It would be great to start this video off by saying that wallets within the world of cryptocurrency are just like wallets in the real world, however unfortunately for us, they’re not.
Unlike wallets in the real world, that typically contain real money, crypto wallets do not contain cryptocurrency. In fact, cryptocurrencies aren’t actually stored anywhere, as they are digital i.e. they don’t have a physical form. Instead, all of one’s cryptocurrency-related transactions are logged within a blockchain, in the form of a cryptographically secured ledger.
So what do crypto wallets contain and what is their purpose? We’ll, cryptocurrency wallets contain a users Public and Private keys, allowing wallet owners to use their keys to send and receive cryptocurrency.
A public key is your public address and can be shared with other users of the network to allow them to send you digital currency.
A private key, on the other hand, remains private and is used only by the wallet owner to send his or her own digital currency to others.
So now that you know what a crypto wallet is, let’s have a look at a few different types of wallets...
Installed on a users personal computer, desktop wallets are the most common of all wallets. However, they are on accessible from one computer and are at the mercy of malware attacks. Malware is software that is intentionally designed to cause damage to a computer, server, client, or computer network
Running on the cloud, online wallets are easily accessible, so long as one has an internet connection. However, the disadvantages of online wallets are that your Public and Private keys are stored by a third party, online.
Mobile wallets are not too dissimilar to desktop wallets, however, they come with the added benefit of being accessible on the move, as they’re stored on a mobile device.
Hardware wallets are amongst the most secure of all wallets, storing your keys on a portable external hardware device, such as a USB stick. Their security comes from the fact that they only need to be connected to the network when transacting, and can otherwise be kept locked away in a secure place, for example, in a safe.