Crypto wallets are similar to online bank accounts for your cryptocurrencies, but with a few significant differences: they are not supported by government deposit schemes, they only keep cryptocurrencies (no ordinary money), and, most importantly, you retain complete control over your assets. Here’s everything you need to know about bitcoin wallets:
What is Crypto Wallet?
A cryptocurrency wallet is a place where you can store your digital currency when you’re not using it, similar to how a typical wallet saves physical currency when you’re not using it. Crypto wallets keep your private keys — the passwords that grant you access to your cryptocurrencies — safe and secure while allowing you to send and receive cryptocurrencies such as Bitcoin and Ethereum.
They exist in a variety of types, ranging from hardware wallets like the Ledger (which looks like a USB stick) to smartphone apps like Coinbase Wallet, Binance Wallet, Trust Wallet, and others that make using crypto as simple as purchasing online with a credit card.
Non-custodial refers to cryptocurrency wallets that are distinct from your cryptocurrency exchange accounts, such as MetaMask, Rainbow Wallet, or Trust Wallet. When you keep money on a cryptocurrency exchange like Binance, Kraken, or Coinbase, those organizations have control over your funds. When you move your crypto to a non-custodial wallet, however, you retain control of your wallet’s keys.
These wallets are the lifeblood of the decentralized web, acting as the principal interface for decentralized financial protocols such as lending protocols, decentralized exchanges, and non-fungible token (NFT) marketplaces.
Why Do You Need a Crypto Wallet?
What you need is a non-custodial wallet unless you’re running a large firm with so much crypto that you need the watchful eye of a specialized custodian — a third party who looks after your crypto for you.
Unlike a regular wallet, which can hold physical cash, crypto wallets do not store your cryptocurrency. Your assets are stored on the blockchain, but only a private key can access them. Your keys verify that you own your digital money and allow you to transact with it. You lose access to your money if you lose your private keys. That’s why it’s critical to keep your hardware wallet secure or to utilize a reputable wallet service like Coinbase, Binance, and many more.
How Do You Use a Crypto Wallet?
Simple programs to more advanced security solutions are available in crypto wallets. A paper wallet, a hardware wallet, or an online wallet are all possible options. Each of these has the same goal in mind: to keep your holding on the blockchain alive.
You can easily access your crypto holdings by using any of these crypto wallets. You can also:
- Manage all of your digital assets in a single, safe place.
- Have control over your private keys.
- Send and receive cryptocurrency to and from anywhere in the world
- Interact with usernames rather than long, hexadecimal “public key” addresses
- Browse dapps (decentralized finance apps)
- Shop at stores that accept cryptocurrency
Final Thoughts
The crypto space is a diverse one, and more people are becoming interested since they are aware of its potential. The awareness the virtual space has garnered over the years is enough to keep you on guard and put your holdings’ safety first.
This is the point where a crypto wallet comes into play to ensure the security of your virtual currency, just like your physical wallet ensures the safety of your money, credit cards, and more. On this note, when choosing a wallet to yet, make profound research to pick from the best.
