A Cryptocurrency wallet is entirely different from your regular digital wallets. In order to understand how do Cryptocurrency wallets work, you need to know what a crypto wallet is. As per definition, a crypto wallet is a software that lets you send and receive cryptocurrencies, for example ; Bitcoin.
The working of a crypto wallet.
Like I said earlier, a crypto wallet is a piece of software that allows you to exchange or transact digital currencies. Now before I venture further into the working mechanism of the wallet, I would like you to imagine a physical leather wallet that stores all your coins and currencies.
A crypto wallet does the same, except that there is no physical money present here, it is a little different in the world of blockchain technology. These currencies exist in the form of keys, there are two types of those; a private key and the public key. They are long codes. Only you and your wallet would know the combination of the private key. If you want to do any transactions, both your private key and the public key has to match.
Moving on further, every wallet has an address that is unique, and you can share it with anyone who wants to send you coins. These addresses are similar to your bank account IDs. They are unique and directs to one unique wallet. A wallet address is a unique combination of alphabets and numbers. The alphabets include both upper and lower case, however, in 90% of the cases, no signs or symbols are involved, Another thing to keep in mind here is that you can create multiple wallet addresses.
Most of the wallets available in the market today are safe to hold a few coins at a time and allow it you to conduct secure transactions. However, owning different coins having different protocols can be stressful for you as well as can mess up your wallet. Hence it is advisable to use multi-cryptocurrency wallets. Here is a list of the best multi cryptocurrency wallets if you want to read in-depth about the topic. My personal preference is the exodus wallet, it is secure and extremely user friendly.
There are also two major types of wallets that you should know; cryptocurrency hardware wallet and software wallet. We will be discussing those in a later post of this series.