Crypto wallets protect passwords that are required for cryptocurrency access
Like your traditional currency notes, you cannot fold your bitcoin, ethereum, dogecoin, or any other cryptocurrency holdings and put them in your wallet. So, how do you protect the digital coins you own? You can do this with the help of a cryptocurrency wallet. They exist in a variety of formats, ranging from a hardware wallet — a physical device — to apps you can run on a smartphone or computer. These wallets keep your private keys – the passwords that give you access to cryptocurrency – secure and accessible.
Here are the types of cryptocurrency wallets:
There are three main types of cryptocurrency wallets that you can choose from – paper wallets, hardware or physical wallets, software or online wallets.
Paper Wallet: Here you can write down your private key on a solid medium, such as paper, and keep it in a safe place. However, it is not safe, especially if you are going to leave pieces of paper scattered all over the house.
Hardware Wallet: Also known as a physical wallet, the keys here are stored in a device that is kept in a secure location and only connected to the computer when you want to use your cryptocurrencies. Like paper wallets, hardware wallets also carry the risk of being lost or destroyed.
Software or Online Wallet: In these wallets, the private keys are stored in an app or other software or online wallet. It allows you to send, receive and use cryptocurrencies in the same way as you would transact in an online bank account.
A software wallet is an example of hot storage, while the other two types of wallets – paper and hardware – are also known as cold storage. To put it another way, hot storage wallets are those that are connected to the Internet and can be used to pay for items instantly, as well as receive additional cryptocurrencies in real time. However, when it comes to cold storage wallets, they only hold private keys.
One thing to note is that if you lose your private key, you will lose access to all your cryptocurrencies. As a result, it is important to keep your hardware wallet secure or use a reliable service if you are using a software wallet.
The simplest way to start your cryptocurrency journey is to use an online wallet provided by a major exchange that offers a mix of security and accessibility. However, since your personal information is stored online, your protection against hackers is limited to the extent of your wallet provider’s security. So, look for measures like two-factor authentication when using an online wallet.
Ultimately, whatever you choose, make sure you know where your private keys are and that you’ve protected your wallet password. You don’t want to lose your cryptocurrency just because you lost your keys.
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