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FAQ 11 – What is a wallet?
Definition of Wallet
A wallet is an electronic wallet for storing crypto-currency.
A wallet can be :
– Physical : account in a bank like Ledger, Trezor, Nexo…
– Digital : grâce à une application mobile
Wallets allow us to exchange, receive and spend crypto-currency.
We can own different wallets, each containing different content. Indeed, wallets can be compared to our different bank accounts in different banks. Each of our accounts do not have the same amount and it’s the same process for the wallets.
The composition of the wallets
Each wallet is composed of two keys:
– The public key is known to everyone. It is an encryption used to convert a message sent into a format readable by the recipient.
– The private key, composed of 64 characters, is known only by the wallet owner. It is similar to a secret code, it allows you to access your wallet, to confirm a transaction but also to prove that you are the owner of your wallet.
Both work together. There cannot be a private key and no public key and vice versa.
The different types of wallet
Photo credit: Horizen Academy
What is the difference between a cold wallet and a hot wallet?
A cold wallet is part of the hardware wallets. It allows you to store your crypto-currency without being connected to the internet. It works without connection, and makes sure to keep your wallet safe, limiting any possible hack.
A hot wallet, on the other hand, is a wallet that requires an internet connection. It stores your crypto-currency on an online server. As a result, it is more easily hacked because it is online. If you make transactions very regularly, favor this type of wallet.