Storing your cryptocurrency safely

When you buy cryptocurrency from an exchange, you put your full trust in the company behind the exchange. They create the cryptocurrency wallet for you, which in turn means that they have the private keys to your wallet. In practice, this means they have the full access to your funds and if they would get hacked, the hacker will also have access to your funds. This can be very dangerous and people have lost bitcoins and cryptocurrency worth hundreds of millions of dollars due to this fact. But trading does not have to be dangerous if you store your cryptocurrency in your own cryptocurrency wallet. Then the risk of being hacked is totally in your control. Below we have gathered a list of the best cryptocurrency wallets available. There are three different types of cryptocurrency wallets, Hardware (Most Secure), software and paper wallets.

What are Cryptocurrency wallets and how do they work?

Wallets are one of the key pieces of the whole cryptocurrency system, without them we would not be able to store, own or be able to transfer our cryptocurrency. The wallet is a pretty strange analogy since, in reality, there is pretty much no resemblance between a cryptocurrency wallet and a real wallet. A cryptocurrency wallet is simply an address in the shape of a long string of letters and numbers. The address on the blockchain is empty until there is any transaction on the blockchain that sent money to the address.

The reason this simple system works is because of the key pair that you get when you generate your wallet address. You get a Public Key, and a Private Key. With your private key, you can sign transactions and prove that the address belongs to you. Because of it, we can prove that we are the owner of the specified address and thus are allowed to do transactions.