Stores and manages digital currencies like Bitcoin or Ethereum.
Key Roles of a Crypto Wallet
Storing Crypto
Keeps cryptocurrencies safe and accessible.
Sending/Receiving Crypto
Enables sending and receiving cryptocurrencies.
Types of Wallets
1. Hot Wallets
Definition: Wallets connected to the internet (e.g., apps, desktop, browser).
Usage: Ideal for daily transactions and trading.
Options:
Exodus Wallet: Multichain desktop and mobile wallet; allows for swapping and bridging cryptocurrencies across many chains quickly and affordably.
Metamask Wallet: Browser and mobile wallet; integrates with most decentralized applications (dApps), such as OpenSea, decentralized exchanges (DEXs), web3 games, etc.
Rabby
2. Cold Wallets
Definition: Wallets not connected to the internet.
Usage: Suitable for long-term storage and security.
Options:
Ledger
Trezor
Bitkey
Wallet Keys
A. Public Keys
Function like an email address.
Used to receive funds.
B. Private Keys/Keyphrases
Similar to an email password.
Should never be shared and must be securely stored in a physical location (e.g., safe, safety deposit box).
How Do Wallet Keys Work?
A crypto wallet functions like a locked mailbox with a "PUBLIC" address and a "PRIVATE" lock.
A. Public Key = Public Address
Allows anyone to deliver mail but not send mail out.
B. Private Key = Private Lock
Allows access to remove mail from the mailbox.
Private Phrase vs. Private Key
A. Private Phrase
Consists of 12 or 24 algorithmically generated words.
Can be used to generate multiple wallets that can be accessed with the phrase.
B. Private Key
A string of random characters, a 1:1 encrypted hash of a single wallet.
Only provides access to one wallet, cannot unlock others generated by the same private phrase.
Important Note
ALWAYS BACKUP YOUR PRIVATE KEY in a safe place, preferably in a physical format (e.g., handwritten on paper).