Cryptocurrency wallets work similarly to traditional wallets because they can keep your digital currency safe when not in use.

You only need to use your private key and wallet address to handle cryptocurrency.

In terms of functionality, the public key is the same as your bank account number. As long as you agree, sharing it with other people or entities allows them to transfer money to you or withdraw funds from your account. The wallet address is a hashed or compressed version of the public key used by these people to access your funds.

On the other hand, your bank login information or debit card PIN is like a secret key. You don't want to hand it over, because that will give me access to your bank account. "

Encryption is not stored directly in your wallet, but only stored there as information about your public and private keys. You can use these keys to transmit or receive encrypted currency while encrypting private keys.

Different types of cryptocurrency wallets

Hardware wallet

If you want to keep your private key from being spied on, you can use a "cold wallet" or "cold storage" device. Many of the most popular cold wallets resemble USB drives in appearance. Paper wallets allow you to store your private and public keys on a piece of paper, and in some cases can even be used as cold storage.

Cold storage is generally considered the best way to protect your digital assets. Cracking hardware wallets is the most challenging of all wallets because they are physically located far away from the Internet. However, this does not rule out the possibility of danger.

If you lose or misplace your hardware wallet, you must start from scratch. Count the number of times you misplaced a USB device that only contains documents. This is a trouble in itself. However, if you misplace the gadget with the investment key, you may experience major financial setbacks.

There is always a risk of being hacked. You should buy refrigeration equipment directly from the manufacturer and not from a resale store. The hacker may have purchased the item, hacked it, repackaged it, and sold it on the black market. This danger exists whenever you buy from a third-party seller.

Software wallet

Some people call them "hot" wallets. A hardware wallet is similar to a handbag wallet, while a software wallet is similar to your online bank account.

They are usually associated with exchanges and are usually user-friendly, making them more accessible to a wider audience. However, when it comes to your money, there are many dangers.

There are different types of hot wallets. To get one, you can use the cryptocurrency exchange where you purchased the coins, download a program for your desktop computer, or even download an app for your smartphone. However, if you choose any of these methods, you may face a greater risk of being hacked because they will expose your keys to the Internet.