So, what is a crypto wallet?
A crypto wallet is a virtual wallet equivalent to your bank account where you can manage your virtual currency.
The crypto wallet does not store your cryptocurrency physically but instead, information about how much cryptocurrency you own is stored only on the decentralized blockchain network, and access to a wallet can only be obtained by providing the corresponding secret key to that wallet.
Every cryptocurrency has its own wallet with a public and a secret key where only you know the secret key.
Think of the secret key like your password but remember, if you lose your private key – your cryptocurrency is gone forever, there is no “password reset” button in crypto!
What types of crypto wallets are there?
Crypto wallets range from simple desktop or mobile apps to more complex hardware & offline solutions. You can choose from four main different types of wallets.
Software wallets (online wallets)
The private keys are stored in an app or other software. This makes sending, receiving and using your cryptocurrency as easy as using an online bank account
- As a software solution, we recommend Bitcoin Core and Electrum for Bitcoin, My Ether Wallet for Ethereum, and Litecoin Core for Litecoin.
For mobile, you can use the Samsung Blockchain which supports most cryptocurrency wallets.
Hardware wallets
The keys are stored on a special physical device that is kept in a safe place and only connected to a computer when you want to use your cryptocurrency. The idea is to create a balance between security and convenience.
- We recommend and use Trezor & Ledger wallets.
Both brands are the most established in the industry and provide cutting edge security. They have similar product offering and choosing one over the other is mostly down to personal preference.By using a hardware wallet you eliminate the risk of your secret keys getting lost. Remember to only purchase hardware wallets directly from the manufacturers, by using the links above. Otherwise you risk buying an infected device which could easily lead to your funds being stolen.
Paper wallets
The keys are written on a piece of paper and stored in a safe place, like a bank vault. This is the simplest (and near-free) way to keep your crypto secure, however it’s also the most technically challenging and to ensure the integrity of your paper wallets, the best practice would be to discard them after each withdrawal and create new ones.
Hosted wallets
The simplest way to get into crypto – you let somebody else worry about securing your the private keys, and you access all the functionality you need trough a web-based application. Finansiv offers two types of hosted wallets, the standard wallet and the Finansiv | Vault.
Remember, that hosted wallets are as secure as the provider which offers them!
So, which wallet should I pick?
Each type has its advantages and disadvantages. Paper wallets are very difficult for malicious users to access because they are stored offline, but they are limited in function and risk being lost or destroyed. Hardware wallets are the middle ground between ease of use and maximum security. Software wallets offer easy access, but they are only as secure as your device. A simple malware could lead to your cryptocurrency being stolen. Hosted wallets (such as your Finansiv wallet or Vault) are the simplest way to get started in crypto and offer a balance of security and ease of use, however, your protection against hackers is only as good as your wallet provider’s security – so make sure you look for features like two-factor verification and cold storage. You can read more about our security features here.
Key takeaways
What is a cryptocurrency wallet?
A crypto wallet is a piece of software or hardware, allowing you to store, send & receive cryptocurrency.
How does the crypto wallet store my funds?
It doesn’t. Funds are stored on the blockchain. Your wallet simply allows you to interact with the blockchain via your public & private keys which certify that you are the owner of the funds.
What are addresses, public keys, and private keys?
Your address is like your bank account number – share it with somebody if you want them to send you crypto.
Your public key is your “master address” – anybody that has it can track your entire transaction history and balances, share it only with trusted parties.
Your private key is your password – never share it with anybody. If you lose it – you lose access to your wallet, forever.
What is a mnemonic seed and is it different then a private key?
Your private key and a string of seed words (also called a mnemonic seed) are functionally the same thing. These are alphanumeric characters generated by entropy (structured randomness).
Private keys are what you actually use on the blockchain. The seed is simply a different way to store your private key.
Can I use one wallet for different cryptocurrencies?
NO! Different cryptocurrencies use different blockchains so don’t try to send Bitcoin to an Ethereum wallet address and vice versa or you will lose your funds forever.
Each cryptocurrency uses a different wallet, with the exception being tokens, generated on the Ethereum network, which you can store in an Ethereum wallet.
Does Finansiv offer a wallet?
We offers two custody solutions, by default, you can generate deposit addresses and make crypto transactions from your Finansiv account.
If you want absolute security but don’t want to use a hardware, or paper wallet – we have the perfect solution, Finansiv | Vault. The vault, while technically a hosted wallet, is completely focused on security, with 100% fund segragation and 100% offline storage, utilizing advanced methods such as multisig wallets, Shamir’s Secret Sharing and many more.
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