Crypto Wallet
A crypto wallet is a device or application that stores a collection of keys and can be used to send, receive, and track ownership of cryptocurrencies.
Wallets can take many forms. A wallet might be a directory or file in your computer’s file system, a piece of paper, or a specialized device called a hardware wallet.
There are also various smartphone apps and computer programs that provide a user-friendly way to create and manage wallets.
Features of a wallet
• Seed phrase/Recovery phrase
• Public key
• Secret key
• Keypair
Seed phrase/Recovery phrase
A seed phrase is a sequence of 12 or 24 random words that provide the information required to recover a lost or damaged cryptocurrency wallet.
It is also referred to as a mnemonic phrase and is best understood as a security measure for digital assets held in personal custody.
Public Key
- The public key of a wallet is the wallet’s receiving address or simply its address. The wallet address may be shared and displayed freely.
- When another party is going to send some amount of cryptocurrency to a wallet, they need to know the wallet’s receiving address.
- Depending on a blockchain’s implementation, the address can also be used to view certain information about a wallet, such as viewing the balance, but has no ability to change anything about the wallet or withdraw any tokens.
Secret/Private key
The secret key (also referred to as private key) is an alphanumeric code used in cryptography, similar to a password. In cryptocurrency, private keys are used to authorize transactions and prove ownership of a blockchain asset.
It is required to digitally sign any transactions to send cryptocurrencies to another address or to make any changes to the wallet. The secret key must never be shared.
If someone gains access to the secret key to a wallet, they can withdraw all the tokens it contains.
If the secret key for a wallet is lost, any tokens that have been sent to that wallet’s address are permanently lost.
Keypair
A keypair is a securely generated secret key and its cryptographically-derived public key.
A secret key and its corresponding public key are together known as a keypair.
A wallet contains a collection of one or more keypairs and provides some means to interact with them.
Types of Wallets
Major Classification
- Custodial Wallets (CEX): Binance, OKX, Bybit, Gate.io etc
- Non-custodial wallets (DEX): Klever, Metamask, Trustwallet, Safepal, Phantom etc.
Subcategory A
- Hot wallets: any wallet that readily connects to the internet
- Cold Wallets: Ledger, Trezor, Keepkey etc.
Subcategory B
- Software wallet: an application that allows users to HODL, send, and receive cryptocurrencies. E.g: Klever, Metamask, Binance, Bybit, etc
- Hardware wallet: physical device that stores your private keys in an environment separated from an internet connection. E.g: Trezor, Ledger, Keepkey etc
- Paper wallet: a printed piece of paper containing keys and QR codes used to facilitate your cryptocurrency transactions.
Wallet Safety
- Always ensure to backup your recovery phrases securely where it can be easily retrieved.
- If you use a custodial wallet, ensure to turn on two factor authentication 2FA
- Keep the bulk of your assets in your noncustodial wallet.
- Always ensure to disconnect your wallet after connecting to dexs and sites.
- Never give out your private keys/recovery phrases
- You can use revoke.cash to revoke all permissions on your wallet.