Every investor needs to store their cryptocurrencies in a safe place, protecting assets from virtual risks and keeping them organized, with easy access whenever there is a need to move. Therefore, knowing what a wallet is is essential.
The principle is the same as keeping money in a conventional bank account. But, in the case of digital currencies, which do not exist in physical form, this storage is done in digital wallets, also known as wallets.
How does the wallet work?
Usually, the wallet is a software or a hardware (a device), where the user can store their crypto assets, in addition to sending and receiving digital currencies. All transactions are recorded on the blockchain.
When creating a wallet, a string of 12 to 24 words (in English) is generated, which works like a system recovery password. After that, the wallet releases a private key, a public key and an address. It is important to know that if this sequence (called a seed) is lost, the investor will no longer have access to the wallet.
The private key is created using an algorithm to ensure a high level of security. The public is mathematically related to the private and generates the addresses (alphanumeric codes) for transactions with digital currencies.