Probably not the most obvious question for experienced crypto users. If you are the one, don’t read this text – you already have your crypto wallet (or wallets), and know how to use it. But for those who are not aware what the difference between private and public keys and hot and cold wallets…then keep reading! That’s exactly why we are writing those articles.
Okay, let’s dive into the technology. A Crypto wallet is software that creates and stores your public and private keys. This software interacts with the blockchain, monitors your balance, and allows you to send and receive cryptocurrency.
Contrary to the normal physical wallet, where you keep your cash, credit cards, and cards with stamps from a coffee shop, a crypto wallet is more like a personal key to all your assets. But it’s not just one key for everything: you have your public key (something like an account number) – it’s data you can share with other people so they should send you cryptocurrency.
Also, there’s a privet key – something you must (yes, must) keep only to yourself. It’s like your bank application password or like the whole information written on your credit card unless when someone steals your credit card you still can reach banking there’s a possibility to refund, but there are no system administrators that can help you in the crypto world. Once you’ve lost your crypto wallet – you’re doomed, you’ll never prove it not you anymore being in charge of transactions.
That’s exactly why dozens of people bought bitcoins in 2011, lost their crypto wallets, and are now called the biggest losers in the world. Okay, then moving to the types of crypto wallets (yes, there are more).
Crypto wallets can hot and cold. Hot crypto wallet – the one that is connected to the internet (consider it as your bank application), that’s the most convenient way, but the least safe. The second option – the cold wallet, is a device (that looks like your hard drive), this is one considered the safest, but there is always an opportunity to lose it. Also, remember that you can only buy your cold crypto wallet from the manufacturer and never buy the used one – we warned you.
Of course, there’s a lot to say, but at least now you have some idea. What else would you like to know about crypto wallets?