What is a Crypto Wallet?

 

What is a Crypto Wallet?

Definition

Crypto wallets store your private keys, keeping your crypto safe and accessible. They allow you to send, receive and spend cryptocurrencies like Bitcoin and Ethereum.

Crypto wallets keep your private keys – the passwords that give you access to your cryptocurrencies – safe and accessible, allowing you to send and receive cryptocurrencies like Bitcoin and Ethereum. They come in many forms, from hardware wallets like Ledger (which looks like a USB stick) to mobile apps like Coinbase Wallet, which make it as easy as shopping for crypto online with a credit card.

Why are crypto wallets important?

Unlike a regular wallet, which holds real money, crypto wallets don’t technically store your crypto. Your holdings live on the blockchain, but are only accessible using a private key. Your keys prove ownership of your digital money and allow you to make transactions. If you lose your private keys, you lose access to your funds. That’s why it’s important to secure your hardware wallet or use a trusted wallet provider like Coinbase.

How do you use a crypto wallet?

Crypto wallets range from simple-to-use applications to more complex security solutions. The main types of wallets you can choose from include:

Paper Wallets: Keys are written on a physical medium such as paper and stored in a secure location. This of course makes it difficult to use your crypto, as digital money can only be used on the internet.

Hardware wallets: Keys are stored on a thumb-drive device, kept in a secure location, and connected to a computer only when you want to use your crypto. The idea is to try to balance security and convenience.

Online Wallets:

Keys are stored in an app or other software – look for one protected by two-step encryption. It makes sending, receiving and using your crypto as easy as using an online bank account, payment system or brokerage.

Each type has its trade-offs. Paper and hardware wallets are difficult for malicious users to access because they are stored offline, but they are limited in functionality and vulnerable to being lost or destroyed. Online wallets provided by major exchanges like Coinbase are the simplest way to get started in crypto and offer a balance of security and ease of access. (Since your private information is online, 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.)

Using an app like Coinbase Wallet or Exodus gives you easy access to your crypto holdings. You can:

Manage all your digital assets in one secure place

Control your own private keys

Send and receive cryptocurrency from anywhere in the world

Communicate with usernames rather than long, hexadecimal “public key” addresses

Browse Dapps (Decentralized Financial Applications)

Shop at stores that accept cryptocurrency.

What is the difference between Coinbase App and Coinbase Wallet?

The main Coinbase app (or Coinbase.com) allows you to buy and sell crypto or exchange it for fiat currency and transfer it to a bank account. If you want to invest in Bitcoin or another digital currency it is what you need. The Coinbase app securely manages your private keys.

Coinbase Wallet is a separate application that allows you to store your private keys and send, receive and spend digital money; Browse and use DeFi apps and more. You do not need a Coinbase account to use Coinbase Wallet.