Table of Contents
In 2009 a revolution began in the payment method field as a software developer created a decentralized form of currency. His name was Satoshi Nakamoto. He created bitcoin which is the first cryptocurrency. It is available only in the virtual world and has no existence in the physical world which means you can not touch the bitcoin.
Bitcoins are extracted from the blockchains and the process is called bitcoin mining. The bitcoin transactions are decentralized and not governed by the central government or other organizations.
The main difference between the normal currency and cryptocurrency is the governing bodies. The normal currency is governed by the central government or any other central organization and the transaction system follows the traditional approach.
But in crypto transactions, there is no publicly available record. If you are interested in bitcoin trading check this link.
As we discussed above that it is different from the normal currency and is not physically present in the world so it is difficult to store the cryptocurrency in the banks like a normal currency that follows the traditional banking system and one can keep their money in the bank and in return the bank provides some profitable interest on the money saved in the bank.
For bitcoins, there was no such service in which the cryptocurrency holder can store the bitcoins. But with the increase in the popularity of bitcoins over the years, there was also an increase in the services which were designed specifically for the cryptocurrency. For the storage of the bitcoins, there was the development of the wallets which were designed specifically for this purpose.
These wallets behave like a normal bank account in which people deposit their money and get some interest. In these wallets, the crypto holders can deposit their bitcoins or other cryptocurrency and keep them safe.
Different types of wallets are available all across the world for different types of cryptocurrencies. The wallets provide safety to cryptocurrencies.
Types of wallets
The cryptocurrency wallets are of two types one is a hot wallet and the other one is the cold wallet. Hot wallets are those wallets that use the internet and system for the operation.
But the hot wallets are at risk of being hacked due to the usage of the internet. On the other hand, cold wallets are those which are used offline and there is no requirement of the internet for the operations.
This makes these types of wallets safe as they are not at the risk of being hacked. The types of wallets in both the categories are given below
The crypto holders can use the Mobile wallet but it is to be kept in mind that a mobile wallet is a type of hot wallet. In this wallet, the user can use any app which allows the transaction of bitcoins.
Mobile wallets are very easily accessible and can be used anywhere in the world for transactions but it is risky too if you lose your mobile then there is no way back to the wallet.
This is the type of cold wallet. In this type of wallet, the private key of the user is printed on paper with a QR code which makes it safer than other hot wallets because no one hacks the information until it is kept in a safe place.
It is a type of hot wallet. The key is saved on the web portal. The key works as an address to which the coins are finally posted. The coins find their way through these keys which are basically the address of the target or source wallet.
Some of the web wallets provide the facility of insurance for the safekeeping of coins thereby increasing their popularity and use.
Other types of wallets include Hardware wallets, Desktop wallets, etc.