cryptocurrency transactions for distributed ledgers. These keys act as proof of your ownership of the digital assets and to implement the transactions that transfer or alter them. Needless to say, these keys are of significant importance to maintaining the equilibrium of the cryptocurrency ecosystem.
A Crypto wallet does more than just storing the keys for performing transactions. It also stores the address of the digital asset on the Blockchain. In this case, if the owner loses the address, he/she might permanently lose authority over the digital asset or digital money.
In the further blog, we shall study more about crypto wallets and their important aspects. Let’s start reviewing them in a little brief.
How does a Crypto wallet Work?
Unlike a physical wallet that stores money, a crypto wallet stores the keys: public and private keys. A public key acts just like your bank account number whereas the private keys act like your personal PIN to have direct access to your bank account. Since bitcoin is sent in the form of a transaction, the recipient’s Private key must match with the sender’s public key.
With the ownership of private keys, you get complete authority over financial digital assets following your public keys. It is significant to hide your private keys so that you only know about them. If a third person gets access to your private keys, he/she may have the hold over all your digital assets (coins). Thus, you must have a backup to secure your private keys in case you lose them. You will lose your entire funds if your keys don’t get recovered.
Types of Crypto Wallets
Mainly, there are 2 types of wallets.
Hot or Software Wallets – These wallets are accessible with the help of internet service for example-Coinbase (This is one of the largest cryptocurrency exchanges that supplies online wallets). Hot wallets can be further categorized into Online Wallets and Client-Based Wallets.
These wallets are easy to handle locally on a user’s computer or a mobile device. Besides, software wallets are hot wallet generators that can create keys that can be printed out as QR codes.
Cold or Hardware Wallets – These wallets can be downloaded and stored offline on hardware components such as – a USB device and or on a mobile device. Lesser-known to many, cold storage wallets can also be bought as devices where the software is already installed on them. TREZOR and LEDGER are the types of vendors who sell such devices. Hardware wallets are not considered very friendly user-interface and with Blockchain, it communicates through codes.
It has been seen that most of the Crypto attacks happen online where hackers transfer all the keys to their wallet(associated funds as well). Experts commend not to keep any cryptocurrency balance in online wallets as attacking customer accounts is one of the conventional tactics adopted by stealers to take control of your blockchain cryptocurrency accounts.
The solution is to use a wallet with an online exchange that carry-outs two-factor authentication via push technology, which ties the second factor to the user’s registered mobile phone. It authorizes users only to approve the request sent out by the wallet’s authentication service.
Webcom Systems as a Cryptocurrency Wallet Development Company!
At Webcom Systems, you can get the best cryptocurrency wallet development services for acting with virtual exchanges. Our supremely talented digital asset wallet developers focus on creating reliable, highly-secure, and expandable crypto wallets to always give you an extra edge in this game. We intend to provide you with a powerful and authentic wallet for trouble-free transactions and successful storage of private transaction keys.
Also Read: How To Start Building a Blockchain Development Platform From Scratch?