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A crypto wallet serves as a digital tool for securely storing, managing, and transacting with cryptocurrencies. The main goal of a wallet is to safeguard the “keys” to your crypto kingdom. There are two types of keys, one being the private keys and the other being public keys.
Private keys are encrypted strings of characters that, when used correctly, allow you to “unlock” your wallet and access your crypto treasure trove. While the term “wallet” may imply a physical container for storing assets, crypto wallets actually store the private keys needed to access and manage digital assets on their respective blockchains.
A public key is like your bank account number: It tells you where your crypto is, but it doesn’t provide access to it. The private key identifies you as the “true owner”. Wallets enable users to send, receive, and monitor their cryptocurrency holdings while ensuring the security and control of their private keys. If you lose the private key, you could lose access to your crypto. Likewise, any person who gets hold of your private keys has full access to your crypto earnings.
There’s a popular expression in the crypto world, “Not your keys, not your coins.” If you don’t control your keys, you don’t have full access to your crypto assets. A key aspect of a secure crypto wallet is its non-custodial nature, which means that users retain full control of their private keys and, consequently, their digital assets.
This differs from custodial solutions, such as certain exchanges or hosted wallets, where the service provider holds the users’ private keys on their behalf. While custodial solutions may offer convenience and ease of use, they expose users to the risk of losing their assets if the service provider suffers a security breach or becomes insolvent.
Related: Crypto News Australia Updates
