Cryptocurrency is virtual money and as such, it cannot be stored under similar storage conditions as conventional money, this necessitated the creation of a storage system unique to cryptocurrency, this storage system is called a wallet.
A cryptocurrency wallet is fundamentally a storage system for cryptocurrency with the necessary tools to support withdrawals and deposits of funds, just like a regular bank account. A typical cryptocurrency wallet comprises two components – the public key and the private key.
The public key is like a bank account number to the wallet. It is available to all users on the network and every transaction that involves sending funds to another user is completed using the recipient’s public key.
The private key on the other hand is more like a secret password that authenticates a user and grants them access to the funds in their wallet. The user is expected to keep the private key confidential and secured. If the private key is compromised, then the funds in the wallet associated with that private key are vulnerable to theft. Fundamentally, a user receives funds from others through the public key and sends money to other users via the private key.
There are 5 main types of wallet; web wallets, desktop wallets, mobile wallets, paper wallets and hardware wallets. Each type of wallet is however not without its own complexities, benefits and drawbacks. This article will focus on a web-based wallet known as MyEtherWallet.
[zombify_post]
0 Comments