With the increasing trend of digital currencies, the use of crypto wallets is also becoming more popular. As such, the question what is a crypto wallet still comes up in many conversations among new users of crypto currencies or those interested in venturing into that line of business. They are digital wallets used to store the digital currencies before they are transferred to other destinations.
The wallets make it easier to send and receive the currencies whether it’s from outside sources or from the company that the person is invested in. Since the wallets are software, there are three main categories available. They include:
Multi signature wallets
With these wallets, the relevant users who are participants of the intended money exchange need to log in signatures from their respective places before any transaction can be cleared. Without all of them, this wallet cannot be used at that time.
Multiple currency wallets
Digital currencies continue to come up, creating the need for this type of wallet. It allows the use of different currencies and is therefore a better option compared to those that only accept one currency. Other than sending and receiving currencies across the crypto currency divide, some of the wallets in this category can allow the exchange of one currency to another.
Cold and hot wallets
The difference between those in this category comes in whether they can operate without the internet or not. Hot wallets need internet access while cold ones are usually offline. This differentiates some of their features though they still operate the same way. One of the major differences is the security perception since hot ones are considered more susceptible to hacks and other attacks than the cold ones.
Public and private key wallets
Although this isn’t considered as a category since all wallets operate with the keys, it’s still an important aspect of how wallets work. All currencies require public and private keys in order for any transaction including exchange into real money to be complete. The public key usually comes with the currency and the private key is stored in an individual’s wallet. Without the keys, no transaction can take place and the currency is as good as lost. Each wallet has different methods of keeping this key safe making it a very important factor to consider when choosing a crypto wallet.
With a variety of wallets falling under these categories ranging from web wallets, mobile wallets to hardware wallets, it’s very important to compare each of them and their features before choosing one. Safety and convenience should be the top priorities, as well as how all the other features and setting can fulfill your needs.