Understanding what cryptocurrency wallet is and how it works

Without cryptocurrency wallets, we will not be able to access, store, send, receive or tract our digital currencies such as Bitcoin, Ethereum, Litecoin, and much more. When Bitcoin was created, its main goal as a decentralized currency was to give people the full control over their own money. Given the fact that the cryptocurrencies are increasing in value, it is normal and necessary to have your own cryptocurrency wallet for storing and managing your coins.

What is cryptocurrency wallet?

A cryptocurrency wallet is a software program that enables you to store private and public keys and cooperates with various blockchains to allow users to send, receive, and monitor digital currencies. Actually, the digital currencies are not storing any money, and there are no currencies stored anywhere in physical form. There are only records of transactions stored on the blockchain.

How it works?

When someone sends cryptocurrency to another, they are signing off ownership of the coins to the receiver’s wallet address. In order for the receiver to be able to spend these coins, they must have the private key that matches with the public address the currency is assigned to. When public and private keys match, the digital wallet balance is increasing. There is no actual coin exchange.

The cryptocurrency wallet works as a safety box, the type of box that we use for storing very important and valued possessions. We cannot afford to lose key of this type of box because if we lose it, we lose ownership of our important possessions. It is the same with the cryptocurrency wallets. Instead of keeping physical keys, we keep digital keys. Those digital keys are in the form of codes.

Types of cryptocurrency wallets

There are three categories of cryptocurrency wallets — software, hardware, and paper wallets.

• Software wallets — there are three forms of software wallets: Desktop wallets (those wallets that are installed on a laptop or a PC, and can be accessed from a single computer. They are highly secure, but if the computer gets virus, there is a chance of losing your wallet), Online wallets (those wallets that run on the cloud and can be accessed from any device; your keys are online stored), Mobile wallets (those wallets that run on an application in a smartphone; they are simpler than the desktop wallets and can be used anywhere).
• Hardware wallets are storing private keys on devices like USB. They enable offline storage which increases the security and safety of the keys. These wallets support different digital currencies as well. You have to insert your device to any device that is connected to the internet, enter your password and start transacting.
• Paper wallet is a piece of software that securely generates keys that are printable. If you want to transfer currencies on your paper wallet, you just have to transfer coins from your software wallet to the public address of your paper wallet.

Where can you get a cryptocurrency wallet?

There are many places where you can get your cryptocurrency wallet. The main place is on the web browsers, as well as the app stores. You can get your wallet from online stores as well. The most popular digital wallets are MyEtherWallet.com, IMtoken, Gnosis, MyTrezor, Crowdwiz, etc.

How to secure your cryptocurrency wallet?

The security of a cryptocurrency wallet depends on the wallet type and service providers. For example, the online wallets have more risks than the offline wallets. But, even though online wallets are more exposed to hackers, they have proven to be secure due to many implemented measures for all wallets. Don’t forget that you must keep your key because losing it will mean theft of your coins. Here are some ways of how to secure your cryptocurrency wallet:

• Always keep your software up to date
• Backup your wallet
• Add additional security keys

Energy Premier recognizes the importance of the cryptocurrency wallets. That’s why we enable our users to create a digital wallet on MyEtherWallet.com, to ensure their wallets, and to move it to the private wallet.

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Thank you for reading.