The cryptocurrency wallet stores two important keys called public and private key. Both keys can be used to receive the cryptocurrency. There are 900 cryptocurrencies present in the wallet. Among 900, the best-known one is Bitcoin. The wallet may include various public and private key pairs, but only some wallets will guard multiple cryptocurrencies. But in case of bitcoin and cryptocurrency, it is stored and maintained in a publicly available record. The cryptography itself is not present in the wallet. Each bit of cryptography has a private key. With the help of this private key, it is likely to write public records.
Accessing the Wallet:
While wishing to access the wallet, the important thing to keep in mind is that “Who has access to private key” and has potential access to money. Once the private key access provided, you must trust that provider to keep your cryptocurrency safe. An important thing to understand before downloading a cryptocurrency wallet from a wallet provider on your computer or phone is “downloading does not mean that you are the only one who automatically has a copy of private keys”. Because the same wallet can be accessed through their website. The wallet software may have known or hidden vulnerabilities and also we should be more conscious before using wallet.
Characteristics of Cryptocurrency Wallet
The software comes in different forms such as:
- An application that directly installed on the desktop or laptops and phones.
- Can be used as Web Wallet. Here the private keys are managed by a trusted third party. Some Web Wallet uses two authentications as like Google Authenticator. Here hacking your account becomes too difficult.
To verify a transaction, Cryptocurrency wallet has been connected to the client network to process the request. But in case of bitcoin, there are multiple user types such as full clients, header-only clients, thin clients and mining clients. Full clients verify transactions instantly on a local copy of the blockchain. Lightweight clients ask full clients. Few Bitcoin clients can process transactions and some of them have their own wallet functionality.
Watch-Only Wallet : Watch-only wallet helps to track all transactions. But, public key alone is needed where the private key is kept safe in a different location.
Multi-signature Wallet : In Multisignature Wallet, multiple users have to log in with their private keys for transaction out of that public key wallet.
Brain Wallet : Brain Wallet helps to remember the public and private key regeneration.
Hot and Cold Wallet : The hot wallets are connected to the Internet but cold wallets are not connected. You can spend your cryptocurrency transaction at any time with a hot wallet. But Cold wallets to be connected to the internet first. In General, we can say that hot wallets are software wallets and cold wallets are hardware wallets.
Hardware Wallet : It is considered as the most secured wallet because the private key information will not leave the device. Mostly the hardware wallets require the physical activity over the wallet to make transactions. As these wallets were resistant to attacks, it is allowed to use the virus affected or hacked systems.