Cryptocurrency Wallets

With extensive experience as an electrical/software/coding engineer along with having a diverse financial background, Thomas Wettermann’s areas of interest include Machine Learning (ML), artificial intelligence (AI), and Financial Technology (FinTech). For the past few years, Thomas Wettermann has focused on the underlying technologies that support and promote all phases of cryptocurrency, Web 3.0, and metaverse ecosystems.

Cryptocurrency Wallets (source:zipmex.com)

Introduction

Cryptocurrencies (crypto) are a relatively new type of currency evolving rapidly in an increasingly tech-driven economy. They do not have an actual physical form, but rather exist in a blockchain on a server. They are not backed by banks or other traditional lending institutions, and transactions are highly encrypted to keep personal information private. Crypto can be purchased, sold, or swapped on different types of cryptocurrency exchanges or on peer-to-peer marketplaces, like LocalCryptos. Once crypto is purchased, it is important to understand how this digital asset should be properly stored and how it can be securely transported or moved.

What is a Cryptocurrency Wallet?

When Bitcoin, Ethereum, or other crypto is purchased from a CEX or a DEX, these coins can be left sitting in the exchange where they were purchased. If purchased on a CEX, these coins will be kept secured in a storage mechanism referred to as custodial storage where the CEX maintains custody or control over the coins.

Alternatively, this crypto can be moved outside of the exchange and into non-custodial storage. These storage mechanisms are collectively referred to as crypto wallets. A crypto wallet is a storage mechanism that allows for the secure storage of cryptocurrencies. You do not store your crypto but rather the public and private keys that provide access to your purchased crypto on the blockchain.

There are many different types of crypto wallets but generally, these wallets can be categorized into two main wallet types: a “hot” wallet (“software”) or a “cold” wallet (“hardware”). They vary in levels of security, accessibility, and usability.

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Trading digital financial assets such as cryptocurrencies can carry a high level of risk, and may not be suitable for all investors. Before deciding to invest, purchase, and/or trade cryptocurrency you should carefully consider your investment objectives, level of experience, adversity to risk, and volatilities. The possibility exists that you may sustain a loss of some or all of your initial investment; therefore, you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with cryptocurrency trading, and seek advice from a qualified and independent financial advisor.

Thomas Wettermann is not an independent financial advisor. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as a general market commentary of Thomas Wettermann and does not constitute investment advice. Thomas Wettermann will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. All opinions expressed on this site are owned by Thomas Wettermann and should never be considered as advice in any form.