Bitcoin is a virtual currency, which cannot be folded and put inside a wallet. It needs a virtual Bitcoin wallet, where your crypto keys are stored. In general, a crypto wallet is a hardware or software that stores your coins and allows you to do BTC trade or transactions.
The crypto wallet comprises two pairs of keys including –
- Public key
- Private key
The public key is a derivative of the private key. It is the address used to transfer or receive crypto to and from your wallet. The private key is the most important part, where users can have some issues. The private key gives the right to access and control the balance held in the wallet. It is the key to your personal safe deposit box and whoever has the password can use the wallet to start a transaction. It is called signing.
Working of the crypto wallets
Blockchain works on a public ledger that stores the data called ‘blocks’. The public ledger records every transaction, balance held at specific addresses and holds key to those totals. Crypto does not get stored inside the wallet but it exists on the blockchain and the wallet program allows interacting with totals held on the specific blockchain. Wallet stores addresses allowing owners to transfer cryptocurrency elsewhere as well as allow others on the network to see the balance held by a specific address.
The majority of the crypto wallets allow you to receive, send, and store coins. A few features just spending and buying cryptocurrencies, while certain offer extras like swapping between different tokens or venturing tokens for a fixed return or gaining access to decentralized apps [dApps].
Every wallet has its pros and cons. The general steps of receiving and sending crypto from the wallet are –
- To receive crypto – You will need to copy the public key or alphanumeric address from your wallet [from generating address feature] and share it with the sender of crypto.
- To send crypto – Under the send feature in the wallet enter the wallet address of the user you want to send crypto funds to and click on confirm. If the amount is large, send a tiny transaction as a test. Sending coins needs a fee that is paid to miners during the transaction.
Crypto wallet types
In general, there are two categories of crypto wallets.
- Software wallets
- Hardware wallets
These are browser extensions or desktop programs that hold the private key online. For every cryptocurrency, software wallets are unique, while hardware wallets support several cryptocurrencies. Software wallets are of three types –
- Web-based wallets
- Desktop wallets
- Mobile wallets
It is a tiny device that stores crypto coins offline. It keeps the keys and password off the computer and phone. Plug in the hardware via a USB port to perform crypto transactions. It is more secure as all signing occurs off your computer. The majority of hardware wallets communicate with a computer either via –
- A company-created app
- A web-based interface
- A single software wallet
Zengo Crypto wallet use needs a basic level learning curve because it is a new type of financial system. Users are 100% responsible for protecting their wallet passwords.