What is Cryptocurrency Wallet?
Cryptocurrency wallet, or in other words, digital wallet, is defined as applications that manage public and private keys. The most popular of the cryptocurrency wallets are known as the Bitcoin wallet. A cryptocurrency wallet is needed for buy-sell cryptocurrencies. The purpose of producing cryptocurrency wallets is not to keep the coins, but to store the private keys required to access those coins. So the wallet does not store digital currencies, but the data that proves the existence of these currencies. Private and public keys are used to access the deposit in the account or to send coins to a different account. Unless you have a public and private key, it is not possible to make transactions with the deposits in the account. These keys are linked by special encryption standards. It is possible to access public key data with the private key information, but it is not possible to access the private key information with the public key information. According to the online and offline features of cryptocurrency wallets, they are classified as a hot wallet and cold wallet. Hot wallets; There are three categories: mobile wallets, desktop wallets, and online wallets. Cold wallets; There are two categories: paper wallets and hardware wallets.
What is Cold Wallet?
Bitcoin cold wallet is called offline wallet used to store Bitcoin and other altcoins. Hardware wallets are physical, electronic devices that use random number generators to generate public and private keys. Paper wallets are physical documents with an open or secret key in the form of a QR code. Cold wallets do not have an internet connection, thus making the wallet more resistant to cyberattacks, unauthorized access, and other vulnerabilities. Only people who know the private key can access the funds in cold wallets. In this sense, the account owner should not share the secret key code given to him/her with another person. Also, care should be taken not to lose the shared code and private key.
Bitcoin cold storage is recommended for long-term investors and investors who want to store larger amounts. It is recommended to use hot wallets for daily transactions and to hold small amounts of Bitcoin.