Ledger Nano X - The secure hardware wallet
Ledger Nano X - The secure hardware wallet
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What is a Cryptocurrency Wallet?

cryptocurrency guide

What is a Cryptocurrency wallet

A cryptocurrency wallet is a secure digital wallet used to store, send, and receive digital currency such as Bitcoin. Nearly all coins have an official wallet.

In order for you to be able to use cryptocurrency, you will need to have a cryptocurrency wallet. Some wallets are built for just one cryptocurrency alone, some can be used for more than one coin, some wallets you will manage yourself, and others like on exchanges will be custodial.

There are a vast amount of different wallet types to choose from, as we will discuss below.

How Does a Cryptocurrency Wallet Work

Wallets are software which can be used to view cryptocurrency balances and make transactions in simple terms. Each wallet brand is a bit different from another, but really, most often but not any wallet will work with one or more different cryptocurrency and you will be able to store one or more cryptocurrency public addresses.

Public addresses are just like bank account numbers but are instead cryptocurrency-specific account numbers, they can be used to receive and send a specific type of cryptocurrency. Each address relates back to all transactions associated with that address on a coin’s blockchain.

A wallet lets you view your balances associated with an address and also lets you move funds around on the blockchain as long as you are the owner of the address of course.

Proving you own the actual address is done with by using a private key. A pritvate is a secret code associated with a public address in non-custodial wallets. In custodial wallets, the custodian which is a third party such as an exchange, holds the key for you, and it is just a matter of inputing your password into their wallet app.

So as I said above a wallet is just like your online bank account, your address is just like your account number and the blockchain is like the bank’s ledger and with custodial wallets the custodian is a you could say is like your banker.

Be safe

Don’t ever share your private keys: private means for your eyes only, you can share your public address. But make sure you never share your private keys and passwords with anyone.

Crypto is a on the Blockchain, it Isn’t Stored in Your Wallet: Cryptocurrency itself is not actually “stored” in a wallet, it is stored on a coin’s blockchain. Your wallet is in simple terms software, which is designed to interact with the blockchain. Your wallet stores the addresses, not the crypto coins or tokens.

Important to know

Many wallets are custodial wallets, With custodial wallets all you have to worry about is the balances displayed and your public address. However, full wallets, like the official wallet of each coin are a little more complicated. Behind every address is a private key which is remember a secure digital code known only to you and your wallet.

A private key shows you have ownership of the public key which is a public digital code connected to a certain amount of currency. Each set of private and public keys is connected to a public address which is an encrypted version of the public key.

So your wallet is software that stores your private keys, public keys, and public addresses, lets you send and receive coins, and also acts as a personal ledger of balances and transactions.

Types of Wallets

There are several types of wallets you can use including online, offline, mobile, hardware, desktop, and paper. Each type of wallet refers to what type of medium the wallet is stored on, who is in control of the wallet, and whether or not the data is stored online. Some wallets offer more than one method of accessing the wallet for example atomic wallest’s wallet is both a desktop application and a mobile app.

Check out the different types of cryptocurrency wallets listed below:

Full Node Wallet:

A wallet where you are in control of your private keys and host a full copy of the blockchain. Remember each coin has an official wallet of this type and that can be found on the official GitHub of the site - often there is a link on the official website. Many cryptocurrencies are decentralized, so to think about it that way there is no real official anything.

Desktop Wallet:

The most common type of wallet. is an app that connects directly to a coin’s client.

Mobile Wallet:

A cryptocurency wallet that is run from a smartphone app.

Online Wallet:

An online wallet is a web-based wallet. You do not download an app, but instead data is hosted on a real or virtual server. Some online wallets are hybrid wallets allowing encryption of private data before being sent to the online server, not the safest but good when trading on cryptocurrency exchanges.

Software Wallet:

A wallet that is software-based is a software wallet.

Hardware Wallet:

One of the safest ways to store your cryptocurrency is dedicated hardware that is built to hold cryptocurrency and keep it secure. This can include USB devices. These devices can go online to make transactions and get data and then can be taken offline for transportation and security and are the safest for you to store your cryptocurrency.

A example of a hardware wallet is the Ledger Nano S which can store up to 30 different cryptocurrencies. Ledger's hardware wallets are device-based, which means they use storage mechanisms such as USB drives to store private keys. Which will make it difficult for hackers to access the key from an online location.

Paper Wallet:

You can print out a QR code for both a public and private key. This will allow you to both send and receive cryptocurrency using a paper wallet. Using a papaer wallet you can avoid storing digital data about your currency.

Coin-specific:

A wallet that only works with a specific coin.

Network-specific:

A wallet that can hold multiple tokens on a single network.

Universal / multi-asset / multi-coin:

A wallet that can hold addresses for many different coins.

What cryptocurrency Wallet will I Use?

Putting together everything above, here are some ideas on what wallet to use. We typically suggest using an official (or officially endorsed) wallet for any given coin. Online wallets are good for when your on cryptocurrency exchanges like Binance or Coimmama for example. in a line line of defence for your cryptocurrency, if you are planning on saving those coins up till they rise in price for example We would suggest using a wallet outside of exchanges.

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Ledger Nano X - The secure hardware wallet