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Brief Guide to Storing Digital Assets on Crypto Wallets
In the most basic form, crypto wallets are programs, software, or dedicated systems that enable the storage of public and private keys. Those keys allow you to send, receive, and monitor their crypto assets. But if you’re reading this article, chances are you already know something about crypto wallets and are ready to put your hands on one that best serves your needs.
Safe Storage for Your Public and Private Keys
When you buy crypto, you’re issued two types of keys. The first type is the public key, which you can safely share with your customers so that they can pay for services, while the second one is the private key, which you don’t want to disclose to random guys.
The public key can be compared with your PayPal email, which any payee can use to send you the money. However, your private key acts as a password to your email. And if you share it with someone, you automatically grant them complete and total access to your money. So, in other words, your public key enables you to receive transactions, while the private key helps to manage your assets, including transferring them to any third party.
Your crypto wallets can store both public and private keys, which can differ based on the cryptocurrencies you choose to deal with.
One thing that you need to know about cryptos is that they have different address structures. So, a Bitcoin address will differ from that of Ethereum or Cardano. Your address structures might resemble a random mix of numbers and letters. In reality, though, they contain valuable information about your assets and transactions.
But what might interest you more is how to store your keys in three different wallet styles.
The first type of wallet you can put your hard-earned digital money into is a software wallet. These days, such wallets are usually online-based. Exchanges like Coinbase or Binance are good examples of software or online-based wallets. The public and private keys are stored on the dedicated servers, and exchanges grant you access to these servers through your unique account. It’s important to note that technically, exchanges can spend your money once they uncover your private key, or a password, stored on their servers. Therefore, it’s critically important that you choose your cryptocurrency e-wallet wisely and carefully.
If you’re reluctant to trust your private key to any third-party application, you can use a hardware crypto wallet, which looks like a good old USB stick. Once you unplug them, you can rest assured no one can access your crypto. Hardware wallets are famed for their highly secure process of getting into them. For example, Ledger Live relies on a 24-key-phrase system, adding an additional security layer against unauthorized use. And there’s no recovery process. So, if you forget your phrase, your crypto is gone forever. This is a double-sided sword, though. Nobody can hack into your tokens unless they get access to your Ledger and know the unique password.
The thing you want to know about hardware wallets is that they can be a little bit pricey. Moreover, they can be tricky to use and set up, especially if you’re new to this area.
The last type of wallet you can use for crypto is a paper wallet, the least popular option nowadays. This wallet would consist of your public and private keys and, quite possibly, QR codes used to facilitate cryptocurrency transactions.
With paper wallets, public and private keys are written down on paper. You can think of this as using cash to debit cards.
One of the most significant problems with paper wallets is the possibility of losing or accidentally destroying your valuable piece of paper. So, this type of wallet can be considered the least practical and convenient. That said, paper wallets remain the safest and most secure way to store your crypto, especially if you’ve accumulated a hefty amount of digital money and want to protect but not access it very often. Note that if you opt for this method, you must type in your private key whenever you want to transact.