Digital wallets
The rapid development of the virtual industry affects literally everything, even the financial world. The introduction of alternatives to fiat currencies has led to the creation of many special services for storing electronic finances. They are called crypto wallets and have gained immense popularity around the world.
Types of cryptocurrency wallets and their features
When choosing this service on the Internet, users may come across a large number of options. This is due to the rapid development of the crypto industry and its active penetration into all spheres of modern life.
There are two main types of crypto wallets: hot and cold. The former are divided into the following types:
- Desktop. These include Exodus, Electrum, Armory, and Green Address.
- For mobile devices. Samourai Wallet or MyCellium are examples of such services.
- Third-party wallets. Coinbase and Xapo.
These systems have many useful features, including secure storage and multi-signature. However, most users prefer to use cold types of cryptocurrency wallets and their features. This is due to the presence of control over private keys. They can be:
- Paper. It is possible to access private keys without using special equipment. This type includes Cryptotag and Cryptosteel.
- Hardware. In addition to access to private keys, such services will help you create a public address. These are Keepkey or Ledger.
- Digital. They can be used to receive and send virtual assets.
Interestingly, such wallets do not store the funds of their owners, as the money is in the blockchain.
How to choose a cryptocurrency wallet: the main criteria
Before you send your own virtual funds to a specialized service, you need to conduct a little research. You can make a decision based on the facts obtained. When choosing a cryptocurrency wallet, you need to take into account several factors:
- Security. This is the most important criterion to pay attention to. Having your own security service, information about the storage of funds, and a strict identity verification procedure indicate the reliability of the storage system and the protection of cryptocurrencies on wallets.
- Convenience. This criterion is dictated by user experience. Experienced traders and beginners always want to have instant access, so they should choose a custodial service.
- Compatibility. There is a large amount of virtual money on the market, so you need to check the support of certain tokens.
- Control. Managing your funds is important. Software and hardware wallets give the user control over private keys, and exchanges keep these keys.
Taking into account the above factors, experts answered the question of how to choose a cryptocurrency wallet - you just need to take into account the main criteria. Even a beginner can handle this task.
Opportunities and risks of using online wallets
Such systems allow users to check their account balance and conduct payment transactions similar to traditional banking transactions. The system itself does not contain virtual money; it only stores credentials in the form of private keys that provide access to the blockchain of the respective crypto currency.
A crypto wallet stores user keys and information about the location of public keys. The combination of these two elements, called cryptography, ensures the security of operations. This means that transfers and other transactions are more secure than in banks.
However, crypto wallets can be hacked and all assets stolen. This will be very painful because, unlike the loss of funds in conventional banks, no one will look for electronic money, as there is no legislative regulation of cryptocurrency wallets and consumer protection in this area. As you can see, there are great opportunities and risks in using online wallets.
Examples of cryptocurrency wallets and their functionality
One of the most interesting services is Metamask, which allows users to interact with the Ethereum crypto without the need to fully download the blockchain. It works as a browser add-on. Another example is the Electrum cold wallet, which has a simple interface and a good level of cybersecurity. It does not fully load the entire blockchain because it uses the SPV protocol. However, these are not all examples of cryptocurrency wallets - there are many more in the world, and the functionality is constantly expanding, which helps users secure their currency and earn money on it.
The future of cryptocurrency wallets
The prospects for the development of such systems depend only on the development of crypto. The future of cryptocurrency wallets may depend on the prevailing trends in this area. Currently, this industry is rapidly penetrating all spheres of modern life.