What Are Crypto Wallets: How to Use Wallet Addresses and Manage Funds
Crypto wallets come as software applications or USB devices and are essential for managing user's cryptocurrency holdings. Cryptocurrencies are not just physically stored in some place; instead, they are bits of data scattered across the database.
Sending and receiving cryptocurrency through these applications is pretty simple. You can send or receive cryptocurrency from your wallet using various methods, such as entering the recipient's wallet address, selecting the amount to send, signing the transaction with your private key, adding an amount to pay the transaction fee, and then sending it.
In this article, we will find out a little bit more about cryptocurrency wallets and how to manage wallet addresses.
Public and Private Keys – the most important crypto wallet components
A key is a sequence of random and unpredictable characters. In public-key cryptography, each public key has a corresponding private key, where the former serves kind of as a bank account number that can be shared with a sender, while the latter is more like a bank account password or PIN code that must be kept private. Together, this pair of keys is used to encrypt and decrypt your wallet data.
Why Do You Need a Crypto Wallet?
The safety of a user's crypto assets relies heavily on the way they store their cryptocurrency. Although it is possible to store crypto directly on an exchange, it is not recommended, as crypto exchange cannot always protect users’ funds from hacking attempts.
If you deal with crypto transactions of large amount, it is advisable to transfer the funds to a crypto wallet, which can either be a hot or cold wallet. This method ensures that the user retains ownership of their private keys and maintains control over their crypto assets.
You might also need a cryptocurrency wallet if you wish to accept cryptocurrency payments from your customers. Give a try to the Plisio cryptocurrency payment gateway – not only does Plisio provide a quality integration to start accepting crypto payments, but it also offer a free and secure cryptocurrency wallet that you can use to store and manage your funds.
How Do Crypto Wallets Work?
As previously stated, a wallet does not physically store your coins. It only stores the key that grants access to the coins stored on a public Blockchain network.
To send cryptocurrency to another user's wallet, you must enter their wallet address either by copying and pasting it into your wallet application's "send" field or by scanning a QR code provided by the recipient. Once you have entered the recipient's wallet address and clicked "send," the transaction will be initiated.
How to Find a Crypto Wallet Address?
To locate your wallet address, log in to your wallet application and click on either the "Request" or "Receive" button. Your wallet address will be displayed after this step.
Please note that each wallet application has varying methods for sharing, scanning, or copying the wallet address. Once you have selected your preferred option, paste the address into the designated field when placing your order. It is crucial to avoid typing the wallet address manually since crypto wallet addresses can be up to 40 characters long and even the slightest mistake may lead to the loss of funds.
What Crypto Wallets You Can Use: Hot or Cold wallets
The primary contrast between hot and cold wallets is the internet connection requirement. Hot wallets are connected to the internet all the time, while cold wallets are offline. This makes funds stored in hot wallets more accessible and, as a result, more vulnerable to hacking attempts.
Hot wallets come in various forms, such as web-based, mobile, and desktop wallets. In these wallets, private keys are encrypted and kept online. However, using a hot wallet can be risky due to the hidden vulnerabilities of computer networks that hackers or malware programs can take advantage of to gain access to your funds. It is not advisable to store significant amounts of cryptocurrency in a hot wallet as the safety of your funds can be compromised.
As it was stated above, cold wallets are completely offline and, while less convenient than hot wallets, they are much more secure. Cold wallets are often of a physical form such as a piece of paper or a USB device.
Examples of cold wallets include paper wallets and hardware wallets. A paper wallet is a physical location where a user writes down or prints their private and public keys. This method is safer than keeping funds in a hot wallet. However, there is a risk of the paper being destroyed or lost, resulting in the loss of funds.
In contrast, a hardware wallet is an external accessory, typically a USB device that stores the user’s keys. To sign a transaction, a user must push a physical button on the device, which prevents hackers from getting access to the device.
Do YOU Need a Crypto Wallet?
Indeed, private keys and access to a blockchain are necessary to access and manage your cryptocurrency. While all wallets are capable of storing keys, only hot wallets are capable of interfacing with the blockchain. Therefore, it's crucial to keep your keys off your hot wallet until they're required.
How to Get Started with a Crypto Wallet
If you're a small or medium-sized business owner, accepting cryptocurrency payments can be a great way to expand your customer base and reach more potential buyers. However, it's important to have a reliable and secure way to accept these payments, and that's where Plisio might help.
The Plisio cryptocurrency payment gateway provides a seamless integration option for your website, allowing your customers to pay with 19+ most popular cryptocurrencies like Bitcoin, Ethereum, or Litecoin. Plisio also provides a free and anonymous cryptocurrency wallet, which you can use to store, send or receive funds. Plisio only charges 0.5% service fee that is the lowest across the market.
So if you're looking to start accepting cryptocurrency payments for your business, be sure to check out Plisio.
Please note that Plisio also offers you:
Create Crypto Invoices in 2 Clicks and Accept Crypto Donations
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