Crypto Wallet: What It Is, How It Works, and Types
A cryptocurrency wallet is a digital tool for storing, managing, and accessing digital assets like Bitcoin (BTC 0.93%) and Ethereum (ETH 0.74%). It's like a digital purse that holds your private keys, which are like passwords that allow you to control your cryptocurrency. Crypto wallets also enable you to send and receive cryptocurrency, view your balances, and interact with decentralised applications.
Cryptocurrency
Cryptocurrency is decentralised and secure digital money, based on blockchain technology, that offers new investment opportunities.
A crypto wallet doesn't store the actual crypto but rather the private keys that grant access to the cryptocurrency on the blockchain. These keys are essential for sending, receiving, and spending digital assets.
A smartphone with a cryptocurrency wallet.
Image source: Getty Images.
What is a crypto wallet?
The most crucial function of a crypto wallet is to store your private keys, which are essential for accessing your cryptocurrency and signing transactions. Wallets facilitate the sending and receiving of cryptocurrencies by using the blockchain network. They allow you to view your cryptocurrency balances and track your assets.
Some wallets enable you to interact with decentralised applications (dApps), which are applications built on the blockchain. Crypto wallets come in various forms, including software wallets (mobile or desktop apps), hardware wallets (physical devices), and web-based wallets. Each type offers different security levels and features.
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