We use leather made wallets to store our real world physical cashes. Similarly, the digital currencies of bitcoins can be held and stored in a cryptocurrencies wallet- known as ‘crypto wallet’. A digital crypto wallet can be simply a physical device or it can be something like a program which we can’t actually touch. A crypto wallet performs dual functionalities. Prime function is to act as a medium through which one can send or receive bitcoins or even buy bitcoin instantly. While doing so, the wallet stores both the valuable bitcoin keys- private and public. Public keys are required to perform online transactions. Private keys are basically passwords or PIN’s that let the owner to spend the bitcoins stored in the wallet like bitpapa.
Types of Wallets:
There are different kinds of wallets available in different forms. However, all these forms of wallets have one thing in common- they store your private keys. The most basic form of wallets is the software wallets that run on devices like phones and computers. These forms are most popular for its convenience in everyday usage. An important drawback with the software wallets is that they are always connected to the internet, hence making it vulnerable to theft or losses bitcoin exchange rate to naira.
Cold storage wallet:
- Hardware wallets:To avoid the risks and store the bitcoin for long period, cold wallets such as hardware wallets are used. Hardware wallets are more secure as it never connects to the internet. Hardware wallets are like a physical portable device which requires an USB cable to connect with the phone or computer in order to use them. Even though it is in contact with the internet enabled phones or computers, the USB cable prevents the transfer of private keys. The users need to confirm transaction on the hardware wallet before using the private keys to sign.
- Paper wallets: Paper wallets are another popular form of a cold wallet. Address QR code and private key QR code are used for online transactions. These QR codes are printed in such a way that one can fold the private QR codes to hide them, revealing only address QR code portion to receive the bitcoin.
- Metal wallets: Metal crypto wallets are durable form of cold storage which uses group of words known as ‘seed phrases’ to unlock the crypto wallet. Seed phrases stores the private keys offline, hence the metal wallets offers solution of protection of the digital assists against hackers. The metallic body withstand against other physical disasters like fire or flood.
- Multisig wallets: Multisig wallets are highly securable form of crypto wallet which requires authorization of multiple (2 or more) signatures or private keys to sign the transaction. Approval from multiple partners ensures the bitcoin protection over the shared funds.
To conclude, keeping your bitcoin safe requires the use of a cold storage wallet. This will take your assets to offline and secure it from hacking attempts. Additionally, it is important that you never share your private keys with anyone. It is a good idea to not store large amounts of bitcoins on exchanges. Finally, keep yourself updated with latest security threats.
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