Crypto Wallets: Everything you need to know
21 October 2020 | ZebPay Trade-Desk
A Crypto wallet is a software program in which assets and tokens are stored. Technically, Bitcoins are not stored anywhere. For anyone that owns a cryptocurrency wallet, there is a private key (unique number) corresponding to the assets address of that wallet. These wallets facilitate the sending and receiving of cryptocurrencies and give ownership of its balance to the user.
How it works
Unlike traditional wallets, digital wallets don’t actually store currency. These currencies don’t even exist anywhere in a physical form. All that exists are records of transactions, which are stored on a blockchain.
Cryptocurrency wallets run software programs that store unique public and private keys and interact with multiple blockchains. This allows users to monitor their balance, and engage in transactions. When a person sends coins, they are essentially signing off ownership of the coins to a particular wallet’s address. To unlock the funds, and spend it, the private key stored in the receiver’s wallet must match the public address the currency is assigned to. If the public and private keys match, the transaction is successful. There is no real exchange of actual coins.
Hot and Cold Wallets
There are many types of cryptocurrency wallets out there, which can broadly be categorized into hot wallets and cold wallets.
A hot wallet is always connected to the internet and can be accessed anytime.