Every investor or user who decides to jump with both feet into the crypto world should realize that he’s solely responsible for his digital coins. If fiat savings can be put in the bank without worrying about anything, then the crypto user is responsible for the storage of his crypto assets and no one will compensate him a possible financial loss. That’s a sort of payment for the freedom of the market that can only be avoided if you choose the right crypto wallet.
A crypto wallet: what’s this?
A crypto wallet is a place to store digital savings. Most of the crypto wallets are implemented in the form of programs and online services. However, some crypto wallets have a physical form just like an ordinary purse.
Any crypto wallet has two important components:
- A public key (address), which is a unique set of letters and numbers. It has much in common with a bank cell and serves as an address for sending coins;
- A private key, which is a cryptographically protected hash. Despite it also looks like an alphanumeric combination, it’s comparable to a key that grants access to the same bank cell.
A pair of these keys depend on each other. The public key is visible to everyone and it can be safely transferred to third parties as a payment means. As for the private key, it needs to be securely stored by the user or the service on which such obligations were imposed since it enables you to make transactions from the wallet.
Digital coins are not secured in possession of a specific user. In fact, the one who owns the private key of the ETC wallet also owns all the digital coins stored in his account.
How a crypto wallet works
Cryptocurrency wallets are used by millions of users around the world, but not everyone realizes exactly how it works. Unlike cash transactions, when at the time of payment one transaction participant transfers a certain amount of money to another, transfers with digital coins are carried out without a physical transfer.
Digital coins don’t exist in the physical form. Therefore, all operations with them are presented by merely changing the entry in the blockchain registry. When a transaction is made via a crypto wallet, the ownership of digital coins from one address to another is simply rewritten.
Such a transaction is possible only if it is signed with a private key corresponding to the public address. If the public and private key on the wallet match, then the transaction is sent to the miners for verification, after which it is added to the blockchain registry, and the balance of the senders and recipients’ purses changes accordingly.