Everyone knows what a traditional wallet is. If you don’t, come closer, we need to talk. A traditional wallet is where you store cash and other valuables like your ID cards, your debit/credit cards, and maybe even your key. Much like a traditional wallet, a crypto wallet is where you store your cryptocurrencies.
Think of your BTC, ETH, BNB, and SOL as currency notes that you’d put in your wallet. Or maybe even tokens like AXS, SPLUS, and MANA. All of these cryptocurrencies are valuable to you and can only be stored in your wallet.
Every crypto holder has a crypto wallet, and there are currently more than 60 million crypto wallets in circulation globally. But while every cryptocurrency holder has a wallet, many don’t know how they work.
Today, we’ll explore crypto wallets and how they work. Ride along!
What is a crypto wallet?
Like we explained, a crypto wallet is simply a place where you store your cryptocurrencies. There are many types of wallets. Some work with physical devices, but the most popular wallets are apps since they are usually accessible and easier to use.
- Crypto wallets work similarly to a traditional wallet. You store your cash and valuables and take them out whenever you want.
- Many wallets are multi-chain. That means they interact with different blockchains, and you can easily store different cryptocurrencies.
- Crypto wallets are an integral part of how cryptocurrencies work.
How does a crypto wallet work?
If someone wants to send you crypto, you will need a wallet address to receive it. The wallet address works like your bank account number and is unique. No one else has that address.
Each crypto wallet address is unique and specific to the coin indicated. This means that Bitcoin wallet addresses can only receive Bitcoins and not any other crypto
- There is no limit to the number of crypto wallets created on a blockchain.
- No two crypto wallet addresses are the same.
Another feature that makes crypto wallet addresses unique is they are transparent and provide anonymity.
Here’s a quick example of how transparency and anonymity work: You are not required to register your name or personal information to use most crypto wallets. However, all transactions made from a wallet are public, traceable, and permanently stored on the blockchain.
This means that anyone can see the balance and all transactions made from the wallet even if there’s no name attached. This helps protect privacy while still keeping everyone accountable.