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How Does a Cryptocurrency Wallet Work?

Cryptocurrency Wallet

Cryptocurrency is not actually  “stored” in a cryptocurrency wallet or exist anywhere in the physical form. Furthermore, all that exist are records of the different transactions stored on the blockchain. The cryptocurrency wallet stores your public and private keys, interacts with various blockchain to enable sending and receiving digital currency, and used to monitor the balance of your digital currency. It is more accurate to think of it as a ledger of sorts.

Wallets

The different crypto currency wallets give you two different keys for the different currencies, a private and public key. Private keys show “ownership” of digitally coded public keys. Public keys are coded to be connected to a certain amount of currency. In addition, the public key also works as an address for you to give and as a result others can send you currency. The wallet then works with the blockchain to ledger all these transactions so you can monitor your balance and transactions.

Keys Defined

A good way to think of the keys is an email account. A public key is like an email address that you can give out to anyone and everyone. They then can send you currency using your public key acting like an address.  For you to send currency to someone, there are more steps. Like an email account, you have to log in with the proper credentials, in this case your private key. The private key ensures that it is you doing the transactions and not someone else. That is why it is important to keep the private key hidden and safe. Once the verification of the private key is done, you have validation that it is you sending currency and you are able to do so freely.

Keep it safe!

Lastly, it is important to note that once you send currency from your wallet, it is almost impossible to get it back. The only way is if the person on the receiving in willingly sends you back the money. That is why it is important to keep your private keys hidden and safe.

Take a look at some of the past clients we have worked with. Maybe there is a token there you would like to add to your cryptocurrency wallet?

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