The total market capitalization of cryptocurrencies peaked at nearly $ 2 trillion as of August 13, 2021. Still, before starting to buy or sell coins, a user needs to choose the right type of wallet and register an account on an exchange.
Today, we will analyze the following:
⚪ What is a crypto wallet?
⚪ Software work mechanisms
⚪ Varieties of crypto wallets
⚪ Benefits of crypto wallets, etc.
What is a Crypto Wallet: How It Works?
First of all, a crypto wallet is an essential component of a software package for brokerage. As for the clients, we are talking about software and hardware tools that allow the client of a brokerage company:
⚪ Store
⚪ Buy
⚪ Sell
⚪ Transfer coins
All functions of the crypto wallet are based on Blockchain technology. The software provides an owner with high-speed execution of any number of financial transactions.
Besides full transparency and instant access, the software has an exceptional level of security. What’s more, crypto wallets are:
⚪ Completely anonymous
⚪ Do not disclose the identity of the account holder
⚪ Guarantee the complete safety of funds
Thanks to digital wallets, financial transactions with cryptocurrencies are safe and easy. Keep in mind that a completed transaction can no longer be changed or canceled. It is recorded on the Blockchain chain.
Reliability
Today, a crypto wallet is valuable for its main feature – it has the highest degree of reliability. The mechanism uses two types of keys to provide maximum protection:
- Open (public). Used to initiate a payment transaction in a cryptocurrency network. It is open to everyone and contains only information about the amount and address of wallets. Any member of the system can check these data on their own.
- Closed (private). Used to decrypt information from the side of the initiator of the transaction. As a result, only the addressee receives the funds while the transaction owner has access to the key.
Working Mechanism
Let’s take a look at the basic principle of crypto wallets. So you can easily understand the process of conducting a financial transaction in the Blockchain network:
⚪ A peer-to-peer (P2P) network participant initiates the transfer of a certain amount of cryptocurrency from one wallet to another.
⚪ All information about an open transaction (including the public keys of both parties) is recorded in the information block. It is signed with the initiator’s private key.
⚪ The resulting block is sent to all blockchain validators (miners) to confirm the operation.
⚪ Miners check the public keys of both sides. If the information matches, the transaction is approved. This process is 100% automatic.
⚪ The wallet owner or the recipient of funds decrypts the message with a private key and receives funds.
⚪ The validators automatically enter the processed information block into the blockchain.
How Many Crypto Wallets Are Registered Today?
The German Internet resource Statista previously uploaded statistics on the registration of new addresses. The active growth in the registration of new wallets fell in 2016. That exact figure reached an incredible $ 34.9 million by early 2019.
Where to Register a Crypto Wallet?
It is essential to understand that there are several types of crypto wallets. Their functions are approximately the same, but they still differ significantly in their principle of operation. Before registering a new address on the network, choosing the right wallet for your preferences is vital.
Online Wallets
Online wallets are considered the most common ones. They are suitable for frequent transactions in small sizes. Among those, it is worth noting the #1 solution – Blockchain.com. More than 90% of all crypto wallets are registered here.
Registering an online wallet is easy. You will need to add an email and generate a complex password. It is advisable to make a backup copy of the keys on your device. Even for an experienced PC user, the registration process takes no more than 2-3 minutes.
Hardware Wallets
Devices equipped with a USB connector for use on a PC or laptop. Most of them look like flash memory sticks. They are used to store data and keys from the wallet.
Paper Wallets
It is nothing but a sheet of paper depicting a crypto wallet owner’s public and private keys. Keys are written as QR codes.
Hardware and paper wallets are most commonly used to store coins in the long run. However, these types of crypto wallets are not suitable for frequent crypto transfers.
Software Wallets
These are apps for a PC or smartphone. This type of wallet has a great security level and can be used anywhere with an internet connection.
Software crypto wallets can only be installed on a physical device. They are divided into two types: “thick” and “thin.” The first type implies additional storage of a backup copy of the blockchain network.
“Thin” crypto wallets
They interact with the blockchain using a remote server that stores information about the network.
What Should I Choose?
There is no unequivocal answer to this question. Nevertheless, you can use the one that is most popular among experienced crypto traders. Here’s the list of top solutions in 2021:
⚪ #1 for beginners: Profit Center FX wallet
⚪ #1 for advanced bitcoin traders: Electrum
⚪ #1 for mobile users: Mycelium
⚪ #1hardware wallet: Ledger Nano X
⚪ #1 for security: Trezor Model T
When choosing a crypto wallet, you should take into account the following criteria:
⚪ Security of private keys
⚪ Anonymity
⚪ Safety
⚪ Convenience
⚪ Speed
Crypto Wallet: Benefits of Innovation in the World of Finance!
Crypto wallets have two significant advantages. The first one includes the opportunity to exchange fiat currency and crypto in real-time.
What’s more, any transaction is carried out almost instantly (less than one second), and the level of protection is the highest possible today!
The second advantage is absolute anonymity. The crypto wallet does not require an owner to enter personal data during registration. Still, one should add a minimum set of info to transfer coins.
Each member of the blockchain has access to the public key, which is just the address of the digital wallet. Thus, the risk of data leakage is reduced to zero. The same cannot be said about the traditional methods of conducting payment transactions: e-payment systems or bank cards.
Summary
Cryptocurrency is already widely used today. It is even being introduced into government and commercial structures in some countries. Therefore, the use of crypto wallets is becoming more and more relevant.
There are a wide variety of crypto wallets one can start using right away. All of them are divided into groups by type. Having chosen the most convenient one, you can begin to buy/sell coins 24/7.
If you need a crypto wallet for your brokerage, it is better to contact the professionals from Profit Center FX.
A reliable brokerage software integrator has accumulated over nine years of experience developing and integrating IT products for Forex and crypto brokers. If you want to win sales – opt for the software designed and powered by real professionals!
