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Crypto wallet is a digital tool for managing and storing assets and interacting with blockchain networks. Digital currency vault is a kind of virtual wallet that is installed on mobile phones, tablets, laptops, etc. and provides you with access to digital currencies. In fact, the first step to operate in the cryptocurrency market is to install a digital currency wallet. The most secure digital currency wallet is responsible for storing and protecting your coins and tokens. Also, by downloading the digital currency wallet, you will be provided with various other facilities to manage your assets.
Types of digital currency wallets include hot wallets and cold wallets, each of which includes several types and has its own advantages and disadvantages. Crypto market players should know the types of crypto wallets and the best digital currency wallets for Android, desktop wallets, etc. and choose the safest and best digital currency wallet for Iran to store their assets. For this purpose, in this article for you, following the definition of crypto wallet or wallet wallet, I will mention the specifications of the best and safest digital currency wallet.
What is a digital currency wallet?
At first, newcomers to the crypto world may face the question, what is Volt in digital currency? Or what is the use of digital currency wallet? To answer this question, we can say that Crypto Wallet is a digital tool that allows you to create multiple addresses (account numbers) and store, receive and send cryptocurrency in secure conditions. Before buying bitcoins, you must have a bitcoin wallet so that you can give its address to the bitcoin seller and ask him to send the bitcoins to your wallet.
After that, you should make sure that you receive it in your wallet by viewing your wallet account, and then you can manage and store it in your wallet or even send it. A Bitcoin address is a 26 to 35 character string consisting of upper and lower case letters and completely unique numbers that is used as a Bitcoin account number for storing, sending and receiving Bitcoins.
Digital currency wallet has an address that functions like a traditional bank account. This address is an alphabetical identifier based on private and public keys. Crypto wallets with public and private keys allow the possibility of keeping, sending, receiving, storing and investing in hardware wallets or software applications such as TrustVault digital currency wallet, Metamsk, etc. Provide.
There are mainly two types of crypto wallets. Hot Wallet refers to wallets that are connected to the Internet. Another category of wallets include cold wallets that are not connected to the internet. These types of Volt digital currency also include several types that I will mention below.
What are the main components of a cryptocurrency wallet?
Wallet wallet is an intermediary between you and the blockchain network, which sends transactions and requests to the network in the form of encrypted codes for review by auditors.
To send a transaction, you only need to enter the wallet address of the other party along with the transaction amount and sign the transaction with your private key. To receive the transaction, you must send your public key or wallet address to the other party so that he can send the desired currency by following the mentioned steps. But you may ask what is the public and private key?
Public and private key are important components of crypto wallet. These components are built using asymmetric cryptography in order to validate and keep the currencies received and sent safe. Encrypting these keys creates a new layer of security to ensure the wallet is unhackable. In the following, I will explain to you the concept of these digital currency wallet components and the recovery phrase (Seed Phrase):
Wallet Address
Most people think that the public key is actually the public address of the wallet to receive transactions. But in fact, each person’s wallet address consists of a unique private and public key. A wallet address is a string of letters and numbers that is similar to a traditional bank account. Your wallet address represents the location on the blockchain where your assets are located. This way you will be able to receive and send cryptocurrency.
Public Key
It is a code that allows you to receive cryptocurrencies in your wallet at the wallet address. The public key is mathematically a link to the wallet address, which looks different from the wallet address. The public key is generated and encrypted in crypto wallets to share with other people and receive cryptocurrency. But in order to prove ownership of assets and access to transactions, you will also need a private key.
Private Key
A type of code consists of a string of secret numbers and letters, which, together with the public key, ensures the security of the wallet. This key is like a bank account password and only with its help you can prove your ownership and manage your digital assets.
Anyone who has the private key of a wallet is the wallet. This issue is similar to the fact that a person can be considered the owner of a bank account by having a bank account password. With the difference that if money is stolen from your bank account, it is possible to track it. But if money is stolen from your Bitcoin account and someone can access your private key in any way, your assets are untraceable. Therefore, you should be diligent in maintaining the private key.
Recovery Phrase (Seed Phrase)
Recovery Phrase or Seed Phrase is a list of words in the wallet that stores the necessary information to recover your account in the crypto wallet. Seed Phrase is usually generated automatically after registration in the account creation process. Please note that you must store the recovery words in the order they are displayed in a safe place.
If your digital wallet has problems due to software or hardware bugs, you will be able to recover your cryptocurrency account with this statement. Please note that the recovery term is only used for accounts created on the blockchain platform and is the only way to access the digital currency wallet when you forget the password.
What is the working method of cryptowallet?
in bank accounts; Money or its equivalent value is kept in a safe place. But in crypto wallets, private and public cryptographic keys will be kept. In fact, digital currencies cannot be physically stored in a crypto wallet. Because such assets do not exist physically.
The address of the digital currency wallet is the same as the bank account number and there is no problem if it is given to someone else; Because others need it to transfer and send money. In the cryptocurrency world, if someone wants to send you digital currency, you can give them your wallet address and receive your cryptocurrency.
As with bank accounts, no two wallet addresses are the same. Therefore, no one other than you will be able to receive your money. Also, you have no limit to create wallet addresses. For example, the address below is one of the Bitcoin digital currency wallet addresses, which is believed to belong to Satoshi Nakamoto, the creator of Bitcoin:
1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa
Considering that most transactions are done transparently, the amount of money in the wallet or the transactions made in the past can be seen by its owner. Of course, it should be noted that the crypto wallet address does not indicate the real identity of its owner.
Custodial and non-custodial wallets
In a general category of digital currency wallets, we can mention Custodial and Non-Custodial types. In a custodial wallet, a third party, such as a digital currency exchange, is responsible for maintaining the users’ private keys and uses them to sign the owner’s transactions. These types of crypto wallets are suitable for those people who don’t worry too much about their assets and don’t have a problem with third-party monitoring of their wallets. However, it is not recommended to use custodial wallets due to the possibility of risks such as hacking of the exchange.
The other category is non-custodial wallets, which are a good option for professional cryptocurrency users. In this type of crypto wallet, the management of private keys is completely the responsibility of the user. Non-custodial wallets, which are also called self-custody wallets, do not require third-party supervision. Nevertheless, the owners of the wallets should be diligent in taking care of the private keys themselves; Because if these keys are missing, the possibility of accessing their assets will be lost forever.
What are the types of digital currency wallets?
Some types of crypto wallets can be installed for free in the form of software or browser extensions on computers or mobile phones. Some of them are also in the form of hardware and in the form of small physical devices such as flash memory in the market. In general, digital currency wallets are divided into two main types, cold wallets and hot wallets. In the following, we will explain each of these types of cryptovolts:
Hot Wallet
Hot wallets are wallets that are connected to the Internet. These wallets provide facilities such as sending, receiving, storing, viewing the amount of tokens and asset management for users. Hot wallets can be accessed by devices connected to the Internet such as tablets, mobile phones and laptops. Due to the easy operation of Hot Wallet, these wallets are suitable for beginners and all digital currency users.
The Gram digital currency wallet has the possibility of storing the private keys of your cryptocurrencies after buying and extracting Bitcoin , etc. Also, you need your private keys to make transactions with this digital currency wallet. Of course, it should be noted that in the custodial digital currency wallet, the third party signs the transaction using your private key instead of you. In this way, Gram Crypto Wallet registers transactions in the distributed ledger as an interface between you and the blockchain.
Types of Hot Wallets
- Web wallet
- Software wallet
- Mobile Wallet
- Desktop Wallet
Advantages of digital currency wallet
Below are some of the advantages of these crypto wallets:
- Simple to use
- Making transactions without the need to transfer from online to offline environment
- Connected to the Internet and online
- Always access
- The possibility of installing a crypto wallet on different systems
- Free use
Disadvantages of warm wallet
In addition to the advantages of this digital currency wallet, it also has disadvantages, which we will discuss below:
- Vulnerable to hacking due to internet connection
- Saving passwords and private keys in users’ Internet browsers and the possibility of thieves accessing them
- Loss of Assets in the event of Service Termination by the Wallet Provider System
Cold Wallets
Unlike warm wallets, cold wallets are not connected to the Internet. Considering that the only way to connect to the blockchain is through the Internet, a cold wallet has high security. As a result, it is less exposed to cyber attacks and hacking. Hence, these Cold Storage vaults store your public keys offline.
The transactions of these wallets are initially started in the online space and then transferred to the offline space and finally return to the online space. Cold wallets have more technical complexity and therefore are considered a good option for professional users.
Types of cold wallets
- Paper Wallet
- Hardware Wallet
- Sound Wallet
Advantages of cold wallets
The advantages of this digital currency wallet include the following:
- high security
- High storage capacity
- The possibility of cold storage of users’ funds in many reputable exchanges in the world
- It has additional layers of security
Disadvantages of cold wallets
The disadvantages of cold wallets are:
- Relatively expensive
- Need to pay the initial fee
- The difficulty of buying and selling digital currency
- Limited cryptocurrency support
The difference between hot and cold digital currency wallets
Cold wallets are non-custodial wallets where only the user can access and control cryptocurrencies, private and public keys. But the warm wallet is considered a type of custodial wallet that, in addition to the user, a server also maintains the private key on his behalf. In addition, one of the most important differences between these two crypto wallets is that the warm wallet is connected to the Internet. But the cold wallet can be used offline and hence it is considered the most secure digital currency wallet.
Although cold wallets have high security, using and making transactions through this wallet takes time. Therefore, they are not suitable for everyday use. As the best digital currency wallet for Android, Gram Wallet has an easy setup process and a convenient and fast operation. Therefore, this wallet is one of the most common and common types. Hot wallets are constantly connected to the Internet and are therefore exposed to security and financial risks. It is recommended not to store large amounts of digital currency in these hot wallets for a long time.
Read more: How can blockchain security be increased?
How to choose the best digital currency wallet for Iran?
It is never possible to give a definitive answer to the question of which is the best digital currency wallet for Iran and other users. Using and installing a digital currency wallet depends on the type of wallet you use. For example, the best cryptocurrency wallets for Android for daily transactions are web wallets. Because they enable faster access to assets. Of course, in choosing the best digital currency wallet for Iran, you should also pay close attention to its security options.
On the other hand, if you plan to invest large amounts of money for a long time, hardware wallets are the safest cryptocurrency wallets for you. This is due to the fact that assets are stored offline, which enables a higher degree of security. Therefore, to choose the best crypto wallet, you should pay attention to the type of activity you do in the crypto market.
Important points in choosing the best and safest digital currency wallet
A suitable digital currency wallet, in addition to storing cryptocurrencies, should also have the ability to integrate with decentralized applications (dApps). It should also be able to support non-NFT tokens. Of course, you should pay attention to the fact that a crypto wallet cannot store cryptocurrencies; Rather, your assets are stored on the blockchain platform. Therefore, the crypto wallet provides you with access to the assets in the blockchain to manage your digital currencies. In general, to choose the best crypto wallet, it is better to pay attention to the following points:
security
One of the most important things in choosing a cryptocurrency wallet is security. The storage location of your cryptocurrency assets should be safe in every way and protected from cyber attacks and hackers as much as possible. You can also research the types of wallets and choose the most secure digital currency wallet based on user reviews.
Digital currencies
Some types of crypto wallets offer a wide range of digital currencies. While some others are more limited than Volt digital currency. If you are constantly exchanging cryptocurrencies with each other and you care about diversity in digital currency portfolio management, you should use a suitable wallet that supports a variety of cryptocurrencies.
Wage
The way to receive fees is different in different types of crypto wallets. Some of them charge more from users and some charge less. But it should be noted that although some wallets have low fees, the transaction speed in them is low. Therefore, depending on your needs, you should choose the best crypto wallet with the right fee.
access
If you use your laptop and desktop a lot, desktop wallet is the best option for you. But if you want to access the wallet in your browser and mobile phone in addition to the desktop, you should choose a wallet that has different versions for mobile, desktop, etc. be
Customer support
Some companies have provided 24/7 support in their services. This issue can be an important advantage considering the possibility of creating problems in the wallet at any moment.
Yes. Most crypto wallets have encryption technology to increase their security. But you can also consider some security measures such as preventing the sharing of sensitive data and keeping private keys in a safe space, etc. Make it more secure
For small deposits or day trading, using online wallets is a better option. But if you are looking for a wallet to store large sums of money for the long term and store value, you are advised to use hardware wallets.
no Each wallet is usually suitable for one or more types of cryptocurrencies. Therefore, before choosing the best digital currency wallet; Be sure to make sure that the wallet supports the cryptocurrency you want.
