Category: CRYPTO BUSINESS
As Bitcoin and other cryptocurrencies have continued to sweep through the digital world like a pack of Huns, they have brought with them a whole new set of tools that need to be thoroughly understood if you want to grasp what going on in the digital currency world.
If you want to profit from this trend then you need to go far beyond just understanding.No matter your goal, if you want to understand CryptoCurrency then you need to understand wallets. Not the one in your pocket, but digital wallets.
What are digital wallets?
So, what is a digital wallet? A digital wallet is exactly like a wallet in that it is a container that stores either your money or, more often, the means to access your money. Think of a modern wallet. There is rarely that much cash in it at any given time, but the purchasing power of its contents is enormous because of debit and credit cards. I.e. it is a container that contains keys (this is an important word) to the real money and the real value that is stored elsewhere.
There are two major kinds of digital wallets right now.
The first is more like the wallet you use today. It is a digital way of accessing your bank account, debit card, and credit cards without actually having them with you. This kind of digital wallet is becoming more and more common with cellphones. The idea behind it is that if you carry your cellphone and wallet everywhere, why not combine them and create one solution? With the advent of near field communication in both cards and phone, this kind of digital wallet it really taking off.
But it is not the most interesting kind - not by a long shot. And if you are reading this article those wallets probably interest you very little.
The other kind of digital wallet is the cryptocurrency wallet. This is the kind of wallet that you need if you want to use Bitcoin, Litecoin, or really any other cryptocurrency that currently exists on the market.
Why use one
Want to get involved with cryptocurrency? Ok there you go, you need a wallet. There really isn’t a choice. If you want to use cash you need to at least have a pocket to put it in, it’s the same with cryptocurrency.
It’s slightly more complicate, however, in that a cryptocurrency wallet is more like a secret keychain. It holds onto the public and private keys that allow you to access your coin. The public key is known by all, it is written in the ledger and makes it clear who (in a very general sense, it would be very difficult to find out really).
The wallet itself also holds the private keys that are associated with the public keys. The private keys are what you need to move coin around, to enter it on an exchange, to convert it to a fiat currency, etc. Your wallet is the only thing in the world that can access your coins. And while this is super secure and protects your money for miscreants, it also entails a certain amount of risk.
The risks associated with a cryptocurrency wallet are about as high as those associated with a real wallet. If you lose your access key then you are screwed. If you are using a hardware wallet and you lose it, you are screwed.
And this isn’t like losing your cards where you can call the bank and cancel the cards and get your money back. Even better, you are legally protected from charges made on those cards while in the possession of the thief.
This kind of protection doesn’t really exist with cryptocurrency wallets because to be able to do this would destroy the anonymous, decentralized aspects of the currency that makes it so attractive and useful! So just be careful with your wallet and make sure you don’t forget your access key!
So, what are the benefits of using a digital wallet? And what kind of features can you find in more advanced ones? Let’s start with a card. Some cryptocurrency wallets come with what are essentially debit cards. They allow you to bridge the gap between the world stuck in the past and the crypto future.
If all your money is in the crypto future but McDonald’s will only take cash or credit, you’re still going to want that bigmac!
So, with newer wallets you’re not totally cut off from the world.
As Bitcoin and other coins continue their flight into the stratosphere, it is reasonable to assume that the future of the crypto wallet will continue its ascent with the currencies they hold.
Wallet technology is one of the areas of cryptocurrency that is seeing the fastest development and that will have the greatest impact on the actual user experience with the coin.