#walletsdk

What is a cryptocurrency wallet?

Within the ecosystem that surrounds blockchain technology , we use the term wallet to refer to the virtual wallets that store or store the cryptocurrencies we own. since with the wallet we have complete freedom to send and receive foreign currency autonomously, freely and without intermediaries.

Going a little more in its operation, wallets are encrypted programs that store public and private keys, which fulfill the function of storing the various cryptocurrencies that we have. Usually, the wallets official support only one cryptocurrency; While multi cryptocurrencies can house various types, but these are created by third parties. Through these wallets we can authorize monetary transactions, send or receive cryptocurrencies through blockchains and control our available balance, whenever we want.

To use a virtual wallet, it is not necessary to have great technical knowledge about it; it is enough to know that a wallet is software that stores, sends and receives cryptocurrencies. But, it is always good to understand as best as possible how these technologies are handled and more because we talk about our money.

How does a wallet work?

Although we have only recently compared wallet s to an ordinary wallet, they are very different; The reason is that virtual wallets were not created to store money as such, but instead store public and private keys. To better understand what we mean; Public keys are like the account number that we have in the bank, anyone who owns it can send us money, but they will not be able to access our funds. While private keys are like the PIN with which we can access our bank accounts; therefore, if we share our private key, that person would have direct access to the funds of our wallet.

When a person sends a cryptocurrency, they are not sending money as such, but instead transfer their ownership of the crypto asset to another person; in this way it sends the value of it in the form of a transaction. Once the procedure has been carried out, in order for the destination wallet to register the entry and the recipient can use the sent crypto asset, the private keys must match the destination address.

Types of wallets

We can find a wide variety of purses, but all of them are grouped into two completely different categories. The distinction that exists between the two is based on the level of exposure that private internet keys have. Let's know what these categories are and the types of wallets that exist:

Hot wallets 

 Hot purses are all those that are always online, through an internet connection and an electronic device; These maintain a permanent connection to the blockchain . The hot wallets that we can find are:

Online Wallet : Also known as web wallet , these store private keys on a server monitored by the service provider company. Its main feature is that it allows users to access their crypto assets from anywhere in the world, provided they have a device with an internet connection. When using this type of wallet, it is vital to be certain of the security of the site, since administrators can access our private keys.

Mobile Wallet : Ideal for those people who constantly carry out cryptocurrency exchanges; either selling, buying or paying in stores. This works by downloading an app on our smartphone, which allows you to pay directly, even using proximity functions such as contact less that some cards have. Although these wallets use simplified payment verification, they are very vulnerable to computer attacks.

Desktop Wallet : As their name indicates, they are wallets that are installed on our computer, storing our private keys on the hard disk . Within the group of wallets that make up hot wallets, this is the safest and is ideal for those who want to trade small amounts of cryptocurrencies.

Cold wallets :

Cold wallets are those that are not connected to the internet and therefore not to the blockchain . The cold wallets that currently exist are:

Paper Wallet : Completely offline and immune to any cyber attack; This type of wallet consists of a printed document that contains the public and private keys, with which we can easily access our wallet. The best way to use the paper wallet is through the generation of QR codes, since we can scan them and make transactions quickly.

Hard Wallet or Physical Wallet : These are USB devices specially designed to provide extra security to offline storage options . The wallets physical security have a chip whose function is to prevent private keys entering the computer, so that, for purse transactions we enter a PIN. These devices are the safest type of wallet that exists, since they are not vulnerable to phishing attacks . The most popular ones are developed by Ledger and Trezor.

Frequent questions

Surely as they have progressed through the reading, some of their doubts will have been clarified, while some more questions will have been asked; perhaps in relation to security, in terms that they did not fully understand or about what is best when we talk about wallets. That is why we will take care of answering your concerns below.

What are the best cryptocurrency wallets?

There is a type of wallet for each person and their choice is a very important aspect in the world of blockchain . To make the best decision, you must take into account the amounts of money that will be handled, your preferences or even the amount of money that you can invest in the wallet itself. Knowing which wallet best suits our lifestyle is as important as knowing when is the right time to acquire cryptocurrencies. Next, we will indicate the most recognized online purses worldwide for their variety, security and efficiency.

Winkpay: winkpay is specialized cryptocurrency wallet with high security.In this platform allows to  change more than types of cryptocurrencies.

Binance: It has the largest cryptocurrency exchange in the world in terms of volume; on its platform it is possible to change up to more than 100 types of crypto assets and not only that, it has very low commissions, high performance and high liquidity.

Coinbase: It is the best known worldwide and they trade as brokers in around 32 countries, while they store and transact in more than 190 around the world. Additionally, they accept VISA and MasterCard.

Are the purses safe?

As we mentioned when defining what is a cryptocurrency wallet, wallets are encrypted software or hardwares; this means that its structure has been modified and prepared to be incomprehensible, unless a key is available. As its name implies, Bitcoin, Ethereum, and the other cryptocurrencies base their technology on crypto. Currently, this field aims to find and obtain unbreakable encryption standards for communications that are carried out through electronic equipment. For its part, Bitcoin uses algorithms and protocols that were already established and internationally recognized for their level of information encryption. All these security protocols and the disposition of public and private keys make wallets safe to store crypto assets; But we must always take the appropriate security measures, such as avoiding compromised computers or sharing our passwords.

What are public and private keys? 

 On a couple of occasions we have mentioned the use of a public and a private key, to carry out transactions from the wallet, but these are also in charge of safeguarding and protecting the stored crypto assets. These keys are randomly generated and no two are the same, so they are 100% secure. By having both keys, it will not matter if the computer or mobile phone from which we access our wallet is damaged or misplaced, since, by reinstalling the program or application of the virtual wallet on our new device and restoring our account by entering our keys, we can access everything again, as if nothing had happened.

It is important to understand that the conservation and ownership of the public and private key give the user absolute control over the crypto assets associated with both the public key and the wallet ; so it is essential that the private keys are never disclosed to third parties or else, it could take control of the wallet and therefore, of the cryptocurrencies stored there. Additionally, we recommend making backup copies of the private keys of the wallets they possess, as well as their seeds.

What is a security seed? 

 The seed or seeds are a number of everyday words that make the function of private key to being introduced in the correct order within the wallet . The seeds are usually composed of 12 or more words and even if they seem difficult to remember the beginning, it 's much easier to memorize the 52 alphanumeric characters that make up the main private key.

 Crypto wallets are the starting and access point for any transaction in the cryptocurrency world. Banks and other intermediaries simply do not have any here. When that is mostly free of charge.

 Let's see their sources of profit. Above all, it is necessary to talk a little bit about the crypto wallets themselves: they are usually free programs or mobile applications that allow to work with cryptocurrencies such as storage, transmission, receipt and control of public / secret keys. 

Generally they all seem simple, but some are very popular and even earn a lot of money. How can this be?

 The governor does not receive any profit from transactions

 There is aberration that the crypto wallets earn by taking commission on transactions. This misguidance has been entrenched because some exchanges (which they mistakenly consider conservative) receive significant commissions in exchange for taking out the money (and sometimes in exchange for depositing it). Thanks to the bitter experience of interacting with the traditional financial system, we assume that any broker involved in the process needs to take his share. As for the fees collected by the governor, in fact it is the payment of services for the miners who organize the transaction in the register. The governor has nothing to do with mining. We present a description of this process from Coinbase:

 "Coinbase generally does not charge a commission for using the digital wallet service. Virtual currency conversions to the Coinbase platform address can entail the network commission (for example a Bitcoin metallic reward) that a user has to pay. All these fees are reported before the transaction." 

But there are exceptions as well. Bitgo Signature Wallet Signs 0.25% of all incoming and outgoing payments for safe storage of funds for business. Bitgo is for large companies that need to store a digital asset, not for ordinary people. 

Most portfolios maintain their viability at the expense of partnership agreements

 Its main business model is thus limited (at least for the time being). The portfolios earn substantial partnership rewards from external services thanks to the large number of users and the wide spectrum of use. The most famous of which is the ability to instantly switch cryptocurrencies via Shapeshift or Changelly services. The latter of them have a very generous partnership program because prices are usually much higher than market prices. Customers pay comfort, while portfolio designers receive the reward from the service provider.

 Finally, some wallets allow the purchase of digital assets directly from a credit card. These services are provided in cooperation with companies such as Simplex, which pay designers a reward for each process. Users pay to rest so they reward wallet designers. Other than that, the portfolios create passage on stock exchanges that are willing to pay high discounts on new customers. Everyone has partnership programs, and even systemic portfolios (which cannot be said to be free) often participate in such events.

 The financial indicators of the designing companies are often unknown, but it can be said with certainty that 90% of its revenue comes from one or several sources mentioned above. 

The basic problem of systemic wallets Systemic wallets 

(or "cold warehouses") are usually a very simple business model in which the buyer pays. Prices range in the range of $ 50-300. Producing portfolio itself does not cost dearly (about $ 20) so the profitability of projects such as these is high which helps conduct generous partnership programs (eg Trezor offers a 10% cashback).

 However, in reality, this model has one drawback, which is only one-time purchase. The average customer has no need to switch his wallet with the new one every year (other than the smartphone), he buys a wallet (and a second for backup) and here his interest ends. Theoretically, portfolio producers cannot offer him anything new. Designers know this very well so they include software links on various possible services or try to get out into new markets with a future.

 Hybrid portfolios / stock exchanges 

Some portfolios allow the purchase of cryptocurrency, but other than their integration with the third party, they work with the stock exchange directly. For example, Harrow or Blockchain.info (possibly the largest cryptocurrency portfolio to date) allows the purchase of bitcoin and ethereum.

They charge commercial commissions and sometimes earn from regular currency conversion. Some projects never pursue interests Many cryptocurrency wallets are open source code projects that are not profit-making, but their freeware usually affects the convenience of use. And other projects (such as Ethos) do not require profit because they collected a huge amount during the IPO so achieving service income is not a priority. 

Finally, some portfolios are free because they are under the control of companies that earn from other services, and the portfolios have business costs for them. This is for example, Trust Wallet. The wallet was purchased by Binance Exchange so it is completely FREE (and it will likely remain that way).

 New frontiers 

Thus, portfolios relate to either revenue from partnership programs or one-time purchases made by users. Hehti that partnership programs are a safe basis for long-term growth as no one knows when to cancel them. Is there a stable approach to the development of crypto wallets? So far, it is difficult to answer this question. Ultimately, every consumer will have their own wallet like smartphone or TV. 

These projects will gain a lot in the industry as well as browsers or mail clients on the Internet. When that is the partnership programs or even the buying / selling operations they will become a basis for offsetting operating expenses (which are rather large). In the future, new income items will emerge that will keep the cryptocurrency portfolios evolving. It is difficult to say exactly what it will look like. Additional revenue may appear in the form of direct or indirect payments because we are all used to paying for software and services. The presence of a lot of paid mobile applications other than games indicates that this idea is perfectly possible to investigate.