When you purchase cryptocurrency assets, you are given both public and private keys. Both these keys are alphanumeric characters that authorize access to your crypto. A public key can be shared with anyone as it is the means by which other users can send you funds. Meanwhile, a private key should be for your eyes only as this is essentially the password that allows the holder access to the entirety of your crypto funds.
Given its importance, you should choose to store your private keys in a secure location to ensure hackers won’t get access to them. A common way to do this is through a cryptocurrency wallet. Here’s a quick overview on what crypto wallets are and how they function to ensure your crypto funds remain secure.
Cryptocurrency Wallets: Keeping Your Assets Secure
A crypto wallet is a device or program that stores your public and private keys, the latter of which allows access to your crypto funds. Say, you need to transfer Monero funds to someone. What you do is you enter the recipient’s Monero wallet address, specify the amount you’ll send to them, and then authorize the transfer with your private key. Without your wallet, this transaction would’ve been much more complicated as you’d have to type the long string of keys needed to facilitate the transfer. Your wallet streamlines the entire process for you, making transactions almost instantaneous.
There are different types of wallets, each with their own pros and cons. Software wallets are the most common, and they are essentially apps that have quality-of-life features such as displaying your balance and having quick transfer options via QR codes. Meanwhile, hardware wallets are actual devices such as hard drives or USB drives that store your keys and need to be plugged into your computer during transactions. Lastly, paper wallets are exactly as it says: your private keys are written or printed on physical paper.
Software wallets are the most convenient to use, although they do theoretically open themselves to more risks since they’re connected online. Hardware and paper wallets may be safer, yet both don’t offer the accessibility that software wallets provide. What’s more, if they get damaged, your keys may be lost forever if you don’t have a backup.
Different Wallets, Different Mechanisms
Crypto wallets work by using your keys to authorize fund transfers, thus proving to the blockchain that the transaction is indeed legitimate. It’s not much different from using a digital banking app in this regard, although crypto wallets do not store funds per se but only provide access to them through private keys.
Considering that there are different kinds of cryptocurrencies, these coins are also often stored in different wallets as well. This gives you additional security, because your different crypto assets are stored in separate wallets for safekeeping. Of course, there are also crypto wallets that can hold various types of crypto, if that’s what you prefer.
Having a crypto wallet offers both convenience and security. However, you must also do your part in keeping your crypto wallet safe. This includes not connecting to public Wi-Fi when making transactions as your credentials can be stolen by hackers through an unsecured network. You should also consider enabling two-factor authentication (2FA) to deter unauthorized logins, and you should be vigilant of social engineering tactics that may involve criminal actors pretending to be legitimate customer service representatives and asking for your wallet’s login details. Keep your crypto wallet away from the prying eyes of cyber criminals by remaining discreet with your login details and not sharing your password or private keys to anyone.
Choosing the Right Cryptocurrency Wallet
If you have crypto assets, then you most likely have a cryptocurrency wallet or two already. However, since there are many wallet providers out there, it’s up to you to do your research on how to find the right crypto wallet to use. Read up on other users’ experiences on specific wallets and see if your prospective providers have garnered community trust. Look up as well if the wallet has all the features you need. Last but not least, check if the wallet provider is also proactive in releasing updates and security patches to ensure the safety of their software.
When you’ve decided on which wallet to use, make sure you’re downloading from the provider’s official website and not from dubious sites. Once you’ve downloaded the wallet, set up necessary security measures such as recovery phrases and 2FA for added safety. Backing up your wallet can also give you peace of mind, knowing that if your wallet is ever compromised or corrupted then you don’t lose access to your keys.
Cryptocurrency wallets are a convenient way to manage your crypto assets, allowing you to send and receive funds in just a few clicks. By knowing how they work and what you should look out for when choosing one, you can rest assured that your funds will remain safe from hackers and you can enjoy all the benefits your crypto wallet has to offer.