Storing Cryptocurrencies in Crypto Wallets

Cryptocurrencies are one of the top-performing digital assets in the on-going era of digitalization. It’s been almost a decade since the launch of the first cryptocurrency, Bitcoin.

One of the major motivations behind Bitcoin’s creation was to create a decentralized system that is not controlled by a central authority.

Over time, as cryptocurrencies became popular, it became one of the most favorable investment assets for investors. Even though cryptocurrencies are volatile and price swings occur within a few days, investors are still keen to invest and have made good profits from their investments.

Like traditional currency is stored in a physical wallet, cryptocurrencies are stored in digital wallets, commonly known as cryptocurrency wallets. These wallets serve the purpose of storing, sending, and receiving of cryptocurrency.

 

 

Cryptocurrency wallets exist in both software and hardware form. In hardware form wallets exist in the form of small-sized devices like a USB. Software wallets usually exist online or could be installed on the desktop.

How are Cryptocurrencies Stored in Wallets?

When we say cryptocurrencies are “stored in wallets,” the digital record of being an owner of a specific coin is recorded in the wallet. Wallets use public and private keys for sending and receiving of cryptocurrencies.

Public Key: Public key is like a bank account that could be shared to transfer funds to your wallet. The public key uniquely identifies your account on the ledger.

Private Key: Private Key is like a password that must be kept secured at every time. Losing your private keys could make you lose your funds from the wallet.

When public-key matches with the private key, a transaction is carried out on the blockchain network, and funds are decreased or increased from the wallet depending on the type of transaction.

Types of Cryptocurrency Wallets

Hot Storage Wallets: Hot storage wallets are types of wallets that are connected online. They are mostly in the form of web applications.

Cold Storage Wallets: Cod storage wallets are offline. Hardware wallets and desktop wallets come under the category of cold storage wallets.

Online Wallets: These kinds of wallets are usually web applications where users could sign up and store their desired currency online. Online wallets offer good accessibility.

Mobile Wallets: These kinds of wallets are usually small mobile applications that could be used to send and receive cryptocurrencies using just your mobile phone.

Exchange Wallets: Cryptocurrencies are traded on the exchange platforms. These platforms are web applications where different cryptocurrencies could be bought and sold online. Users could create an account and could trade their desired currency online.

Hardware Wallets: Hardware wallets are commonly used wallets in crypto space. These wallets offer a high level of security and are unplugged and kept safe when not used. When connected, they could be used to make transactions from one wallet to another. You could store a maximum number of cryptocurrencies in these kid of wallets

 

Should You Store Cryptocurrencies? How is it Beneficial

When it comes to making crypto investments or buying and selling it, keep in mind that cryptocurrencies are risky. In the early days when Bitcoin was launched, it made many people rich overnight. The value increased drastically within a few days, and people who bought it for a price for bananas sold it at the price of gold. But this doesn’t means this will happen to everyone.

If you are a beginner, it is better to study the market, do your research, and consult market professionals. Also, try to keep your eggs in different baskets, invest in different currencies rather than going all in one currency. Start small and learn yourself on the way.

Crypto investments are being considered as one of the best investment assets these days. A lot of advancements are being made, and Bitcoin and other currencies are now being used in daily routine transactions. You can even order a pizza with Bitcoin or use it to make online purchases. You could store your crypto in your desired wallets and use them as you like!