A cryptocurrency wallet is a device used for the purpose of viewing balances and exchanging digital currencies. The wallet does not actually store cryptocurrencies but stores the public addresses and private keys used in order to carry out transactions. The public address is used to exchange cryptocurrencies between users, while the private key is used to gain access to them.
There are various types of cryptocurrency wallets providing users with different ways to store their currency. They can be categorized into - hardware, software, and paper.
Hardware walletsA hardware wallet allows a user to store their public address and private key on a physical device like a USB. All a user needs to do is connect their wallet to a computer or device that is internet-enabled. Even though the transactions occur online, the keys are stored offline, thereby enhancing security.
Software walletsSoftware wallets consist of the following three types:
Online wallets are controlled by third parties, which is one of the major reasons why they are not as secure as the other types. The keys are stored on the cloud and can be accessed from anywhere.
Mobile wallets can be accessed through an app on a smartphone. A user always has a smartphone on hand, making transactions easy and efficient.
Desktop wallets are downloaded or installed and can be accessed only on a single computer. It provides users with high-end security.
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Paper walletsPaper wallets basically have the public address and private key printed on them. If certain measures are taken, this is considered as an extremely secure way of storing cryptocurrencies. If the user needs to use/transfer funds, they can do so by using the keys on the paper wallet and sending funds to their software wallet.
The above are the types of
cryptocurrency wallets based on their working. It is important to ensure that all precautions are taken before building a wallet and using it for the transfer of funds. If you need some help developing one that suits your preferences, then you should have a look at Blockchain App Factory. A pioneer in blockchain technology, they can guide you through the entire process effortlessly.