The world of Cryptocurrency is booming and is constantly on the rise and with every passing second it is catching up on all other types of currencies across the world. As such the use of cryptocurrencies for transactions amongst the traders and organizations is increasing manifold and hence the need for securing all of this digital money digitally wherever they are stored is imperative. As such, mediums and services that can store all the cryptocurrency are required and that’s where the Cryptocurrency Wallet comes into picture.
Cryptocurrency wallets are computer programs that store private and public keys enabling users to transact with digital currency and also monitor their balance. You will need a digital wallet if intend to use Bitcoin or any other cryptocurrency. A cryptocurrency wallet would be a digital wallet used to receive, send and store, among others, digital currencies like Litecoin, Ethereum, Bitcoin.
Cryptocurrency wallet, as such gives you a total and absolute control of your digital money. For all cryptocurrency investors as well as anyone looking to be a beneficiary of the many opportunities presented by the blockchain network, it is an extremely vital tool.
Let’s examine the importance of Cryptocurrency Wallets a little more closely.
Why Creating Cryptocurrency Wallets is Important?
Cryptocurrency Wallets store your private and public keys and communicate with various blockchains ebnabling users to track their balance, send money and perform other operations. Whenever somebody sends you bitcoins or some other form of digital currency, they sign off the ownership of the coin at your wallet address. The transaction is represented by a blockchain transaction record and a change in your cryptocurrency wallet’s balance.
As such creating a cryptocurrency wallet makes it easier for you to store all your currency for usage and also provides a digital address for you to receive your currency.
Now that you have a fair idea about what these Cryptocurrencies are let’s see how you can create a Cryptocurrency Wallet.
Creating a Cryptocurrency Wallet.
Cryptocurrency wallets can be accessed via web browsers, downloaded from smartphone app stores or bought from online shops as hardware devices.
If you’ve ever signed up for an email address you already know how to build one. Setting Up an online Cryptocurrency wallet just takes the same amount of time as required for setting up an email account.
- Open a new Web Browser
- Open the URL that you want to create your wallet with. For example https://www.myetherwallet.com/
- Once you have opened the website from the main menu options look for the option that says “New Wallet”. Once you click on it a new wallet gets created.
- You would be asked to enter a password in the entry field.
- Make sure you put in a strong password and then click on the “Create Wallet” option.
- Safely store your password at a place from when you can easily retrieve it.
- In the next step download your Keystore file/ JSON file and keep it safe and never share it with any third person.
- In your final step, you would be prompted to download a private key. Save it and download it and keep it safe.
All that you obtained in steps 6,7,8 are extremely important and never share this information with anybody.
You are done!! Your Wallet is successfully created. The one you just created is a paper wallet and there are a lot of other types of wallets too which we will see in detail
Types of Cryptocurrency Wallets
Now wallets are of different types. Now based on the cryptocurrency that you are using your type of Wallet that you are planning to use will also differ. Let’s look at the various types of Wallets that are in use:
It is a wallet that includes the exchange from where you buy the cryptocurrencies from. Normally the wallet is connected to some bank account which can be utilized to move Fiat cash in and out of the wallet. You can purchase and store virtual cash on a trade, for example, Bitfinex, Coinbase/GDAX, Bittrex, Poloniex, Bitstamp, Binance, etc. Trade wallets are not viewed as safe for long haul use as they can be inclined to programmers and savage power assaults. Every year, 15% of Ethereum and Bitcoins are taken from trades and wallets prompting a huge number of dollars in misfortunes. One can store digital money like BTC, USD, ETH, and LTC. There are other altcoins trades too, which are used to purchase digital currencies utilizing bitcoin as a type of interconvertible currency. Each of these could likewise be supported up to a capacity vault, with additional safety measures, for example, email/SMS affirmation or 2FA (two-factor verification) utilizing a google Authy application.
There are numerous gadgets also known as hardware wallets (with a touchscreen display and little keypad) that fill in as equipment for storing your digital currencies. A couple of the famous hardware wallets are the Trezor and Ledger Nano S. There are some other companies as well who are selling hardware wallets, however those two are the most used ones. These hardware devices will have a huge store of keys (word phrases or seeds) to re-establish your wallet in the event of any crisis or loss. Make sure you purchase your hardware wallet from a credible source, for example, the official Ledger site, never a used one from eBay or Amazon. In some cases, these wallets that are resold can be hacked into, a portion of these are also sold with changed chipsets, hence ensure you purchase from a trustworthy source. Equipment wallets or Hardware device wallets are the most secure types of wallets since they can’t be hacked too easily. They can likewise be locked with a password and reworked. Three unsuccessful attempts and the hardware wallet will be wiped clean of all its data.
All the cryptocurrencies have their respective desktop versions that can be used for storing currency. If you store currency in your desktop wallets you are given a percentage return. And nowadays this service is made available by many emerging digital currencies to make sure the coins are held on in these desktop wallets for a long time. These wallets can be installed on smartphones. However, they are not too secure and are prone to attacks by hackers, but the ease of using your currency makes it a preferred wallet.
There are several paper wallet generator sites that give an open and private key combinations for a particular type of digital currency. The keys thus generated are generally an arbitrary grouping of numbers and letters that form a string. The generated public key fills in as the wallet address. And the private key is connected to public address which shall never be disclosed except unless you are attempting to pull funds from the paper wallet. You need to makes sure the paper wallet is put away in a safe place, away from suspicious eyes and you must keep duplicate copies of the same so that you can use the keys in the event of any loss due to fire, theft or any other eventuality. If somehow the keys are lost, your funds are lost too forever. However, the paper wallet certainly is the least expensive way of safely storing your digital currency. MyEtherWallet.com is one such site to create an Ethereum-based online paper wallet (which supports ERC 23 and ERC 20 utilizing smart contracts). You can put away a paper wallet as a JSON record or even in the form of PDF that contains decoded open and private keys.
The best thing to do is to use a combination of two wallet types for safely storing cryptocurrency. The best and the safest combination is the use of a hardware wallet along with a paper wallet containing a fool proof paper backup of necessary codes and keys.
How does knowing how to create a wallet benefit you?
When you are aware of how to make a wallet you avail of all the benefits of using a wallet as a whole. Let’s quickly list some of the benefits of using a cryptocurrency wallet:
It never runs out of space and can seamlessly hold hundreds of digital currencies.
All development platforms and cryptocurrency exchange markets prefer wallets as wallets form a package of cryptocurrencies that are earmarked with distinguishable sections, that avoid any confusion or mix-ups.
It is an easy balance checker that you can use to keep a check on the transactions on where the money being received or being sent or added. You can keep track of every transaction using your wallet.
While there are benefits of using Cryptocurrency wallets there can be some major security threats as well when using any of these wallets. So ensure you choose a wallet that is provided by a credible and trustworthy source and is not prone to any external virus or malware attacks. That’s because cryptocurrencies are extremely high-valued and you would definitely not like to lose some of the very hard-earned, strategically traded currency because of some negligence that could be avoided.
Barring the security threats that can be avoided, Cryptocurrency wallets are surely the convenient way of dealing with digital money and knowing how to create one is definitely going to be of great help always.