What is a Crypto Wallet?

Hey 👋, how are you doing today? I just had a cup of coffee, grab yours and let us discuss today's topic, Crypto Wallets. You will hear a lot about crypto wallets especially if you are into web3. So, what is this crypto wallet?

A crypto wallet is a digital wallet that enables users to manage and store their cryptocurrency. You want to do crypto transactions, well you need a crypto wallet to buy, save and sell cryptocurrency to and from other wallets.

It is very similar to the online banking account that allows you to make or receive electronic transfers to and from other bank accounts. To best protect cryptocurrencies from online attacks, and have cutting-edge security, you need a crypto wallet and it will help you manage different cryptocurrencies.

Crypto wallets securely store unique private and public keys corresponding to the wallet address, an important part of the blockchain network and vital for cryptocurrency transactions. One wallet can store different kinds of cryptocurrencies.

Now your crypto wallet is like a bank account you have just created, your bank account needs your ID number and account number, which are unique to everyone. Now think of your id number as your private key and your account number as your public key. To receive transactions you use your account number which you can give to everyone(in this example that would be your public key), although the id number you don’t give to everyone is secret to you( in this instance it would be your private key). The essential difference between crypto wallets and normal bank accounts is that in crypto you have to authorize transactions to and from your account.

Here is how the keys work, lets's say you want to send me some ethers, I will give you my public key so that you can do the transaction on your side. Now for me to accept the transaction I use my private key to sign or authorize the transaction on my side, which will be connected to the public key as a reference that I own the wallet you are about to send the ether to.

This eliminates that frustrating situation when you are sending money to a friend or family member but you don’t put in the correct account number or cellphone number when doing the transaction. Now the person you never intended on sending money has got your money, and by law, it's not their problem you missed a few digits in the account number, the money now belongs to them, unless you find a person that is understanding that mistakes happen, otherwise forget you will not see your money.

One of the important things to note about crypto wallets is the seed phrase. wallet software will typically generate a seed phrase and instruct the user to write it down on paper. If the user's computer breaks or their hard drive becomes corrupted, they can download the same wallet software again and use the paper backup to get their bitcoins back. Anybody else who discovers the phrase can steal the bitcoins, so it must be kept safe like jewels or cash.

A seed phrase, seed recovery phrase, or backup seed phrase is a list of words that store all the information needed to recover Bitcoin funds on-chain.

Hot Wallets Hot wallets are considered user-friendly wallets that connect to the internet and generally offer better accessibility due to their connection to the internet

Cold wallets Specific variations of cryptocurrency wallets that are designed for cold storage. which implies wallets store crypto tokens of users in offline mode, resulting in them serving as vaults that you can use for everyday transactions. although there are sometimes cold wallets that connect to the internet.

These wallets have types also, first let's discuss types of hot wallets

• Desktop wallets which involve downloading an app to your desktop

• Web wallets you can access through web browsers

• Mobile wallets you install a mobile application that serves as a hot wallet

Now onto the cold wallet types

• Paper wallets as the name suggests, are physical pieces of paper that contain data you need to access cryptocurrency

• Hardware wallets save private keys on a physical device in an offline environment and work just like a flash drive

I have heard of hardware wallets a long time ago although it did not make sense to me, I was watching CSI: Cyber the American series that focuses on cyber crimes, interesting watch on how people get to hack you and just make life difficult for you should they see it fit to do so.....

To wrap up, crypto wallets use a seed phrase that is very important because you lose it you lose your whole wallet. it is essential to keep your private key as the word suggests private, don't share it with anyone unless you want to lose your cryptocurrency. Use the public key only for receiving and making transactions.

there is so much that can be said about web3 and its currency please feel welcome to share your thoughts in the comments section. I would appreciate hearing from you