Those who are new to the world of cryptocurrency, and even those with a little bit of knowledge, may be confused about the term ‘wallet’ for your cryptocurrency. Is it like the leather wallet you carry around in your back pocket? Do you house physical coins and cards in it? It’s easy to assume that a cryptocurrency wallet is a physical item, but it’s as digital as the currency itself. However, a lot of the concepts of how it works are similar to that of a physical wallet as well.
What is a cryptocurrency wallet?
A cryptocurrency wallet is a digital wallet that houses all your cryptocurrency. All your various currencies are separated by what they are, and it also keeps track of how much you have of each, as well as a history of your transactions. While you have to count money and keep receipts for a physical wallet, a digital cryptocurrency wallet does all of the hard work for you.
How does a cryptocurrency wallet work?
Cryptocurrency wallets work similarly to a physical wallet but, of course, they are digital. Just as you would keep your safe or leather wallet secure, you must also keep your digital wallet safe. In the same way as you would have a key or a passcode to your safe, you must also hold the key to your digital wallet.
However, if you lose it, you can’t just call a locksmith to bust it open. Failure to keep your key safe can result in the loss of everything within it. Many people have lost thousands of dollars by not keeping their key protected.
A key for a cryptocurrency wallet is not like the four digit pin you use to access your debit card or bank account. Instead, it’s a series of letters and numbers that are around 60 or more characters long. You can either write it down and keep it somewhere safe, save it on an external hard drive (or several for additional protection), or memorize it in your head. However you choose to store this information, be sure never to give anyone access to it.
How do you get a cryptocurrency wallet?
When you decide to invest in cryptocurrency, the first thing you will want to do is get a cryptocurrency wallet. They are easy to find online, and there are various options as well. You can either download them via your web browser, on your smartphone or even purchase hardware versions as well. Quite often, you can see various options when you go to buy the cryptocurrency as well.
In essence, cryptocurrency wallets are safety deposit boxes for your initial coin offerings and cryptocurrencies. They track your trades, withdrawals, and investments, all the while being a secure means of keeping your coins altogether. When you go to make a cryptocurrency wallet, be sure to never share your private key with anyone.