In today’s world of technology, many people are curious to know about the Cryptocurrency and its working. So in this blog you will know the complete detail about the same, but before moving further, let understand what Crypto currency wallet is? In simple term, it could define as a digital money transfer software program that store the public and private keys which users could use to send and receive the digital currency. For managing the bitcoin or any other crypto currency, you need digital wallet.
So it will be not wrong to define cryptocurrency wallet as peer to peer payment app that deals with digital payment. Here you will know about its working and types.
Working of cryptocurrency wallet:
There are ample numbers of people who use cryptocurrency globally but many of them are not aware about its working. The working of this wallet is different from any other mobile money solution in terms of storage. It does not store the currencies in the physical form anywhere. The record of transactions is stored on the blockchain.
It uses public and private keys so any user if send the crypto currency there is essentially a signing off the ownership to the address of wallet. To receive the currency, the public key and private key must be matched with each other. If they are mismatched with each other, there would be no exchange of the currency. The exchange of real coins does not take place in any cryptocurrency payment solutions.
The cryptocurrency wallet address is just like your bank account number. Each cryptocurrency wallet has one public and one private key which are used by the wallet owner. The private key is used to access the fund of the wallet just like the PIN number of your bank account. For transferring any currency, the wallet owner has to use this private key. On the other hand, the public key is a hashed version or you could say mathematically linked to the wallet address. This kind of hash function is a sequence of number or letters which are encrypted to new number or letters.
The sequence of number or the letters before encryption is called as input and after encryption it is called as output. This kind of approach adds extra security that could not be hacked. Let us understand this concept through an example here.
Public key: 012gh55fh44a7a14ag57a4h574ahr74ag47h547ha54g
Private key: 99bh7ag7a52agah12jaga712ahja47jahj8ah8
These two sets are completely different for human but for software, they are linked to each other. So for transferring the money, the cryptocurrency wallet solution will do everything.
The bitcoin or any other crypto currencies are digital money and they are digitally stored on the blockchain. It stores every single transaction within the system. There is a direct connection between cryptocurrency wallet and block chain. The crypto wallet is a protocol that generates the private keys and public keys. For better understanding let us take an example of your debit and credit payment in the store, for this you need to enter the pin to make the transaction. The same concept applies in the cryptocurrency scenario. For transferring the coins, you need to enter your private key so it is like your bank account PIN number.
How to make your cryptocurrency wallet secure?
As far the security is considered, the cryptocurrency wallet is secured when your private key is confidential. In this kind of mobile money solution, your private key get leaked or hacked, and then there is a great chance of getting your wallet unsafe. The relation of cryptocurrency is with internet and hackers use smart ways to steal your confidential information. Some common ways which hackers use to access your wallet are virus, key logger, phishing, malware and remote access to your device.
Some ways to make your cryptocurrency wallet secure are as follow:
- Use the latest software in your device because when you use updated software you have the highest level of security
- To add extra layer of security, you have set up of two factors authentication. In such scenario there is a code sent on the users mobile device which he or she needs to feed
- Using the multi-signature supporting wallet which means a user must use two or more separate device to authenticate the transaction
Types of cryptocurrency wallet:
There are many types of cryptocurrency wallets however; the working process and other features vary according to different wallets.
Mobile wallet: In this type of wallet, a user needs to download an app to access the balance. Using a QR scanning process, a user could spend the coins in any physical store.
Desktop wallet: This type of wallet is useful in laptop or computer and could only be accessed from that particular device. Desktop wallet is providing a good combination of convenience and security.
Paper wallet: In this type of wallet a user need to print the public or private key on to the piece of paper. Whenever you need to transfer the fund, you just need to enter those keys into the software or the web wallet.
Hardware wallet: This kind of wallet is a physical device that stores all public and private keys. Whenever you need to access the fund, you need to connect this wallet to the internet.
Cryptocurrency is very popular in the world of digital payment trend. Throughout the world, people love to access their cryptocurrency wallet. Many software developers are bringing improvement in the wallet app development, so that a fruitful result could be gained. It is a secured way but only you need to take care about your private key. Hope you get useful information here. Stay with us to know discover new facts through our words.
Nikunj Gundaniya, Product manager Digipay.guru, one of the leading fintech solution providers, which provides mobile finance application development services. He is a visionary leader whose flamboyant management style has given profitable results for the company. He believes in the mantra of giving 100% to his work.