Introduction
It's another wonderful edition of our grassroot crypto education and we are glad that many users have benefited from the basic topics in cryptocurrency that has been taught in the previous volumes and today we would be talking on Wallets in Cryptocurrency for volume 6. This is going to be an interesting piece once again and I implore you to join me on it.
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Wallets in Cryptocurrency
Literally, a wallet is any object/device that is used to store money or small documents like Identity cards, passport photographs, and so on. In cryptocurrency, wallets are mostly electronic-based and are used for the storing of crypto assets, it could be a physical wallet taking a form of a USB to store crypto assets offline or digital ones that are connected to the internet at all times.
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In essence, wallets in cryptocurrency can be connected or not to the internet, whatever the case is, it serves the purpose of storing owned crypto assets for short-term or long-term purposes. Wallets in cryptocurrency can further be split into two types, namely; Hot wallets>and cold wallets. We would discuss these two in the section below.
Hot Wallets
Hot wallets in cryptocurrency are the types that are required to be connected to the internet for storing crypto assets and other operations. In this case, a user can store, trade, withdraw assets from the wallet any time of the day but it would be operated via the internet. It's easy to use this type of wallet when desired and one drawback is that it's susceptible to hacking since it's connected to the internet, and it is disastrous if the owner is careless with the wallet keys.
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This type of wallet in cryptocurrency can be mobile-based, online/web-based, and desktop-based. Devices on the internet under the aforementioned categories are used as hosts for the hot wallets to fulfill the purpose of storage of crypto assets. Some examples include Trust Wallet, MetaMask Wallet, Atomic Wallet and so on.
Cold Wallets
Cold wallets in cryptocurrency can be seen as the opposite of Hot wallets, this type of wallet is used for storing crypto assets offline and it is only connected to other devices whenever it's needed. In that case, this type of wallet is more secured as compared to hot wallets as it's kept offline and the keys are the ones generated only at the user's discretion and kept safe making it less susceptible to hack.
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Cold wallets in some cases are connected to the Internet when it's needed while some are kept completely offline. The classification under this type are paper wallet and hardware wallet. The paper wallet basically operates on a piece of paper that contains all information required to access the stored asset while a hardware wallet can be in the form of a USB device connected to another device (computers) to access the stored assets. Examples are; Ledger Nano X, Trezor Model T and so on.
Distinctive differences between Hot and Cold Wallets
- Hot wallets are suitable for storing a large volume of crypto assets but Cold wallets are more suitable for storing a large volume of assets.
- Hot wallets are susceptible to hacks because they are based online while Cold wallets are less susceptible to hacks. After all, the owner has the asset stored offline and the secret keys documented offline as well.
- Hot wallets offer the flexibility of operation as they can be accessed anytime as long as the owner has access to the Internet while cold wallets are less flexible as it has to be connected to another device before the stored assets can be accessed.
Conclusion
In conclusion, wallets in cryptocurrency are used for storing cryptocurrency assets and we have been able to talk about two major types which are Hot wallets and Cold wallets, while the former is connected to the internet all times and the latter, is based offline. In addition, we have given some examples of each of the wallets discussed today, in the next lecture, we would be considering Exchange wallets and Crypto wallets to see how each differs and you would learn how to create a crypto wallet. Thanks for reading the lecture once again and I look forward to your participation. Special thanks to the community @steemkidss for the initiative and the Steemit team for the unending support.
Homework Task
- What's your understanding of Wallets in Cryptocurrency? State the two major types of Wallets in Cryptocurrency.
- Explain each of the types of Wallets stated in one (1) above. List their differences. Which one do you prefer, Hot wallets or Cold wallets? Give reasons.
Guidelines
- Write an article of at least 250 words. Keep your explanation as simple as possible.
- Include the tag #grassroot-education6, #crypto, #steemexclusive, and your club status among the first 4 tags. Also, tag me @fredquantum in your homework entry.
- For Verified Steem kids alone. And the kids must be the ones that have not been participating in the Steemit Crypto Academy.
- I will check your articles and drop comments on the entries submitted now till 11:59 pm UTC, 26/02/2022.
Very usefull and informative about cryptocurrency, i have lost some my money last year in crypto trading....
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Thank you so much our dear professor for this wonderful and detailed crypto education tailored to the understanding of our future leaders. Cryptocurrency wallets is an interesting lesson for the kids. You have done noble and we hope that the kids will find it interesting too. We appreciate all you do for our kids community. @fredquantum
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Thank you, @steemkidss. I'm very glad to do this time again and more would be seen from me. Thanks for hosting me and I hope to see the kids taking full advantage of the lessons as they walk their ways to the top in the crypto ecosystem.
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Your post has been successfully curated by our team through @shemul21. Thank you for your committed efforts, we invite you to do more and continue to post high-quality posts for a chance to win a valuable upvote from our curating team and why not be selected for an additional upvote later this week in our Top Seven.
Note: Always use the tag #fbcrypto to quickly access your post.
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Thanks for the support, @shemul21.
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Hello professor,this is the link to my participation for this lesson
https://steemit.com/hive-139765/@chukwu10/grassroot-crypto-education-vol-6-wallets-in-cryptocurrency-10-cashout-to-steemkidss
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Thank you proffessor hope to do it this week. We have been having weekly exams at school and i missed last week.
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Okay. I wish you best of luck in your exams.
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