When it comes to what is a cryptocurrency wallet or crypto wallet in short, “wallet” is just a metaphor. As a safe place to keep and secure your ownership, a crypto wallet can be a physical device or software installed on your computer, smartphone, or cloud. A wallet keeps secret information, called a private key or a seed phrase, which is used to validate transactions and “sign” them so that your crypto can be used to make purchases or exchanged for another asset. This prevents someone else from using your crypto or the transaction being altered by a third party.
How Cryptocurrency Wallets Work
There are two forms of crypto wallets: custodial wallets and non-custodial wallets. Most crypto wallets, like a bitcoin wallet, come with an app you can add to your computer, phone, watch, or other intelligent devices.
When you’re out shopping, you can pay with most wallets by holding your device near a terminal that has the contactless symbol (four curved lines). To complete the transaction, you need to provide a password or authenticate through fingerprint or facial recognition. For nonmobile crypto wallets, you will be prompted to log in or provide a password. This is much faster and easier than using your physical card and typing in several rows of information.
Different Types of Crypto Wallets
There are many different types of crypto wallets. Most can hold several cards at once. Plus, many devices have built-in crypto wallets that support some of your favorite crypto payment platforms. Standard crypto wallets include Apple Pay, Fitbit Pay, Garmin Pay, Google Pay, PayPal, Samsung Pay, Venmo, and Zelle. Crypto wallets are becoming growingly popular with consumers and retailers. Why are cryptocurrency wallets becoming so popular? What are some of the benefits of using a crypto wallet?
- The first benefit of using a crypto wallet is that it is safer. These wallets can’t be stolen or lost like regular wallets. The data stored in the wallet is encrypted. Your actual account numbers aren’t transmitted during a transaction.
- Secondly, they are easier to manage. Crypto wallets eliminate the need to carry cash or credit cards with us. There are many ways to pay using a crypto wallet. Some crypto wallets even allow users to withdraw cash from ATMs.
- Last but not least, crypto wallets provide a better shopping experience for users because they are so easy to use. Users only have to remember one password instead of many. We can use wallet apps to make online and in-store purchases, pay bills, make deposits, and transfer money.
Crypto wallets benefit merchants as well. Transactions are more secure, and there is less chance of fraud. Checkout is easy and seamless, leading to better sales and fewer abandoned carts.
Are Crypto Wallets Safe
First of all, the answer is: yes. Crypto wallets are safe. When you check out with a crypto wallet, a unique 16-digit number, or token, is assigned to your card. But because the merchant doesn’t see your card number, they can only use that token with a unique, encrypted code applied to each transaction. So when you shop with a cryptocurrency wallet, you can check out knowing that your complete financial information is hidden from the merchant. If your device is lost or stolen, apps are available that allow you to lock or erase your device’s data remotely. Using these apps and setting up additional security, like fingerprint recognition and password protection, can help make your device more secure.