Cryptocurrency wallets allow you to interact with the blockchain network and are primarily used to send and receive cryptocurrency, or to access Dapps. if someone wants to send you cryptocurrency, they can make a transaction to one of your addresses, which is generated by the public key to your wallet. Since your wallet address and public key can be shared with others, the public key is also known as the Public Key.
Private Key
A private key is a piece of random number randomly generated by a computer, and a private key and a public key are generated in pairs, and there will only be one corresponding set of keys in the world, and they will not be duplicated.In the cryptocurrency world, public keys can be seen in public, but private keys can only be held by the person himself, so everyone says that having a private key is the same as having an asset that represents a wallet.
Public Key
For Bitcoin, the public key is a random set of numbers generated by encrypting the private key with an algorithm called "elliptic curve encryption".Since the algorithm of elliptic curve cryptography is irreversible, theIt means that even if the public key is publicized, there is no way for others to deduce the private key from the public key.。
What is a wallet? What are the types?
1. Hot wallet
2. Coldwallet
3. Custodial Cryptocurrency Wallet
4. non-custodial cryptocurrency wallets
Hot wallet
Hot wallets are cryptocurrency wallets that are connected to the Internet and generally provide the smoothest and simplest user experience. Users can easily send and receive cryptocurrencies, and trade cryptocurrencies directly on exchanges. It seems really convenient, but this convenience is often accompanied by security issues.
Hot wallets are vulnerable to hacking because they are connected to the internet. Even if the private key is kept safe, your connected devices, such as your cell phone or computer, are at risk of being hacked or remotely controlled.
Cold wallet
Cold wallets keep the keys to your address offline. Unlike hot wallets, cold wallets are not connected to the Internet. Some cryptocurrency OGs use a more traditional method - the paper wallet, a piece of white paper on which the wallet's private key is printed, usually in the form of a 2D code.
Of course, this method is not only outdated, but also has the risk of falling off easily, so the best choice for cold storage nowadays is undoubtedly the hardware wallet.
The physical device not only stores your private keys securely, but it never needs to be connected to the Internet. In addition, when users need to transfer funds, they can connect to their computers via USB and connect to the corresponding app that is compatible with the brand's public area to see the status of the assets in their hardware wallets.
Cold wallets are basically non-custodial, and as long as users keep their private keys and helpers, they are recognized as the most secure cryptocurrency wallets available. Of course, a good hardware wallet can ensure that the private key never leaves the device.
Hard wallets (brands such as Trezor or Ledger) are secured in a similar way to keep private keys offline for a better user experience, while these hard wallets are more portable and definitely more convenient.
Custodial Cryptocurrency Wallet
This type of wallet is used by a third party to hold your assets and manage your private keys on your behalf.
In the early days of the cryptocurrency world, users were required to create and keep their wallets and private keys. While keeping your assets in this way was beneficial, it was relatively inconvenient for inexperienced users or those with poor memories. This is because if your private key is compromised or lost, your crypto assets will be sunk in the blockchain sea forever.
Obviously, an exchange is an example of a custodial cryptocurrency wallet. The benefit is that even if you forget your exchange password, you can still access your account and assets by contacting customer service. But of course, if you're using a non-custodial wallet, you're still responsible for keeping your cryptocurrency assets safe.
When exploring a hosted service provider, one needs to pay attention to whether the provider, company, or exchange is regulated, how your private keys are stored, and whether they are covered by insurance.
As the saying goes, "Nothing is too big to fail", even an exchange as big as FTX can have such an incident, so we really can't be so sure that having a certification, reputation, and lots of resources means that 100% is safe!
Non-Custodial Cryptocurrency Wallet
For those who want to have complete control over their assets, an unencumbered wallet with the holder holding the private key is definitely the way to go. You can trade cryptocurrencies directly from the wallet. This is a good option for experienced users who know how to manage and protect private keys and safewords.
Uncollected wallets where you keep your private keys provide a higher level of security. A safer option is to keep your private keys in a wallet that is not connected to the Internet, such as a cold wallet.
Uniswap, PancakeSwap, and SushiSwap are common decentralized exchanges, all of which require users to trade with unmanaged wallets.
MetaMask and Trust Wallet are common examples of unmanaged wallet service providers.
In the absence of third-party regulation, non-custodial wallets allow users to have complete control over their keys and assets. Simply put, your assets truly belong to you, not to any exchange. In addition, because non-custodial transactions do not have to wait for withdrawal approval, they are all carried out very quickly.
Conclusion
Should I use a custodial wallet or a non-custodial wallet?
The vast majority of people in the cryptocurrency community use both, but it depends on individual needs. If you want to have full control of your assets, or just want to use blockchain technology to interact with a block-centered application, you can use both.You can use theNon-custodial wallets.On the contrary, if你only want to trade or invest.你It is possible to look for reliable custodial wallet service providers or exchanges.
Regardless of the user'sWhat type of wallet are they using?All of them should exercise caution and prudence to enhance their assets.The safety of theAs the owner of the asset, the subscriber should be fully responsible for the private key and must take precautionary measures within the scope of risk that he/she thinks he/she can bear when storing the private key.
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