![]() Let’s take a look at these in more depth. Types of Crypto WalletsĪs noted above, there are two broad categories of crypto wallets: hot wallets that are connected to the internet and cold wallets that are not. “Once you have one, you simply transfer your coins from your hot wallet to your cold wallet,” Edelman says. “To avoid the risk that hackers might steal your online wallet, you can get a cold wallet which is not connected to the internet,” says Ric Edelman, founder of Digital Assets Council of Financial Professionals.Ĭold wallets are essentially thumb drives or another type of hardware device. This is called a hot wallet because it’s online and connected to the internet. When you buy cryptocurrency, the company you purchased it through probably gave you a wallet to hold the digital coins. How Do Crypto Wallets WorkĪ crypto wallet stores the public and private keys necessary to send, receive and store cryptocurrency. “Coins and tokens are part of a blockchain system in the form of data, and the wallets serve as a means to access them,” says Martin Leinweber, digital asset product strategist at MarketVector Indexes. Keeping your private keys secure in a crypto wallet is essential. Likewise, the person who holds a private key has full access to the crypto. ![]() ![]() If you lose your private key, you could lose access to your crypto. Please don’t share it with anyone, or they could steal all your money. The private key is like a password to your bank account. Think of the public key as something like your bank account number-you can share it with anybody, but it doesn’t provide access to your money. When you purchase Bitcoin (BTC), what do you actually own? A public key and a private key on the BTC blockchain. It exists as nothing more than a string of code on a larger blockchain. ![]() Rather, a crypto wallet is a form of digital storage to secure access to your crypto.Ĭryptocurrency is a highly abstract store of value, without a physical token similar to cash’s coins and bills. The first lesson of crypto wallets is that they are nothing like the billfold in your purse or back pocket, holding cash and credit cards. ![]()
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