Have you ever wondered how to use your Crypto digital wallet in sending and receiving Cryptocurrencies? Then you need to read this work carefully to learn how to do so. You will also learn from this work about the most secure wallet for Cryptocurrency storage and why users prefer offline wallets above hot wallets.
What are Crypto digital wallets?
A Crypto digital wallet is a storage device that allows users to store their digital assets using unique codes. Without these crypto digital wallets, it will be impossible to send or receive any digital assets as it will always require a landing wallet address to do so. Most crypto digital wallets need the internet to function, however, there are some that can function offline too.
Forms of Crypto digital wallets
Crypto digital wallets often appear in two forms known as Hot and cold wallets.
Hot wallets refer to those digital wallets that need the internet to function while cold wallets do not need the internet to function.
Types of Crypto digital wallets
There are six main types of crypto digital wallets. They include:
- Exchange wallets
- Desktop wallet
- Mobile wallet
- Web or online wallet
- Paper wallet
- Hardware wallet
A. Exchange wallet: The exchange wallet is a hot wallet assigned by a Crypto exchange to all their traders for holding their digital assets on the exchange platform. This type of wallet can only be accessed online. Examples of exchange wallets are Binance, eToro, Kucoin, Capital.com, etc.
B. Desktops wallet: The desktop wallet is a type of Crypto digital wallet that needs to be downloaded with the desktop or computer. It operates through inbuilt nodes and storage codes. A desktop wallet needs the Internet to function.
C. Mobile wallet: The mobile wallet is an Internet-based wallet built on mobile applications. It has been designed to carry out fast transactions using smartphones.
D. Web or online wallet: The Web or online wallet is the type of wallet provided by various online platforms. It functions basically through the Internet and exposes users to attacks and hacking.
E. Paper wallet: The paper wallet is a special type of wallet designed to keep a record of all the transactions carried out by its user. It is the oldest storage wallet known today and more secure than all other hot wallets. However, users criticize it as being slow in execution compared to the rest.
F. Hardware wallet: The hardware wallet is an offline wallet that allows users to store their digital assets on an external physical device that does not need the Internet to function. The hardware wallet could be seen as the most secure wallet and immune to attacks or hacking.
How do these digital wallets operate?
Crypto digital assets have been built on Blockchains. The latter provides the ledger where the digital wallets are established and allowed to function. To interact on a given Blockchain, users will need a storage wallet for sending and receiving their digital assets. The storage devices function through codes known as the wallet address. Without these digital wallet addresses, it will be impossible to send or receive crypto on any Blockchain.
To receive crypto using one’s digital wallet, the receiver will first have to copy out his unique wallet address and send it to the sender. He will need to indicate the network too.
Next, the sender will have to copy the address and send the same type of cryptocurrency that is compatible with the receiving wallet address. Any mistake in this regard could lead to loss of assets and is often difficult to recover.
