A cryptocurrency is a digital medium of exchange that uses cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
A first definition of cryptocurrency would be “a digital currency that uses encryption techniques to structure the generation of currency units through defined rules and to verify transactions independently of any bank.”
Cryptocurrencies allow you to buy and sell as with any fiat currency. Unique features of cryptocurrencies
– Digital exclusivity. There are no physical bills or coins that represent or support electronic cryptocurrency transactions.
– There are no countries or central banks behind cryptocurrencies. Its value is established by users like you, through the law of supply and demand. The higher the demand for a cryptocurrency, the higher the value it will have. Although it is true that there are external agents that can make the value of cryptocurrencies oscillate, such as, for example, the attitude of regulators in large economies. In 2013, the explicit support of the president of the FED (Federal Reserve of the United States), Mr. Bernanke, towards Bitcoin, caused its value to increase.
– The holders of cryptocurrencies can be anonymous since you only need an address to receive and send cryptocurrencies. – All transactions carried out with cryptocurrencies are public. In this way, there is complete assurance that the transactions will complete successfully. In order for these transactions to be public, the “Blockchain” system is used. This way you can find out how much and when a transaction has been made.
– They are practically impossible to fake. The algorithms that support this virtual money are very robust
What is a crypto wallet?
A crypto wallet is the place where Bitcoin and other cryptocurrencies are kept. It is the equivalent of the bank account, as it consists of a number from where you can make transfers or receive them.
As great advantages over traditional bank accounts, crypto wallets are more easily created and depending on the type of wallet you use, you will be the only one who can control over that money.
A Bitcoins wallet fulfills the same function as a bank account, storing money. The functioning of the portfolios can be based on two elements:
- A public address.
- A private key.
Basically, a wallet is the union of the two elements. Some wallets are safer than others, and some wallets are more comfortable to use. Typically, the degree of comfort of use tends to be the inverse of safety.
A Hot Wallet is a tool that allows cryptocurrency investors to store and exchange tokens.
Because hot wallets are connected to the Internet, they tend to be somewhat more vulnerable to cyberattacks and theft than cold wallets. At the same time, it is important to remember that they should not be considered unsafe either.
Their main advantage is that they can be used to facilitate basic transactions and are easy to use.
Cold wallets are those that use keys generated by a source that is not connected to the blockchain and therefore not connected to the Internet.
This genre of wallets offers a great advantage over the rest, since they act as a checking account for savings. Where we can save money that we will not use for some time. They are the most used by users to deposit and protect large amounts of cryptocurrencies, as they offer an unbeatable level of security.
Due to the great value of cryptocurrency many hackers target wallets and exchanges, so you need to follow a series of steps to avoid losing your coins.
Step 1: Make sure your PC is virus-free
If you use Microsoft’s operating system, download some good antivirus for Windows and do a full scan of your computer. Make sure to keep your Windows and your antivirus up to date. And it performs periodic scans.
Step 2: Download Your Wallet
Step 3: Download the blockchain
The Download of the Blockchain or Chain of Blocks will occur automatically when you open the wallet for the first time.
Step 4: Bitcoin wallet syncing
Depending on the cryptocurrency you are working with, the download may take several hours.
Once the blockchain download is complete, the “out of sync” warning will disappear from your wallet, and you will be ready to proceed to the next step.
Step 5: Encrypt Your Wallet
Choose the option “Encrypt Wallet” in the “Settings” menu of your wallet.
And make sure you choose a good password and write it down somewhere safe.
When you are done, an icon will appear in the lower right corner of the client indicating that your wallet is encrypted and blocked.
Step 6: Make Wallet Backup Copies
This is the most important step of all.
The wallet file (wallet.dat) contains the private keys that authorize the transfer of the coins from all the addresses that you have generated in step 4.
If someone else has this file, they can steal all your coins.
If you lose this file, you will have no way to get your coins back.
Choose the “Wallet Backup” option from the file menu and select a safe location.
SD memories or pen drives are the best options. You can also burn the wallet.dat file onto a few CDs or DVDs.
Step 7: Delete the wallet.dat file from your computer (optional)
You are now ready to start receiving and sending coins from your wallet safely.
Best Cryptocurrency Wallets
There are many lists online talking about the best wallets in the market. Here you have a short list of some of the wallets that are considered the best of the best.
• Ledger Nano
This is not an exhaustive list. You should research more sources before choosing one.
Cryptocurrencies are evolving and new instruments are coming out every few months. Nowadays the crypto debit cards are gaining fast popularity. With crypto debit cards you can directly spend your crypto in any physical or online store. One of our picks for best crypto cards is ClubSwan, since it offers many advantages over other crypto cards. The ClubSwan card is a good choice to make purchases anywhere in the world and you won’t have to worry about exchanging your crypto before a purchase.