Crypto Wallets and Ledgers Explained
In the world of crypto, storing your crypto safely is an important topic. Often you read about people who lose their crypto, because they do not handle their crypto safely. What is a crypto wallet and Ledger? And how do you keep your crypto safe? You can read it in this blog.
What is a crypto wallet?
A crypto wallet is a virtual wallet for your virtual currency, or crypto. It is comparable to a physical wallet where you keep your Fiat currency, like euros and dollars. Unlike a physical wallet, a crypto wallet does not store your balances at all. Your crypto balance is stored on the blockchain. In short, a blockchain is a ledger, where all data on transactions and crypto balances are processed. You can think of your crypto wallet more like a key ring, because it contains the keys you need to access your crypto.
How does a crypto wallet work?
To store crypto in your wallet or to access your crypto, you need a public and private key. The public key is used to receive payments, while the private key is used to send crypto. You can compare these keys with the data you need to manage traditional currency. With traditional currency you have an account at a bank with an associated account number. Your account number is used to receive money, while a PIN is used to secure your account and send money.
Therefore, never share your private key with anyone else, as they may gain access to your crypto. On the other hand, you can always share your public key, because someone who wants to send crypto to you from his wallet needs your public key.
Your public and private keys are created when you open a crypto wallet. Make sure you write down the codes properly and keep them safe. Especially your private key needs to be kept safe, if you lose this code you will no longer have access to your crypto.
What is the difference between hardware and software wallets?
Now that you know how a crypto wallet works, it's time to choose a suitable wallet. Before you choose what kind of wallet to use for storing your cryptocurrencies, you should know what kind of wallets there are and what the advantages and disadvantages of the wallets are. In particular, hardware and software wallets are widely used and accessible personal wallets.
Hardware wallets are called cold wallets, while software wallets are called hot wallets. A big difference between the two wallets is that with software wallets the storage of crypto happens online at a central party, while a hardware wallet is a physical product that you manage yourself.
With software wallets you can manage your crypto in a user-friendly environment, where you can easily receive and send crypto payments. With software you can store your private keys online. Hardware wallets, on the other hand, are physical thumb-drive devices that allow for offline storage of your private keys. This means you can literally keep the key to your cryptos in the palm of your hand. The principle behind using a hardware wallet is to create an extra layer of security. Hardware wallets are difficult to hack, because the management is done offline, while software wallets are more vulnerable, because the management is done online. For this reason, hardware wallets are often considered the most secure crypto wallet. On the other hand, software wallets are more user-friendly and therefore easier to use. Also, software wallets are free, while hardware wallets cost money. A hardware wallet can cost between $50 and $200 and often requires you to physically connect the device to a computer or something similar.
If you plan to store large amounts of crypto, it is therefore advisable to use hardware wallets. If you trade regularly and are looking for more convenience, a software wallet is more suitable, but always keep in mind that the chance of losing your crypto is higher with a software wallet.
What is a crypto ledger?
Now that you know the difference between a software and hardware wallet, we come to the crypto ledger. A Ledger wallet is a popular hardware wallet for storing different crypto currencies in one place. The hardware wallet is made by the company 'Ledger' and is a French company with its headquarters in Paris. Ledgers are used to store cryptocurrencies offline with all their own wallets and private keys. Ledger's hardware wallets are device-based, which means that they use USB drives to connect your wallet to a device such as a laptop. This way it is more difficult for hackers to gain access to your crypto wallet.
Hardware wallets like a Ledger have a higher level of crypto security, but on the other hand require more responsibility from the user. You keep the private keys of your crypto wallet and are therefore fully responsible in case of loss. Especially the loss of your private keys and the recovery phrase make you very vulnerable to malicious persons. Moreover, you will never be able to access your crypto if you lose the codes. The recovery phrase consists of 24 words and is created during the installation of your Ledger. The recovery phrase gives access to your Ledger and the crypto stored on it and must be entered in the correct order. If someone else knows the words and the word combination, they can log on to your Ledger but also copy your private keys to their own Ledger. Again, you are fully responsible if you lose the codes or share them with others. Nobody can help you if you lose your crypto by using a Ledger. Therefore, you will see that investors with a small amount of crypto, often do not need a cryptowallet like a Ledger, but choose to store crypto at a crypto service
Storing Crypto with Anycoin Direct
At Anycoin Direct you can also store crypto. When you purchase crypto from Anycoin Direct you can choose to have your crypto sent to a personal wallet or to store crypto in the Anycoin Vault. The Anycoin Vault is a personal vault centrally managed by Anycoin. You purchase tokens which after purchase become visible in your vault. The vault is linked to your account ensuring only you have access to the vault. From within the vault you can easily buy, sell and swap tokens with any other token we offer. You can manage your vault in a browser or in the Anycoin app. The app allows you to see your balance at a glance and allows you to trade quickly and easily.