Importance of Wallets..?
As we all know, cryptocurrency is a form of digital currency that cannot be physically touched or felt, but can be exchanged for payment or marketing purposes. Well, some newbies in the crypto space are in awe of where this asset can be placed or even traded. So, the answers to your questions we hide in our theme.
Cryptocurrency assets are actually placed or stored in special crypto tools which are actually known as crypto wallets. Yes, a crypto wallet is a storage site for cryptocurrency assets. Millions or trillions of crypto assets, including coins or tokens, can be safely stored in crypto wallets. While we use pocket wallets to store or secure our fiat currency, similarly in the crypto space, crypto wallets are used to secure crypto assets.
Crypto wallets are protected with the help of various crypto elements. The assets stored/placed in the wallet are actually protected with the help of private keys. The private key actually means the source of access to the assets placed in the wallet. Only the owner of the wallet can access the private key.
People who have access to the private key can easily access the assets placed in the wallet. Also, the owner of the private key can perform transactions such as sending and receiving funds to or from the wallet. Although crypto exchanges also offer wallets where assets can be stored, they can be used for temporary/short-term asset storage as they are less secure than external wallets.
Type Of Wallet
- Hot wallet
- Cold wallet
Hot Wallet
A hot wallet is a type of wallet that can only be accessed via the Internet. This means that in order to verify your funds and send or receive crypto assets, you must be connected to the Internet. A clear example of this type of wallet is an exchange-based wallet. It is important to mention here that hot wallets are software wallets because you can access them anywhere in the world with just your private key.
Cold Wallet
Cold wallets are the complete opposite of hot wallets. This type of wallet does not require internet access to work. This means that you can perform activities on this wallet offline. A clear example of this type of wallet is Trezor. It is important to mention here that cold wallets are hardware wallets because they use hardware to store assets.
Importance of Wallets
The importance of crypto wallets can be guessed from the above discussion. Crypto wallets are especially important for the security of crypto assets. We know that cryptocurrencies are not in the form of physical currency that can be stored in physical wallets. Therefore, these digital assets are stored and protected in crypto wallets.
Crypto wallets can take the form of apps that can be downloaded to the device. After creating an account, users receive the wallet's private key which they then use to perform wallet-related activities.
Another importance of crypto wallets is that they are much safer than wallets available on exchanges, so users can take advantage of external wallets to store their large capital and can also withdraw the required amount whenever they want. trade on any exchange.
Most of the users usually keep their stablecoins in crypto wallets and these coins can be staked as their savings. Moreover, they are much more secure than banks, as users have their own control over their assets and can exercise their authority using the wallet's private keys with ease.
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