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Cryptocurrency Wallets! Is Your Funds Safe?

While the cryptocurrency market is going mainstream itu2019s very important for users to keep their funds safer. https://www.coinmomo.com/article/cryptocurrency-wallets-is-your-funds-safe

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Cryptocurrency Wallets! Is Your Funds Safe?

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  1. Cryptocurrency Wallets! Is Your Funds Safe?

  2. While the cryptocurrency market is going mainstream it’s very important for users to keep their funds safer. While keeping all of our funds on exchanges is very risky it's better to keep a majority portion of your funds in a Cryptocurrency wallet that stays offline just like a pen drive or a data card. Let’s look at the types of wallets we have in cryptocurrencies which you can use to keep your funds safer.

  3. What is a cryptocurrency wallet? A cryptocurrency wallet is a tool you can use to interact with a blockchain network to send, receive, and store cryptocurrencies. It can be divided into three main groups- Software wallet Hardware wallet Paper wallet

  4. Type of wallets depending on their working mechanisms may also be referred to as hot or cold wallets. So how do they work? Contrary to popular belief, crypto wallets don't really store cryptocurrencies. Instead, they work as a sort of gateway, providing the tools you need to communicate with the blockchain. In other words, these wallets can generate all the information you need to use cryptocurrencies.

  5. Let's take a simple example. Imagine that Alexa wants to build a brand new Bitcoin wallet to receive a payment from Bob. The easiest way for her to do that is to use a crypto wallet program. When Alexa creates a new wallet, the program generates multiple pairs of public and private keys, along with several blockchain addresses. To simplify, let's consider only one pair of keys and a single address.

  6. First, the program calculates the pair of keys, one public key, and one private key. Next, the public key is used to generate a unique Bitcoin address. This is the address Alexa needs to provide. Bob then sends bitcoins from his wallet to Alexa's wallet. Note that the coins never leave the blockchain. They are just transferred from one address to another. While it's safer for Alexa to share her Bitcoin address with others, she should never disclose her private key to anyone.

  7. HOT AND COLD WALLETS As mentioned, cryptocurrency wallets may be defined as hot or cold according to the way they operate. A hot wallet is anyone that is connected somehow to the Internet. For example, when Alexa creates an account on any exchange and sends funds to her wallet, she is depositing into a hot wallet, hot wallet is convenient for traders and frequent users because they are easy to set up and the funds are quickly accessible. On the other hand, cold wallets tend to be a much safer alternative for Alexa to store her bitcoins because they have no connection to the Internet.

  8. For more update , visit us https://www.coinmomo.com/article/cryptocurrency-wallets-is-your-funds-safe

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