Wallet is a wallet-like function that stores and manages cryptocurrency. All the data of the cryptocurrency itself is stored on the blockchain.
The actual place where the private key ( cryptography ) to access the data of that currency is stored and managed.
Recently, smartphone applications are often used for this purpose. You can quickly and easily make payments at stores, send money overseas, etc. 24 hours a day, 7 days a week, for a fee of only a few yen.
There are various types of wallets, which can be categorized as follows
- Desktop wallets: An application that you download and use on your computer.
- Web wallet: Online service provided through a specific website.
- Mobile wallet: An application on a smartphone.
- Paper wallet: A paper medium on which wallet information is printed.
- Hardware wallet: A dedicated electronic device developed to be used as a wallet (Trezor, Ledger, etc.).
A wallet that is always connected to the Internet is called a “hot wallet,” while a wallet that is offline is called a “cold wallet. A wallet is basically a trade-off between security and convenience. A wallet like a web wallet, which allows you to trade virtual currency immediately, is very convenient, but it also poses a hacking risk, so be careful.
Cold wallets, which are offline, have zero risk of being hacked.
However, if the cold wallet itself is physically damaged (loss of the private key), there is a risk of effectively losing the cryptocurrency in the form of having the currency but not being able to use it.
If you want to hold your cryptocurrency for a long time, use a cold wallet.
If you buy and sell frequently, you need to diversify your risk by using a hot wallet.