Wallets

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DEFINITION

One of the most important elements in the cryptographic world and blockchain technology are wallets or purses. The use of these tools is essential when managing our cryptocurrencies. That is why choosing an appropriate one that meets our needs is as important as having one.

The term wallet refers to a virtual wallet, wallet or purse in which we can manage our cryptographic assets. It is software or hardware designed exclusively to store and manage the public keys and private keys of our cryptocurrencies.

HOW DO THE WALLETS WORK?

Unlike the traditional financial system, Bitcoin and other cryptocurrencies are fully digital currencies that do not exist in the physical world and function based on cryptography. Therefore, the design of the wallets is of vital importance to be able to operate and manage our funds. And although the term wallet seems similar to the one we use to store our physical money, the truth is that in cryptocurrencies what is really stored in the wallets are the public and private keys.

Cryptocurrencies as such do not exist as currencies, but rather as transaction records contained within a blockchain that is operated by interconnected nodes around the world. So, the public keys and, above all, the private keys within a wallet, are what give us ownership and rights over the cryptocurrencies transferred to a particular address. Let's look at this in more detail:

*The public key is similar to a bank account number. We can give it to anyone to send us money, without the risk that they can extract our funds. Through the public key, addresses are generated to receive, consult and see the status of our funds.

*The private key works as a kind of key, a PIN or password that we should not reveal to anyone, since it gives us the right to spend the cryptocurrencies contained in an address. Thus, the owner of the private key will be the owner of the funds and will have full control over them.

HOW TO CHOOSE A WALLET?

Before operating with a wallet for our cryptocurrencies, it is necessary to know the types that are available in the market. Study the advantages and disadvantages offered by each of them, to determine which one best suits our needs.

With the creation of Bitcoin and later the development of many other cryptocurrencies, the need arose to have a wallet that would allow us to operate digital money. And to choose the one that best suits us, it is necessary to study the available projects. The first of these developments led to the creation of full wallets or full clients. These are the most complex wallets and also one of the most secure in the world of cryptocurrencies.

Cold wallets, hardware or paper type, are undoubtedly those that provide a higher level of security when it comes to safeguarding our funds. Since they operate offline and therefore there is no risk of them being hacked or hacked. Becoming ideal and preferred by many to deposit large sums of money. The best-known hardware wallets are Trezor and Ledger, choose the one that best suits your security and price needs. For their part, hot wallets, such as desktop, tablet or smartphone ones, are better for carrying out daily operations. Due to their condition of being always connected to the blockchain, and therefore, to the Internet, they are more susceptible to computer attacks.