Out of 17.7 million mined Bitcoins, the total coin supply halves every four years. But the catch here is not all the 17.7 million coins are actively available since most of them have been lost. According to a recent study by Chain analysis, a blockchain analysis company specializing in Blockchain reported that around 4 million bitcoins are lost.
There are several reasons for this is that some of them belong to the owners who are gone, some of them belong to Satoshi itself, while the majority of them are lost due to mistakes in money management. This is why Cryptocurrency Wallets are becoming crucial as the value of Bitcoins increases every single day.
The first crypto wallet was initially developed by Satoshi, with simple features. It allowed for the generation of new addresses and sending BTC to other people. As the bitcoin price started enhancing, most of the people understood the importance of crypto wallets and started using them.
This guide will guide everything you need to know about cryptocurrency wallets and its usage. This includes how a crypto wallet works, and different types of wallets in the crypto industry.
Crypto Wallet: An Overview
A Crypto Wallet is a software program that stores your private keys and public keys. With this, one can send or receive coins through Blockchain as well as monitor the balance. The best crypto wallet follows the core principles to make it remain safe.
A modern wallet is something which supports the following set of characteristics:
Mobile Device Support
There are around 5 billion mobile phone users around the world. As most of the traders make use of a mobile device to perform trading, it is important that the cryptocurrency wallets must support this feature. The trading application should be supportive for both Android as well as iOS devices.
Simple yet intuitive interface
Every user must be able to send cryptocurrencies either by copy-pasting the address or scanning the QR code. Since most of the payment processors have made the process hassle-free, users just need to make a few taps/clicks, to perform transactions.
Ease of access
Opening an app will take only a few seconds. However, it must require information like PIN code, Face ID, or a fingerprint, etc.
Supporting Multiple Cryptocurrencies
Most of the requirement for users is to have an exotic feature of supporting a diverse set of cryptos like Bitcoin, Ethereum, Litecoins, etc.
In addition to these characteristics, it must operate a lot of security mechanisms since it involves a lot of money:
Exporting the private key to your money
It may seem logical to have it, but not all of the popular wallets support it.
Encryption on the device
To ensure that no one gets inside the device and finds out what your private keys are.
How does a Crypto Wallet work?
Initially, digital wallets are completely different from physical wallets. Instead of storing money, digital wallets store public keys and private keys. Private keys are similar to a PIN number which is accessed your bank account, while public keys are similar to the bank account numbers.
When you send Bitcoin, you are sending the value in the form of a transaction, thereby transferring the ownership of your coin to the recipient. While in the case of the recipient, the private keys should easily match with the sender’s one. With this, one can easily access to the coins.
The ownership of private keys gives the total access to the access of corresponding public keys. If any other person holds your private keys, they will control your coins. These crypto wallets work for Web and Android devices.
Types of Crypto Wallets:
Cryptocurrency wallets are categorized into the following types depending on the type of usage. Wallets can be classified into three distinct types: Software, Hardware, and Paper wallets. Software wallets can be divided into Desktop, Mobile or Online.
Software Wallets are the frequent hot wallets that are connected to the Internet. Thus, when a user needs to send or receive the cryptos, the device should be connected to the web. These wallets are available on the computer, laptops, or phones and render ease of access to the desired coins and tokens.
Here are the types of Software wallets:
These wallets are for the laptop and computers where the software is installed. But in this case, you can use these types of wallets even without getting connected to the internet.
As the name suggests, mobile wallets are completely accessible from mobile devices like Android, iOS. They have decent security protocols and come with a QR functionality that provides instant transactions.
Online Web Wallets
Online Web Wallets are the wallets connected online and require an Internet connection. They are sometimes referred to as “Cloud wallets”. The third-party allows you to use their software through the cloud.
Hardware Wallets differ from software wallets in that they store a user’s private keys on a hardware device like USB. Though these wallets make transactions online, they are stored offline for security purposes.
Hardware wallets are compatible with several web interfaces and can support different currencies. Users simply plug in their device to any internet-enabled computer or device, enter a pin, send currency and confirm them.
Paper wallets are easy to use and provide a very high level of security. It refers to the physical copy or printout of your public and private keys. It can also refer to a piece of software that is used to generate a pair of keys that are then printed.
Transferring cryptocurrencies to your Paper wallets is accomplished by the transfer of funds from the software wallet to the public address shown on the paper wallet. While in the case of withdrawal, the process happens vice versa. However, there are chances that they can get damaged easily.
How secure are these crypto wallets?
As these wallets handle the most sensitive information and modules, it is important to implement security protocols in it. Anyhow, no matter what if anyone has access to your private keys, they can also access your funds.
Any crypto wallets which are connected with the internet will remain vulnerable. Here are some of the ways through which hackers can get a hold of your funds when connected to the Internet:
- Remote access to your device
To prevent these issues, it is important that the device is using the latest software. Since hackers can make use of the most advanced technologies, it is crucial that software is updated with the highest level of security.
We people at Coinsclone, develop Multi-signature Crypto wallets for bitcoin trading platforms by adding extra layers of security. Here are a few security mechanisms which we integrate into wallets for Crypto exchanges:
Is it possible to store all cryptocurrencies in one single wallet?
This is one of the worth questions to be asked. It depends on the types of coins you hold. For instance, if you store Bitcoin, you need to find a wallet that is compatible with it. But there are multi-currency wallets which it can store a diverse set of cryptos.
Popular Bitcoin Trading Platforms like Binance, Coinbase usually support the best multi-cryptocurrency wallet for their users. Coinsclone offers Multi-currency wallets that are built on top Blockchain platforms.
What does Coinsclone offer with Crypto Wallet Solution?
Most of our clients around the globe have launched their own Cryptocurrency exchanges with us. They buy white label crypto exchange software and script to start a crypto exchange. To assist them with wallet integration, we render services for crypto wallet development as well as integration.
Here are the following set of features we integrate into the Cryptocurrency Wallet:
If you are a person interested to start a crypto exchange, it is crucial to understand the importance of top-notch cryptocurrency wallets in the industry. Be it a Hardware crypto wallet or software wallet, we excel in providing the best.
If you require a Crypto wallet at a reasonable cost for your cryptocurrency exchange, you can get in touch with us for an instant solution!