What is a Cryptocurrency Wallet?
Why do I need a Crypto Wallet?
What are the different types of wallets?
On the upside they offer one of the highest levels of security.
Running as an app on your smartphone, the wallet can store the private keys for your bitcoin addresses, and enable you to pay for things directly with your phone.
In some cases, a bitcoin wallet will even take advantage of a smartphone’s near-field communication (NFC) feature, enabling you to tap the phone against a reader and pay with bitcoins without having to enter any information at all.
One common feature of mobile wallets is that they are not full bitcoin clients. A full bitcoin client is one that downloads the entire bitcoin blockchain, which is always growing and is multiple gigabytes in size. That’s a huge amount of data to download on your cellular data link. On top of that many phones wouldn’t be able to hold the whole blockchain in their memory.
Instead, these mobile clients are often designed with simplified payment verification (SPV) in mind. They download a very small subset of the blockchain, and rely on other, trusted nodes in the bitcoin network to ensure that they have the right information.
Without a doubt, this is the safest and most secure way to store any cryptocurrency. It truly makes you the master of your investment, and if precautions are followed, there’s no possibility of your private keys being accessed by anyone else. Of course, this means that keeping a record of them is even more important. Losing private keys means you’ll forfeit the entire contents of your paper wallet (but then again, that’s true for every wallet out there.)
Paper wallets are an offline cold storage method of saving cryptocurrency. It involves printing out your public and private keys on a piece of paper which you then store and save in a secure place. The keys are printed in the form of QR codes which you can scan in the future for transactions.
The reason this method is so safe is that it gives you complete control. There is no need to worry about the well-being of a piece of hardware, nor do you have to worry about hackers or any piece of malware. You just need to take care of a piece of paper. Paper wallets are the most secure form of offline storage because private keys are not stored digitally anywhere, and are therefore not subject to standard cyber-attacks or hardware failures.
Paper wallets are formed by using a program to randomly generate a public and private key. The keys will be unique, and the program that generates them is open source. Those with advanced knowledge of coding can check the backend of the program themselves for randomness in results. What’s more, keys are generated offline. This completely eliminates exposure to online threats, and deleting the simple program after use will destroy any trace of them.
Don’t worry if it sounds confusing, it’s not. You need no specific knowledge of coding, or encryption. All you do need is a computer, an internet connection, and something to record your keys on.