So, just a regular question! Where do you keep your money when you want to shop around? Do you carry it in your bare hands or you shove them in a wallet? Yeah right! You keep all your money in your wallet that provides a fundamental sense of security.
Now if we try to magnify a bit more we will find there are multiple other factors, besides “security”, clinging to the prior and convenience being one of the most distinctive.
Now how about a wallet that is capable of retaining, safeguarding, managing and making wealth available for you 24/7, at your will. This sounds quite prodigious.
The storage ought to be sophisticated when you are no more dealing in fragile fiat currency for exchange.
Crypto Wallets tend to be a cryptographically designed digital storage space that will replace your Bank accounts and would set us free from the fuss of financial world for ever.
Eliminating all middlemen for authentication would not only slash down the cost of record keeping but also forge a great deal of control over your own wealth.
It is like payment gateway or E-wallets used for online payment transactions, in the sense that such cryptocurrency wallets are used for storing and transacting (includes both functions- receiving and sending) of Cryptocurrency.
Certain crypto currencies are stored in custom made wallets, that is specifically designed to serve a distinct purpose for the wallet owner where the Cryptocurrency user can even link any general-purpose wallet for performing inter-wallet transactions.
Imagine a room with two doors, with one giving you exclusive access to the entire room including the other door while the other is accessible in general to all. Now this gives you the discretion of letting in one the ones you want.
Similar is the concept on which these crypto wallets work, with each crypto wallet opening there is an auto generated access points – one is private key and another is public key. Public key
is attached and open for public review, however it responds to only private key.
Private key is the cryptographic code which is available and known to the user. This private key is made available only to the user which will act in same way like a key to the room with the two doors stated above.
Types of Crypto currency wallets and their real-life examples
Cryptocurrency wallets are broadly classified into first party wallets and third party wallets. First party wallets are those which are installed and maintained by the crypto currency user himself.
On the contrary Third party wallets are those which are stored by third party on the cloud or server, which gives the additional benefits of remote accessibility and operation ability.
– Software Wallet
This is most common and most popular type of crypto currency wallet. These are also known as desktop/laptop wallets since these are directly downloaded on the desktop. These wallets come with additional storage space, which is absent in most of the mobile wallets.
This is most dynamic and secure desktop wallet which is most efficient if the user is mining the digital currency to the tune of $1000 or above.
This desktop wallet is popular due to its speed as well as convenience of use. This wallet can be integrated with other hardware wallets to double the efficiency and deliverance. If you have one or more computers or laptops, then it can work as cold storage, since this wallet can be used even if you are offline.
– Mobile wallets
These wallets can be downloaded and installed on mobile or tablets, which means mobility is their most appealing feature. However, they have restricted and limited storage capacities since they should accommodate the purchases at any time.
This is most simple and secure cryptocurrency wallet which can be installed and operated on most of the iphones or “ios” based devices.
This mobile wallet is compatible with Android architecture and is not permitted to have access to the user’s funds. However, it is easier to access and operate for people who do not understand technical fundamentals, since the account creation procedure is much lucent.
– Web wallets
Web wallets are designed to run on the cloud based architecture, affording the facility to access and operate from anywhere in the world. However, these wallets are most prone to hacking or computer viruses etc. Therefore, certain online or web wallets come with additional feature of encrypting the data before placing the data on the server or the cloud.
This online wallet includes various services like digital currency solutions like exchange of Bitcoins (includes transacting bitcoins), wallet services etc.
This online wallet works with multi signature bitcoin address scheme. This architecture allows the wallet to retain control over the private keys, which leads to instant transactions to clients (approval needed from the wallet).
3. – Paper wallet
These wallets are like your regular wallets in the sense that private as well as public codes can
be QR scanned and printed on the paper. These printed codes can be stored in your wallets like any other legal tender.
– Hardware wallet
These wallets open whenever the user encounters the wallet. These wallets can operate online as well as offline and have come up only this year.
This is an offline wallet hence it offers high level of security for bitcoin storage and transactions. And most important point to be noted is that if the user forgets the password generated then there is no recovery option for the same.
It is actually an USB stick which extends the ability to spend the Bitcoins like legal tender. Though it has security since private keys are stored on USB, it also poses high level security threat since if this USB device is lost or stolen by any chance, the person in possession of the same will know every private key and can very well operate your account.
This revolutionary transformation in the economic evolution would mark the beginning of a new era. These digital wallets would arise as the fundamentals of this epic start.
The pace with which we are aggressive ahead, the time is not far enough when we would be able to customize the wallets to the extent where in we would not only be able to store our digital wealth but also various other assets including our Identity.