With all the cryptocurrency focus, if you are like me, you are not sure why cryptocurrency wallet is needed. Why not just keep your cryptocurrency in the crypto exchange? Hopefully, this blog will help make some sense of and reason for getting a crypto wallet.
What is Cryptocurrency
The purpose of today’s cryptocurrencies as decentralized currency is to give the world the power to control and manage its own money. You think you have control of your money at all times. In reality, if you use the traditional banking system, what you really have is an IOU.
The bank is promising that they will pay you. In reality, the money in your savings or checking account is lent out to others. As a result, you do not have full control over your money.
Why Cryptocurrency
Cryptocurrency offers you the ability to have complete control over your money. With cryptocurrency increasing in value, it’s essential to have your own crypto wallet to store and manage your own money.
What Is A Cryptocurrency Wallet
A simple definition of a crypto wallet is it is a software program that stores your crypto coins. For a more technical explanation, a crypto wallet stores both your public and private keys. This enables you to receive or send crypto coins through blockchain and to monitor your balances.
How Does Cryptocurrency Wallet Work
Unlike physical wallets, which store money, digital wallets store private and public keys. Think of a private key much like your PIN number to access your bank account. While public keys are like your bank account number.
When you send crypto coins, you are sending value in the form of a transaction. In other words, you are transferring the ownership of your coin to the recipient. For the recipient to be able to spend the transferred crypto coins, his private keys must match the public address that you sent the coins to.
Why Cryptocurrency Wallet
Ownership of your private keys gives you total control over the funds associated with your corresponding public keys. That’s why it is vital to make sure you keep your private keys secretly hidden so that ONLY YOU know your private keys.
Should a person gets hold of your private keys, they will have control over your coins. In addition, you will lose your funds if you can’t recover your lost private keys.
Therefore you should always back up your private keys. This way you avoid the accidental loss of your private keys.
In Summary
Cryptocurrency wallets are safer. For instance, these wallets can’t be stolen or lost like regular wallets. Furthermore, they are easier to manage. It eliminates having to carry cash or credit cards. Finally, crypto wallets make for a better shopping experience for users because they are easy to use. If you like to start earning bitcoin for free check it out here!