Cryptocurrency wallets or purses are the bridge that allows us to manage our cryptocurrencies. A piece of software or hardware with which to carry out the reception and sending operations through the blockchain network of each cryptocurrency.

Unot one of the most important elements in the crypto world and tecnología blockchain are wallets or purses. The use of these tools is essential when managing our cryptocurrencies. That is why choosing an adequate one that meets our needs is as important as having one. For this reason, in this article we will share the most important and fundamental information that you should know to understand what wallets are and how they work.

The term wallet it refers to a wallet, wallet or virtual wallet where we can manage our crypto assets. Is a software or hardware exclusively designed to store and manage public keys y private keys of our cryptocurrencies.

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How do cryptocurrency wallets or wallets work?

As we already mentioned, cryptocurrency wallets or purses are one of the most important and indispensable elements when it comes to operating with them. This because of They are the ones that allow us to send or receive payments in crypto assets.

Unlike the traditional financial system, Bitcoin and other cryptocurrencies are fully digital currencies that do not exist in the physical world and that work based on cryptography. Therefore, the design of the wallets is of vital importance to be able to operate and manage our funds. And although, the term wallet seems similar to the one we use to store our physical money, the truth is that in cryptocurrencies, what is really stored in wallets are public and private keys.

Cryptocurrencies as such do not exist as currencies, but rather as records of transactions contained within a blockchain that is operated by nodes interconnected with each other around the world. So, the public keys and above all, the private keys within a wallet are what give us the ownership and right over the cryptocurrencies transferred to a particular address. Let's look at this in more detail:

  • La public key It is similar to a bank account number. We can deliver it to anyone to send us money, without the risk that they can withdraw our funds. Through the public key, addresses are generated to receive, consult and view the status of our funds.
  • La private key It works as a kind of key, PIN or password that we should not reveal to anyone, since it gives us the right to spend the cryptocurrencies contained in an address. Thus, the owner of the private key will be the owner of the funds and will have full control over them.
Wallet or cryptocurrency wallets

Wallet security

Wallets or purses use advanced blockchain encryption techniques to grant and guarantee total security to users. In this way the wallet can save, send and receive cryptocurrencies without greater risk.

At the time of setting up a wallet, the first thing is to create a private key using a secure algorithm. For example, through the algorithm ECDSA using the elliptic curve secp256k1. Or you can also use the algorithm EdDSA. In either case the goal is to provide a high level of security. This is because both methods allow the creation of almost infinite combinations and with a high degree of difficulty. This makes them practically impossible to guess or to be attacked by force.

After the generation of the private key, the public key is created, which is mathematically related to the first. And from the public key the addresses where we can receive cryptocurrencies are generated. However, it is important to note that although the public key is generated and related to the private key, the reverse process cannot be done. That is, we cannot deduce the private key from the public key, since the algorithm used for creation is one-way.

Likewise, there are deterministic wallets (HD wallets) that when you configure them for the first time, they generate seed or seed. From which all the keys and addresses are generated. Later it will serve us to restore, recover the wallet and our funds in case of damage or loss of equipment. These seeds are a kind of code that is represented by mnemonic words generally in English. In order to provide greater ease when making backup copies.

As a curious fact, it is important to note that the public and private keys generated in a wallet are not related to the cryptocurrency protocol. If not rather, take shelter within the hardware that operates them and never leave the device. However, the level of security provided by a wallet will depend on the type that is being used, be it a hardware wallet, paper wallet, light wallets, desktop software, tablet o smartphone, or online.

Wallets have various mechanisms that provide security to our cryptocurrencies

Utility and importance

Since bitcoin and other cryptocurrency systems are completely decentralized, there is no entity or body that controls them. It is because of that wallets play a very important role in this ecosystem. They are a piece of basic infrastructure that allow us to operate with cryptocurrencies. In them we can see and consult our balances, in addition to the operations carried out and received. They also allow us to operate our funds with absolute control over them. We do not need the permission or authorization of any third party to carry out an operation.

In addition to providing us with security and confidence to carry out our operations, wallets also allow us to sign transactions without the need for private keys to leave the device. When we send a shipment to a person, we are transmitting a value in the form of a transaction. Therefore, we are transferring ownership of a certain amount of money to that person. In order for the network to confirm the transfer and the recipient can use the funds, a digital signature is required. Thus it will be verified that the person who performs the operation owns the funds and not a third party.

How much do you know, cryptonuta?

Are cryptocurrency wallets the easiest and safest way to make use of our cryptocurrencies?

TRUE!

Cryptocurrency wallets or wallets were created in order to facilitate the process of use and management of our coins, at all times.

How to choose a wallet or purse?

Before operating with a wallet for our cryptocurrencies, it is necessary to know the types that are available in the market. Study the advantages and disadvantages offered by each one of them, to determine which one best suits our needs.

With the creation of Bitcoin and later the development of many other cryptocurrencies, the need arose to own a wallet that would allow us to operate digital money. And to choose the one that best suits us, it is necessary to study the available projects. The first of these developments led to the creation of full wallets or full clients. These are the most complex wallets and also one of the safest in the cryptocurrency world.

The cold wallets, type hardware or paper They are undoubtedly the ones that provide a higher level of security when it comes to safeguarding our funds. Since they operate offline and therefore there is no risk of them being hacked or hacked. Becoming ideal and preferred by many to deposit large sums of money. The best known hardware wallets are Safe deposit and Ledger, choose the one that best suits your security and price needs. For their part, hot wallets, Such as desktop, tablet o smartphone they are better for daily operations. Due to their condition of being always connected to the blockchain, and therefore, to the Internet, they are more susceptible to computer attacks.

Finally, the least recommended for the security levels they offer are the online wallets or hot wallets. They are platforms that operate directly from a website and that in most cases, the custody of private keys is in the hands of third parties. However, many allow extra security layers to be configured to provide greater confidence for their users.

There are also simpler wallets such as SPV wallets or light wallets. Their main mission is to make the handling of wallets easier and require fewer resources in their execution and work.

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Bit2Me Wallet, an easy and simple to use multi-currency wallet

At Bit2Me we strive to provide all our users with the tools they need to manage their cryptocurrencies with complete freedom. That is why we have designed Bit2Me Wallet, a powerful web wallet that you can use from anywhere in the world. With support for Bitcoin, Bitcoin Cash, Ethereum, Dash y Litecoin, Bit2Me Wallet allows you to manage your cryptocurrency portfolio No problem. Best of all, Bit2Me Wallet integrates seamlessly with other services we provide such as DEX and our buy-sell solution.

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