Ledger Nano X Wallet
- Hold 1,250+ cryptos
- Bluetooth connectivity
- Industry-leading security
If you want to buy Bitcoin or any other digital currency, you must choose a wallet where you can securely store your coins or tokens. But if you’re just starting out, choosing a wallet and learning how to use it can feel complicated and overwhelming.
Find out how coins are stored on the blockchain and how to store, buy or sell coins in your wallet. We’ll also cover common aspects of cryptocurrencies and altcoins to help you understand this important and often overlooked aspect of the technology that’s taking the world by storm.
A cryptocurrency wallet is a software program that allows you to store, send and receive digital currencies.
Because cryptocurrency doesn’t exist in physical form, your wallet doesn’t actually hold any of your coins — instead, all transactions are recorded and stored on the blockchain.
Some cryptocurrencies offer their own official wallets, while other products allow you to store multiple currencies within the same wallet.
But different digital currencies have different address types, and you’re usually able to send coins between like wallet addresses only. For example, you’ll need to send Bitcoin to a Bitcoin wallet address and Ethereum to an Ethereum wallet address.
Instead of holding physical coins, a crypto wallet is electronic and includes a public and private key.
As well as storing your public and private keys, crypto wallets interface with the blockchains of various currencies so that you can check your balance and send and receive funds.
The blockchain of any cryptocurrency contains a public record of all the transactions made since it began. Your wallet address keeps a record of all your transactions, and therefore also tracks your crypto balance. By following the chain to today, a wallet can figure out how many coins you have.
For example, let’s say Alice sends Bob 0.001 BTC. After this transaction is verified and added to the blockchain, the ledger records that the amount of Bitcoin at Alice’s wallet address has decreased by 0.001 and that the amount of Bitcoin at Bob’s wallet address has increased by 0.001 BTC.
The amounts sent and received and the public wallet addresses are all public information.
Now that you know how crypto wallets work, let’s look at the five types of wallets available.
As you research and compare wallets, you’ll likely come across the terms “hot wallet” and “cold wallet” or the concept of “cold storage”.
What does temperature have to do with crypto storage?
If you don’t want to go through the extra step of setting up a crypto wallet, it’s possible to store your cryptocurrency in the wallet attached to the exchange you purchased it from. This quick, convenient solution provides fast access to your crypto whenever you need it.
But it’s not recommended for a couple of reasons:
With this in mind, the safest solution is moving your coins into a secure wallet that lets you retain control of your private key.
To choose the right wallet for you, consider your needs and compare wallets based on key factors that include:
Learn how to use our cryptocurrency wallet step by step:
To send funds from your wallet, you’ll need a wallet address — or the recipient’s public key. These addresses are either:
Once you have this address, you will need to:
Note that the exact process varies depending on the brand of wallet you choose. For example, hardware wallet users typically need to connect their wallet device, enter a PIN or password and manually verify the transaction on the device.
Receiving coins is even easier than sending them. However, wallets vary in how they receive them. Some provide you with a fixed public address, some give you a new address for every transaction and others provide a combination of the two.
If you want to hold on to your crypto, there’s typically not much you need to do once the funds are in your wallet. Log in to your wallet whenever you want to check your balances. You can earn interest on some currencies by staking your holdings, though there may be specific instructions in your wallet to do this.
Other than that, focus on maintaining a high level of security to protect your coins.
Wallet security is crucial for any crypto owner, so keep these tips in mind to keep your funds as safe as possible:
Used by the most secure and trustworthy wallets, two-factor authentication requires a regular username and password combination and another authentication method.
It’s often a PIN code texted to your smartphone, expiring after a set time and different every time you log in. This means that an attacker would need to know your username and password and also have your phone.
Some wallets require you to install a secondary app on your smartphone that generates these PIN codes for you, adding another layer of security.
There’s no one-size-fits-all cryptocurrency wallet. The right wallet for you is the one that matches your needs. If security is your No. 1 concern, you’ll likely choose a different wallet than someone who wants fast and easy access to their coins.
Do your research and compare wallets. Start with our crypto wallet reviews to get an idea of what’s available and key features to consider.
Disclosure: At the time of writing, the author holds ADA, ICX, IOTA and XLM.
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