What are Cryptocurrency Wallets?
Cryptocurrency wallets are like the leather wallets some of us still use in real life for carrying cash and a slew of credit cards.
But there are some things your leather wallet cannot do.
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For instance, when checking how much you have, you have to count through your notes and coins. Your wallet doesn’t tell you when you last spend some money from it, or who you tipped at a restaurant.
So, while your physical wallet is great and all, you have to do all the thinking and record keeping.
As digital apps, cryptocurrency wallets are a lot smarter and combine all the advantages of your physical wallets with more sophisticated flexible features.
With just one wallet, you can hold hundreds of digital currencies without worrying about ever running out of space.
All are neatly packaged into clearly marked sections, so you don’t mix them up. Also, a handy balance checker keeps track of crucial details such as when, where and how much you spent, added or withdrew. There is even an option to scribble a note next to any transaction you make so you can look back on it later and pinpoint exactly where that odd dollar wound up.
If you plan on acquiring some digital currencies for investment or remittances or what have you, you want to familiarize yourself with how they work.
How Do Cryptocurrency Wallets Work?
Cryptocurrency wallets work like the safety deposit boxes we use to store our most treasured possessions be they bond certificates, jewelry or a will.
None of us can afford to lose the keys to the safety box because we could lose ownership of our valuables if they wind up in the wrong hands.
Cryptocurrency wallets work pretty much the same way only instead of physical keys we carefully guard our digital keys.
Commonly known as private keys or master keys, digital keys take form of hexadecimal codes, something like this:
At first glance, it comes across as daunting until you find out it is flexible enough to be written down, printed on paper, typed on a document, converted to image form or even memorized.
Therefore, when you are holding digital assets such as ICO tokens and cryptocurrencies in a wallet, there is no excuse for not taking appropriate steps to secure your private key backups.
You will need your private key to access your assets and authorize transfers from your wallet. So never lose them, share them with anyone and always keep them somewhere safe where you can retrieve when necessary.