What is a wallet?
Anyone who invests in crypto holds a wallet, otherwise you will not be able to use your Bitcoin or other crypto-money.
Without wallet, it will be impossible for you to keep, spend or receive crypto-currency.
In other words, its role is to replace a traditional bank account.
There is not only one type of wallet, depending on your use you will be led to choose such or such type of portfolio.
When you create your portfolio, you will receive several informations including :
- Private key that will be useful for you to connect to your wallet, in other words it is like login credentials
- Public key: to simply explain, compared with a bank account, the public key is equivalent to the IBAN code. The public key will be useful when you decide to make transactions.
Note that you will need a wallet for each currency, you cannot make a single wallet to keep different currencies.
If we repeat the comparison with a bank account, you cannot have an account with dollars, mixed with euros. It will be two separate accounts, so as not to mix currencies and rates.
Different kind of wallets
Hot Wallet (online)
This is the most used and only type that is listed in our comparison.
It is a web application or an application that you download on smartphone.
The objective is to offer immediate accessibility, to allow users to use crypto-currencies. Generally, this type of wallet is advised for daily use. You should not forget that your account will be online, and that there is more risk following this use. If a hacker attacks you risk losing full access to your account.
There is also the desktop wallet that downloads and installs like an application on your computer, without necessarily being linked to the Internet. This means is rather used for small sums, it remains less risky because it is hosted by you and not at a third party.
Cold wallet (offline)
It's the way to store off the Internet.
It exists in 2 forms:
The primary objective is to keep all your keys safe, nothing is connected to the internet.
So it's less vulnerable, you'll take less risk.
In this case, hackers have no access to your wallet, so that it is possible, it is necessary that the person can hold your equipment, to note that some tools allow to enter a PIN code, which adds an extra security.
Don't panic if you damage your hardware, because you can create a backup code to get your crypto back safely. It is such a simple form of wallet that it is suitable for beginners.
However hardware wallets are not free! Don't forget that it's still hardware, so you'll have to pay to get it, because hardware wallets can take the form of a USB key or an external hard drive for examples.
This solution allows you to print your wallet in paper format, as its name indicates it. You will be able to receive these papers using your public address.
For most of the time, paper wallets work with QR-codes.
The advantage of this wallet: there is no trace on the internet, it is probably the wallet that holds the most security since there is no link with the internet, which means that it will be impossible to hack your account. The crypto must still be entered into software on your computer.
However, you must be careful with the paper, because there will be a lot of information on it (pay attention to the water for example), some people store these notes in safes to avoid any danger.
Although ideal to store on the long term in complete safety, it will nevertheless be more difficult to use them (to exchange them or to make transfers), and it will thus not be obvious to use on the daily life, but rather to store on the long term in order to make the money grow.
As for everything, you have to be careful, because more and more scams are thought to take your BTC ! Some small reminders, some common sense, not to forget..:
- Golden rule: only trust yourself when it comes to crypto, never let yourself be influenced by others and keep your private keys secret.
- Silver rule: Remember to check applications (or even websites) on which you create your account, it will take you little time and may not allow you to run headlong into scams.
- Bronze rule: Remember to encrypt your wallet, it is a means that will allow you to protect yourself even more. So you don't lose everything because of a hacker.