What is a Cryptocurrency Wallet?
A cryptocurrency
wallet, or digital wallet, is simply defined as an application that manages public and private keys. The most popular of the crypto money wallets is known as
the Bitcoin
wallet. In order to buy and sell cryptocurrencies, a crypto money wallet is needed. The purpose of producing crypto money wallets is not to keep crypto coins in them, but to store the secret keys required to provide access to crypto coins. In other words, the wallet does not actually store digital coins, but data proving the existence of these coins. Secret and public keys are used to access deposits within the account or to send money to a different account. If you do not have the public and private key, it is not possible to make transactions with the deposits in the account. These keys are bound together by special encryption standards. It is possible to access public key data with private key information, but it is not possible to access secret key information with public key information. According to the online and offline characteristics of crypto money wallets, they are classified as Hot Wallet and Cold Wallet. Hot wallets; mobile wallets are divided into desktop wallets and online wallets. Cold wallets are; paper wallets and hardware wallets.
What is a Cold Wallet?
A Bitcoin cold wallet is called an offline wallet used to store Bitcoin and other altcoins. They are physical, electronic devices, hardware wallets that use random number generators to generate public and private keys. Paper wallets are physical documents on which a public or secret key is placed in the form of a QR code. Cold wallets do not have an internet connection, making the wallet more resilient to cyber attacks, unauthorized access, and other vulnerabilities. Balances in cold wallets can only be accessed by people who know the private key. In this sense, the account holder should not share the secret key code specially given to him with another person. In addition, care must be taken not to lose the private key with the shared code.
The Bitcoin cold wallet is recommended for long-term investors and investors who want to store larger amounts. For daily transactions and to hold small amounts of Bitcoin, it is recommended to use hot wallets.
