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Everything you need to know about wallets

A cryptocurrency wallet is a software program that enables you to store, access and interact with your coins and can be considered as the crypto version of a bank account.

The main difference is that with a conventional bank account, your account number is public and is directly linked to your identity, but your transactional history is private. With crypto wallets, your transactions are public, as well as your account number (public key), but there's no way to link a particular address to you.

You can view transactions on the public ledger using Blockchain explorers such as blockchain.com. If you're unsure how to interpret what you see on the Blockchain explorer, click here.

Wallet addresses

Your wallet address is a unique string of numbers and letters (also called a public key) that people can use to send you cryptocurrency, and which is used on the blockchain to verify transactions. It can also be thought of as the crypto version of your bank account’s IBAN or SWIFT CODE in that it’s only used as an identifying number.

Because Coinmama is not a wallet provider, it’s very important that you triple check the wallet address you provide us with when buying cryptocurrency. We do not keep or store any coins at Coinmama, and if you make a mistake when entering your wallet address, we will have no way of retrieving your coins. This is due to the fact that transactions on Blockchain were designed to be irreversible, so once funds are transferred, they’re at the sole discretion of the receiving wallet’s private key holder. 

Wallet addresses do not expire, but some providers do generate several addresses for the same wallet. This means that even if the address has changed, you should still see the funds in your wallet. You should be able to access a list of your historical addresses from within your wallet, but if you're not sure, it would be best to contact your wallet provider.

How wallets work

In addition to the address (aka public key), your wallet also has a unique private key (or password/ PIN), which only you should know, and which you can use to access your cryptocurrency.

Note that anyone who has your private key has access to your wallet, so don't forget it and be careful who you share it with!

Types of wallets

Different cryptocurrencies are supported by different wallets, but some wallets support several currencies (if you're buying multiple coins you'll probably need more than one wallet, depending on your provider). Note that Coinmama uses smart contracts when sending Ripple or Ethereum, so be sure to choose a wallet that's compatible with smart contracts. Each different type of wallet has its own benefits and drawbacks, and your decision should be based on your particular needs. We've broken down the different kinds of wallets below to help make the choice - or choices - a little bit easier!

Hot wallets

Hot wallets give you easy access to your cryptocurrency and are stored either on your computer or online (depending on the provider). They're best for small amounts of cryptocurrency that will be used frequently, such as for daily trading or making online purchases.

Types of hot wallets:

Online wallets: These cloud-based wallets can be accessed from any device with an internet connection and are stored with a third party, making this to be the least secure type of wallet. Some online wallet providers, such as Coinbase, have insurance for your funds, but it would be best to contact your wallet provider to be sure if they do.

Mobile wallets: Mobile wallets are also based with a third party, but they live as an app on your own device. These can be used as a means of payment even in physical stores, but the downside is that if your phone breaks or is hacked, your funds may be lost.

Desktop wallets: These wallets are installed directly onto your computer and can only be accessed from the device they've been downloaded to. The funds in desktop wallets are at risk if the device is hacked, has a virus, or is damaged.

Hot wallets we like:

Pros Cons

Easily accessible

Vulnerable to hacking

User-friendly

Online and mobile wallets are kept through third parties, which are also vulnerable to hacking and are often uninsured

Usually free or inexpensive

Susceptible to scams

Cold wallets

Cold wallets live offline, either on a USB-like device or on paper. They're typically used for storing larger amounts of cryptocurrency that are meant for investment or HODL'ing.

Types of cold wallets:

Hardware wallets: These are physical devices similar to a USB stick that contains your wallet keys or code.

Paper wallet: Literally paper printed with a QR code and your wallet address and key. Receiving funds to your paper wallet isn't any different from other types of wallets since the transaction and your wallet history are stored on the Blockchain, and here's a short and simple video explanation from one of our affiliates explaining how to withdraw or transfer coins from a paper wallet.

Cold wallets we like:
Both of these multi-currency wallets live offline. They're both a little costlier than hot wallets but offer the highest security possible for funds that aren't being moved around on a regular basis.
Pros Cons

Highly secure and hard to hack

Must physically have the wallet in order to use it

Not reliant on a third-party

If the wallet is damaged the contents may be lost.

Leave control in the hands of the user

 
If your hardware wallet is stolen, damaged or lost, you may be able to recover your crypto assets if you still have access to your recovery seed. You'll just need to import this recovery seed into a new another wallet.
For tips on safe wallet creation, please click here.

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