The Book about Cryptocurrency №1. Second edition expanded. Viacheslav Nosko
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Название: The Book about Cryptocurrency №1. Second edition expanded
Автор: Viacheslav Nosko
Издательство: Издательские решения
isbn: 9785006088436
isbn:
Basically, what is a digital wallet? It is a program or an encrypted and secure record of your account.
The program can be installed on your computer’s hard drive or on your smartphone. To conduct transactions, the program on the Bloxxhain network confirms its legitimacy and enters the transaction data into a registry.
We have already on the pages of this book talked about security and all the precautions you need to take when working with cryptocurrency.
Remember that the principle «don’t put all your eggs in one basket» is more relevant here than ever. It is desirable to distribute all your digital assets in different wallets, as force majeure, hackers’ attacks, your inattention can significantly empty your cryptocurrency account if it exists only in one place and only bitcoins are stored on it.
Where is cryptocurrency stored? Or the main types of wallets
According to the method of communication with the Blockchain system, wallets are divided into hot wallets (hot storage) and cold wallets (cold storage).
A hot wallet is usually downloaded to a computer or mobile device. These programs maintain a constant connection with the system, which allows all transactions to be carried out quickly. When there is no heavy load on the network, then even at the basic tariff (minimum commission to miners), the money goes a few minutes.
This type of wallet is vulnerable to hackers. Therefore, do not forget about security techniques, which you have already familiarized yourself with in the previous chapter.
This is a complex password, two-factor authentication and a 12-word code that you should memorize and keep in a safe place.
Remember: if you forget the code, you will lose all your savings on this wallet irrevocably.
In contrast to the hot wallet – cold wallet (cold wallet), due to the lack of constant connection with the network is better protected from hackers. This type of wallet is more suitable for storing savings. It is necessary to keep the key for access to the wallet on a separate carrier, which helps to avoid hacking.
A cold wallet is usually a piece of paper with keys printed on it – public and private.
The public key is the address to which you can send money. It looks like a set of symbols or a QR code. But you also have a private key, which allows you to withdraw money from your wallet.
Just in case we repeat once again: wallet keys should be guarded like the apple of your eye, because it will be impossible to recover them later.
By the way, according to various estimates, about 20% of keys are lost in the world now. Thus, the currency stored in wallets with lost keys is blocked. There is no access to it. This situation creates some scarcity (and you and I remember that the number of bitcoins is finite) and the ability to keep bitcoin at a fairly high level in terms of price.
Hardware wallets
Hardware wallets are compact gadgets for storing cryptocurrencies. A high degree of security is achieved due to the fact that private access keys are stored encrypted on this device. Several levels of protection, including pin code, make it as reliable as a safe in a Swiss bank.
The most popular hardware wallets are Ledger Nano, Trezor.
Let’s dwell on them in detail.
Trezor is used to store bitcoin. When installing the wallet, it will offer you a unique 24-word security key. It must be written down. If you lose the key, it will be impossible to access your funds.
In addition, Trezor offers to come up with a pin code. Pin-code is created without connecting to the Internet, so no one can intercept this password.
Be careful when entering the pin-code. Each mistake freezes the wallet, and the more you make mistakes, the longer the blocking is activated.
Another level of protection is a keyword. The same word will be requested when restoring the wallet after loss or breakage. Without the keyword there will be no access to the wallet.
The wallet has a display that shows where the money is sent. And to confirm each action you need to press the buttons, which eliminates the possibility of hacking it.
Another family of hardware wallets is Ledger.
They are not inferior to Trezor in the level of protection, quality of work. There are versions of wallets with and without displays.
Ledger Nano S is a model with a display. It also has two confirmation buttons that require physical pressing (which, like Trezor wallet, protects from malware attacks). To open the wallet, you also need to come up with a four-digit pin code. There is also a code phrase of 24 words, which will be requested when trying to make a transaction from the wallet. It is important to remember that if you enter the pin code incorrectly three times, the wallet is blocked.
So, the market offers a lot of hardware wallets, and their prices are quite affordable. You can try any wallet that seems reliable to you. The main thing is to remember about security! If you order a wallet on the Internet, make sure that it came whole, not opened. There are known cases when attackers put malware on the gadget, which then «took» money from the account.
Hardware wallets are needed mainly for long-term storage of cryptocurrencies.
Cryptocurrency exchanges
In the world today there is a huge number of exchanges that trade in cryptocurrencies. What is the convenience of the exchange? All work is done online through a browser, there is no need to use a hardware wallet or wallet in the form of an application.
Cryptocurrency exchanges typically support a wide range of cryptocurrencies, including popular cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), as well as many other altcoins.
Exchanges offer various trading pairs that determine which cryptocurrencies can be exchanged between each other. For example, an exchange may offer to trade Bitcoin for Ethereum or Bitcoin for USDT.
You can fund your account on the exchange in bitcoin, Ethereum, and other altcoins. There are exchanges where you can use both regular bank cards and traditional electronic wallets (WebMoney, etc.).
Cryptocurrency exchange https://partner.bybit.com/b/problockchain supports different deposit systems, including fiat (regular money like USD$) The CEX exchange supports bank cards.
The most popular exchanges in 2023.
Please note that the rating may change depending on current trading volumes.
Binance is the most popular and large-scale exchange in the crypto world with an average daily turnover of $30 billion. The platform has a convenient multi-lingual interface, a large number of trading pairs. Mandatory verification of identity.
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