Connect with us

Crypto Assets

Cryptocurrency Wallet Guide For Beginners

Published

on

Cryptocurrency wallet
Image Credit: mohamed Hassan / Pixabay

If you are just hearing about cryptocurrency or still don’t have a basic understanding of what it’s all about, we suggest you read our cryptocurrency introductory guide before you proceed with this article.

There are no doubt digital wallets forms a key component of the cryptocurrency market. To store money (physical cash), you need a bank. Likewise, in the crypto world, to store cryptocurrency, you need a digital or crypto wallet. 

A cryptocurrency wallet provides users with a platform where they can send, receive and as well keep track of cryptocurrency balance. 

But unlike banks with a vault, a cryptocurrency wallet does not store crypto, instead, it stores the private and public keys and allows users to interact with the different blockchain supported by the wallet.

Cryptocurrency wallet, private and public key pair

While there are different wallets, the one thing common in every cryptocurrency wallet is a pair of keys. They are the public and private keys. These cryptographic keys ensure encryption and decryption of transaction, while a user sends and receive cryptocurrency. 

The private key comes in different forms, for some wallet, the private key is a string of codes, for others, it’s a list of backup phrases. The private key is used to prove ownership and gives a user full control over a wallet.  It’s very important to back up these keys because it’s irrecoverable. Once it is lost, there’s no other way to gain access to the coins stored. The coins will remain stuck in there forever.

While the public key serves as the address of the wallet. It comes in the form of alphanumeric codes. The key serves as the address you are to give out anytime you want to receive coins into the wallet. Let’s look at

How does cryptocurrency wallet work?

Consider two friends, Bob and Sam.

Bob, the crypto guy, had introduced Sam to bitcoin for the first time. For a start, let’s assume Bob decides to send Sam some bitcoins.

Before sending, Sam will need to create a crypto wallet. By creating the wallet, it will generate a public and private pair.

For Sam to receive those coins, he needs to send his public key (address) to Bob.

Bob will then use Sam’s public key to send the coins

For Sam to access the coins sent by Bob, he will use his private keys to decrypt the wallet.

Depending on your preference, there are two main storage options for cryptocurrency wallets. They are hot and cold wallets and come in different forms. There’s a mobile wallet, a desktop wallet, a hardware wallet, a web-based wallet, and a paper wallet. They all vary in their security. 

What is a cold wallet

A cold wallet provides offline storage. Wallets that are cold storage increases the safety of the coins and eliminate the risk of theft and hack. While mobile, and web-based wallets, are easy to use, they are vulnerable to hack as they more online.

What is a hot wallet

A hot wallet provides online storage options and allows users to access and track their crypto on the internet. They are simple to use but need an extra layer of protection. 

Types of cryptocurrency wallets

The paper and hardware are cold wallets. 

Paper wallets provide the highest level of security. The printed paper contains both the public and private key pairs. Paper wallets are not electronic, therefore, they can hardly get damaged

Hardware wallets are probably the most recommended cryptocurrency wallets in the market. They come in the form of a portable device, like a USB. Examples are Ledger Nano and Trezor.

Web-based, desktop, and mobile wallets are hot wallets, but their security features vary from each other.

Web-based cryptocurrency wallets are hybrid wallets. Hosted and operated on a central server where they store the private and public keys. Users operating this wallet can be vulnerable to hacks, which can lead to losing access to their crypto. However, adding an extra layer of security can enhance safety. Examples include Blockchain wallet.

Mobile cryptocurrency wallets come in the form of an Android or iOS app that you can easily install on smartphones. Notable examples are Guarda, Trust wallet, Mycelium, etc.

The desktop wallet is a software program installed on a computer or laptop. Their compatibility depends on the operating system they support. Unlike web-based and mobile wallets, some desktop crypto wallets have no hosted server. That said, a desktop wallet security depends on the computer where it’s installed. If a virus attacks the computer, one might lose the wallet. Examples include; Exodus, Copay, etc.

Finally, It’s important to mention, in the crypto world, YOU ARE YOUR OWN BANK –  meaning you are responsible for your coins. Therefore, before deciding which wallet to use, it’s important you conduct due diligence.

Disclaimer: This guide is purely educational. We advise users to do their own research before taking any decision. Decentralize.Africa is not responsible for any damage caused by the products mentioned in this article.

Comments

Decentralize Daily

From Crypto and Blockchain to AI, Fintech and Web 3.0 delivered twice in a week (Mondays and Fridays)

Tech Writer | Interested in How Bitcoin & Blockchain Can Change Africa.| Barça fan

Continue Reading
Click to comment

Leave a comment:

Bitcoin

The Great Mining Migration from China to the U.S. Explained

Published

on

Bitcoin mining

Coming off the heels of China’s now infamous crypto crackdown, the mining rate in the U.S. has now surpassed that of China for the very first time. With a hashrate – a term used to describe collective computing power of miners around 35.4% in July, the hashrate in the U.S. is up 428% compared to September 2020.

In a move dubbed the “great mining migration“, miners in China had been moving towards more crypto friendly countries since May, when the Chinese government called for a crackdown on bitcoin mining and trading. Some of the locations thought favorable enough to entice mining operations include Central Asia, Eastern Europe, the U.S. etc.

However, it is important to bear in mind that mining operations are extremely energy taxing. For said reason, many of the bitcoin miners who had migrated to the U.S. set out for the U.S. state of Texas, one with one of the lowest energy prices in the country. Another favorable advantage for miners moving to Texas is the crypto-friendly political atmosphere regarding cryptocurrencies.

A criticism often levelled at bitcoin mining is that it is bad for the environment and certainly so seeing the enormous amounts of energy bitcoin mining requires, most of which is supplied from fossil fuels. The mining migration has brought about a trend where miners are actively seeking out renewables and or nuclear power, especially in the U.S. Miners are now clustering around states such as Washington, New York and unsurprisingly Texas.


The U.S. is not the only country to have benefitted from the aftermath of Beijing’s anti-crypto policies. Kazakhstan, the central Asian nation has also seen its share of the global hashrate grow with current levels around 18.1%, just behind the U.S. However, many believe that the Central Asian nation is just a junction on the larger trend of miners moving westward. Also, considering that most of Kazakhstan’s energy is derived from coal and a new law to further tax crypto miners in 2022, It stands to reason that many mining operations will eventually migrate from Kazakhstan.

Comments
Continue Reading

Bitcoin

Bitcoin.org gets hacked, scammers run BTC giveaway scam

Published

on

Earlier today, Bitcoin.org, the oldest cryptocurrency website registered by the founder of Bitcoin, Satoshi Nakamoto, recently got hacked. Scammers ran a BTC giveaway scam with a promise to return double the amount users send to the named address. In the end, the scammers were reported to have collected $17,764 before the website was taken down. The website was inaccessible for a few hours after the incident, but normal service has been resumed.

To bring users’ attention to the hack, a pseudo-anonymous Twitter account with the name Cobra took to Twitter to reveal the news and claimed that the website may be offline for some days. He also clarified through his tweets that Bitcoin.org has never been hacked and that the breach must have been due to a lapse on the part of Cloudflare- the web provider that the website is hosted on.

“Bitcoin.org hasn’t been hacked, ever. We move to Cloudflare, and two months later we get hacked. Can you explain where you were routing my traffic too? Because my actual server didn’t get any traffic during the hack” he tweeted.

The scam on the website was perpetrated through a giveaway. Visitors on the website were greeted with a popup, asking them to send crypto to a Bitcoin wallet via a QR code and receive double the amount in return. The fake message showed that the Bitcoin Foundation was giving back to the community and that the giveaway will be limited to the first 10,000 people. This was made to draw more people into the scam.   According to an analysis on the scam address done by Reddit Sleuth, it was presumed that a chunk of the 0.4BTC came from the scammers themselves to add an element of credibility to the claim. At the time of writing this report, Bitcoin.org is once again, back to life.

How popular is the Bitcoin giveaway scam?

Bitcoin giveaway scam is quite popular among hackers as it allows them to make fast money without tampering with anyone’s wallet. In 2020, Twitter handles of top crypto celebrities, politicians and influencers were hacked to run Bitcoin giveaways. While the scammers were apprehended, the value of Bitcoin was not affected.

Today’s scam on Bitcoin.org did not affect the price of the coin either. Despite the Evergrande debt crisis and the fluctuations bedevilling the crypto market within the week, Bitcoin increased by 2.05% within the last 24 hours, thereby moving from $42,789 to $44,378.

Comments
Continue Reading

Crypto Assets

Crypto prices drop as global market fear increases

Published

on

Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.

Comments

Decentralize Daily

From Crypto and Blockchain to AI, Fintech and Web 3.0 delivered twice in a week (Mondays and Fridays)

Continue Reading

TRENDING

%d bloggers like this: