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What is a digital wallet? The information you need to know when to use

    If you've ever traded cryptocurrencies, you're probably no stranger to the term Crypto Wallet. Join us to learn about the safest cryptocurrency wallets today to give you more tips when you want to store coins.

    What is a digital wallet?

    Crypto wallet is an application that allows users of cryptocurrency to store and retrieve their digital assets. Like regular currencies, you will need to have a wallet to contain all the money to prevent theft and facilitate spending. When users have cryptocurrencies, such as bitcoin, they can store it in their wallets and then use it to make transactions.

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    In fact, even though it is called a "wallet", the nature of a digital wallet is applications like those you run on a smartphone or computer. If you enjoy the experience of holding a real (digital) wallet, you can also buy a physical device that runs the wallet application.

    The first cryptocurrency wallet was introduced by Satoshi Nakamoto when he first launched the bitcoin protocol in 2009. Bitcoin is the most popular and widely used cryptocurrency today. In addition to Bicoin, other cryptocurrencies built on blockchain technology can also be stored in these types of wallets.

    How does e-wallet work?

    You can imagine your cryptocurrency being stored on a wallet the same way files are stored on a USB drive, but in reality, the information stored on the wallet points to your cash position on the blockchain, The public ledger records and validates all cryptocurrency transactions.

    The wallet is a software so you can view the balance of cryptocurrency and transaction history.

    Basically, each type of wallet is slightly different, but in general, any cryptocurrency wallet will work with one or more cryptocurrencies, as well as be able to store one or more dedicated wallet addresses for electronic money.

    Wallet addresses are like cryptocurrency-specific account numbers, they can be used to receive a specific cryptocurrency (for example, to receive Bitcoin, you need a Bitcoin address) and can be divided. share publicly. Every address is linked to blockchain coin.

    The proof that you own the address is done by the private key (the secret code associated with the public address) that is the special characters, you can use these Private Keys to prove ownership. as well as to log in to wallet application.

    Basically, a wallet is like your online bank account, your address is like your account number, blockchain is like a bank ledger, a deposit wallet, or a private key is like your bank clerk. . One thing to note, you can share your wallet address publicly, however, absolutely never share your Private Key and password with anyone.

    Cryptocurrency itself is not actually stored on a wallet, it is stored on a blockchain coin. Your wallet is simply software designed to interact with the blockchain, including address storage. For example, Bitcoin wallets interact with the Bitcoin blockchain, allowing Bitcoin to move between addresses by the owners of those addresses and allowing users to view balances associated with an address.

    An interesting fact is that even if the wallet address is public, no one will be able to exercise access rights or attempt to hack the wallet if you do not share the private key. Because behind each address is a private key (a secure digital code only you and your wallet knows). The private key shows ownership of the public key (a public digital code connected to a given currency). Finally, each set of private and public keys is connected to a public address (encrypted version of the public key). So your wallet is software that stores your private keys, public keys and public addresses, allowing you to send and receive coins, while also acting as a personal ledger on balances and transactions.

    The most popular types of electronic wallets today

    The types of wallets you can use include: online, offline, mobile wallets, hardware wallets, desktop wallets (desktop computers) and paper wallets.

    Some wallets provide more than one access method - for example; Bitcoin.com wallets have both desktop and mobile apps.

    Full Node Wallet: A wallet where you control your private keys and store a full copy of the blockchain. Basically, every coin has an official wallet of this type and can be found on the GitHub website.

    Storage wallet: Some wallets allow you to control your private key, some wallets have supervision (you cannot control your own key). Most exchange wallets are depository wallets.

    Desktop wallet: The most popular wallet type. Typically, an application connects directly to the coin coin client.

    Mobile wallet: A wallet is run from a smartphone application.

    Online wallet: Online wallets are web based wallets. You cannot download an application, but the data is stored on a real or virtual server. Some online wallets are hybrid wallets that enable private data encryption before being sent to the online server.

    Soft wallet: Any wallet based on software is a software wallet.

    Hard wallet: Specialized hardware is specifically designed to keep cryptocurrencies and keep them safe. This includes USB devices. These devices can go online to perform transactions and receive data and can then be offline for transport and security.

    Paper wallet: You can print QR codes for both public and private keys. This allows you to send and receive digital money with a paper wallet. With this option, you can completely avoid storing digital data about your currency by using paper wallets.

    Which electronic wallet should I use?

    Ideally, you should use the coin's own wallet that supports. As for Bitcoin, you can use Bitcoin Core Wallet, for Litecoin, you can use Litecoin Core and for Ethereum will be Ethereum Wallet or MyEtherWallet.

    Learn how to create a storage wallet:

    For those who want to use or invest in multiple currencies at the same time, popular wallets / multi-asset wallets / multi-currency wallets are a good choice. There are popular wallets like Coinomi, Exodus, Atomic Wallet and Ethos that usually have desktop and phone versions. Or popular hardware wallets like TREZOR and Nano S (hardware wallets are often a good option for long-term storage) are also great suggestions for you.

    You should also note that there are wallets designed for specific networks and their functions. For example, Coinbase wallet (a product of Coinbase is an Ethereum-based wallet that allows you to store a variety of Ethereum-based tokens and also acts as a web browser that allows you to communicate with DApps).


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    Author: Tin Nguyen

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