If you’re getting involved in cryptocurrencies, then you need to know what are crypto wallets. The more you know about the ins and outs of crypto wallets, the better prepared you’ll be to function and thrive in this world. Likewise, the more you know about crypto currency and about trusted companies for managing, selling, buying digital currency the better off you will be.
What Exactly Are Crypto Wallets?
Crypto Wallets are a piece of software. With this specific software, you can both send cryptocurrencies and receive them. Crypto wallets are a storage medium for your cryptocurrencies such as Ethereum, Litecoin, Bitcoin, and others.
In your crypto wallet, you can store multiple different coins and tokens at the same time. Beware because there are limitations. Only a set number of cryptocurrencies are supported by these software wallets.
Private and Public Keys
It is necessary to have at least a basic understanding of public and private keys when discussing wallets. Both a private and public key are created when you first use your crypto wallet.
Private keys are a code that is only known by you and your wallet. It is a lengthy hexadecimal code. Think of it as your digital identification. It also has a security function. Your holdings are securely held thanks to private keys.
The public key is derived from your private key. Don’t worry, it is not possible to figure out someone’s private key from knowing their private key. The public key is also in cryptographic code format. This key enables transactions. With it, you can receive cryptocurrencies into your account.
Further, your private key must match your public key in order for you to be able to spend the money in your wallet.
Forms of Wallets
There are a number of forms or types of crypto wallets. Remember, they are pieces of software. So sometimes they are stored on hardware and even kept disconnected from the web. People have been known to put this hardware in bank vaults! Only when the owner wants to be performing transactions will the hardware containing the wallet be connected to the internet.
If you want, you can simply write down your keys. Keeping your keys written on paper is just one method, among others, known as “Cold Storage”.
Another type of crypto wallet is a hosted wallet. These are more like banking apps that most of us are used to using. When using Hosted Wallets you can easily check your balance using different devices such as your smartphone or your computer. These wallets can provide some peace of mind because if you lose, for example, your iPhone you can still access your hosted wallet from another device. Even if you forget your password, you’re still okay.
Can I Legally Have a Crypto Wallet?
With the increased usage, trading, and valuations of cryptocurrencies, much has been said about regulations and laws. Some countries have been warning that regulations are coming. Some have issued bans. Others have chosen a different route while still others have not really done anything.
As of this writing, Nepal, Cambodia, Bolivia, Pakistan, and Algeria have banned Bitcoins. In the countries of Vietnam, Bangladesh, and Macedonia, they have made it illegal to pay in Bitcoins.
Ecuador has flat out banned cryptocurrencies because they say they are going to create their own.
How Do I Create a Crypto Wallet?
Answer this question first: How are you going to access your wallet? Since not all wallets work across all platforms you have to think ahead and take that fact into consideration. Will you be accessing your wallet by logging in to a website or storing it offline in hardware? Are you going to be using your laptop or your mobile phone to use your crypto wallet? Figure these things out.
Of primary importance is that you only use wallets with a good track record. You want to only use trustworthy, reputable wallets that support the cryptocurrencies you plan on investing in and utilize cutting edge technology to best protect the contents of your wallet.
All in all, crypto wallets are a lot like regular wallets…that you’d keep in a safe.