As cryptocurrencies become more and more popular, related concepts are also born. If you also want to participate in this market and need a tool to safely store and store digital assets, then it's time for you to learn about virtual wallets.
What is a virtual wallet?
A virtual currency wallet or cryptocurrency wallet is a software application or a hardware device used to store digital assets. Digital money will not be stored directly in your wallet, but the electronic wallet actually stores information about public and private keys. Using these keys, you can securely send and receive cryptocurrency.
The virtual wallet will have 2 main components:
Publish key or public key: This is considered the user's wallet address, used to receive money transferred to the wallet. Like your bank account number. You can share it with other users, or organizations so they can send you money or take money from your account when allowed.
Private key: The private key has the function of accessing the virtual wallet to use the coins you own. Likened to your Pin password or your bank account password, this is information that cannot be shared with others.
Uses of virtual wallets
Some main uses of virtual wallets you need to know:
The use of a virtual currency wallet is to send and receive money transactions, and track the history of transactions made.
Store the address where your coins reside on the blockchain platform.
A virtual currency wallet will help you prove that the money stored on the blockchain belongs to you.
Allows you to view account balances and changes in money amounts
Principle of operation
Many people will easily mistakenly think that virtual wallets are used to store cryptocurrency. However, this is completely incorrect. In fact, virtual currency is stored on each currency's own blockchain. A virtual currency wallet is a software program or device designed to interact with the currency's blockchain.
The virtual currency wallet will be responsible for storing the owner's private and public keys and a blockchain interface to easily track balance fluctuations from the wallet. In addition, virtual wallets also allow you to deposit money and perform other activities.
If you receive any amount of virtual currency. This means, the sender registers ownership of that money to your wallet address. For a transaction to be successful, the sender's private key must match the public wallet address. At this time, the balance in your wallet will increase and the amount of virtual money of the sender will automatically decrease. Transaction information is displayed as a table recorded on the blockchain.
Types of virtual currency wallets
Virtual wallets are divided into two types: Hot wallets and cold wallets. With different storage needs and goals, each investor will have different wallet options.
Hot wallet
Hot wallets are always directly connected to the internet. With hot wallets users can access and track their assets and make transactions instantly. Assets are managed locally on computers or electronic devices with an internet connection.
Advantages - Disadvantages of Hot Wallet
Advantage:
Quick access, anywhere, and easy transactions. Because of those characteristics, if investors want to invest in the short term, hot wallets are the right choice.
Store a variety of virtual currencies.
Defect:
Low security, vulnerable to attack. When you surf the web, if you accidentally click on a link containing malicious code, information in your wallet can be saved and read.
Internet is a mandatory condition when using hot wallets.
Some popular hot wallets
Below are some of the most popular types of hot wallets used today that you can refer to:
Bitcoin Blockchain virtual wallet
This is a virtual currency wallet popularly used in the world. It is created on Blockchain technology, so all data is stored and encrypted with special characters to limit the disclosure of user information. In addition, this virtual wallet also has a 2FA security function, ensuring maximum information security for users.
Bitcoin Blockchain virtual wallet has a friendly interface and is easy to use, but there is a limitation that you need another application platform to conduct bitcoin cryptocurrency transactions.
Coinbase virtual wallet
This exchange can store virtual currencies such as: Bitcoin, Litecoin, BAT, ZEC, REP, etc. The advantages of Coinbase virtual wallet are free service, easy-to-use interface and support on all platforms. iOS and Android. However, the Coinbase e-wallet does not support the function of making transactions but can only store virtual money.
Virtual wallet on Remitano
This is Vietnam's most famous virtual wallet for trading on the Bitcoin exchange. When participating in this exchange, you can completely create a wallet and use Vietnamese money to buy and sell virtual currencies such as Bitcoin, Bitcoin Cash, Tether, Ripple, Ethereum, etc. The outstanding advantage is the ability to trade quickly, Easy-to-use interface, simple and safe. The prices of electronic currencies are also reasonable, making it easy for you to compare and make trading decisions.
Cold wallet
A cold wallet (or hardware wallet, hardware wallet) is a type of wallet designed on a specialized device shaped like a compact USB. To access and transact you need this device. Cold wallets have the function of encrypting and securing keys (Private Key) for the coins it supports.
Advantages and disadvantages of Cold Wallet
Advantage:
High security. In the wallet there is a chip called Secure Element, which will protect the wallet from being attacked by hackers or malicious code.
Always in offline mode, separate from the internet. Only when needed to transact in online mode.
Defect:
High price, from 2 million - 3 million VND/device.
Cold wallet transaction speed is also longer because of many operations
Easily lost, stolen and costs more to buy a new one
Some popular cold wallets
The following are the most reputable and commonly used cold wallets that finhay has compiled to help you easily choose the right virtual wallet:
Ledger Nano
Ledger is a product of Ledger company in France. This is the most commonly used type of cold wallet today globally. The coins it stores include Bitcoin, Ethereum, Zcash, Dash, Ripple, ...
Some outstanding features of Ledger Nano: High security, many currencies compatible with the wallet, extremely sharp Oled display screen, wallet with many functions and applications, ability to backup and restore data easy, …
Safe
Trezor was released by SatoshiLabs in August 2014. It is one of the first cold wallets in the world competing with Ledger Nano.
The coins that Trezor supports are: Bitcoin, Ethereum, Litecoin, Dash Coin, Bitcoin Cash, Dogecoin, ...
Trezor's outstanding features include: Support for many different types of coins; the ability to install easily and quickly; Strong encryption password; 2-layer authentication; backup and restore capabilities, ...
In addition, there are many other e-wallets with the ability to store large cryptocurrencies, safely and securely thanks to professional encryption systems. Through this article, Phuc hopes you have the most details about virtual wallets to participate in this electronic market, wish you success!