What’s the Purpose of a Crypto Wallet – 2021 Guide

Cryptocurrencies like Bitcoin, Ethereum, Dogecoin, etc. have recently gained mass exposure from all over the world and people are investing in them for long term as well and for quick generation of wealth. Trading of cryptocurrencies require exchange platforms and there are two types of exchange platforms viz. Centralised (CEX) and Decentralised (DEX).

Crypto wallets are used to store, receive and send cryptocurrencies. Crypto wallets are available for every cryptocurrency bought on any exchange platform like bitcoin profit platform app and these are easily accessible on any compatible device.

CEX platforms provides Crypto wallet with a wallet address (public key) which can be used to receive cryptocurrencies. Private Key is encrypted and is like a password to your wallet to access the cryptocurrencies stored on it, which in the case of CEX exchanges lies with the platform.

Crypto Wallet

Crypto wallets are not holding cryptocurrencies directly into the wallet (as it is a digital asset), they remain on the blockchain and the user’s public and private keys are stored in the Crypto wallet.Purpose of a Crypto Wallet

Crypto wallets are categorised into cold and hot wallets, considering whether they are connected to internet or not.

Cold Crypto wallet

Cold Crypto wallets are like a USB drive, which is not connected to the internet but stores your public and private keys on to it in an offline manner.

Cold Crypto wallet provides great sense of security as they are difficult to hack but the major demerit associated with it is that they can be easily misplaced. Writing details of your private and public on a piece of paper is also a form of cold Crypto wallet.

Hot Crypto wallet

Hot Crypto wallets are software based Crypto wallets which are generally provided by crypto exchange platforms and there are standalone Crypto wallets as well. They provide an ease of use but are much more prone to hacking risk.

Hot Crypto wallet ranges from web based to mobile based wallets.

Like crypto exchanges, Crypto wallets have also become next hot thing for development for developers. Owing to the risk of hacking it becomes essential to provide utmost encryptions while creating a Crypto wallet software for users.

Let us know which Crypto wallet is your favourite one.