October 23, 2023
Digital wallets: What are they and how do they work?

A digital wallet is software that allows cryptocurrencies, tokens and other digital assets to be securely stored and managed. Digital wallets can be used to send and receive cryptocurrencies, as well as to monitor the balances of those assets.
Digital wallets work through the use of public and private keys. The public key is a unique address used to receive cryptocurrencies, while the private key is a secret password used to access the wallet.

Digital wallets are divided into two types:

  • Hot wallets are connected to the internet and are easier to use, but they are also more vulnerable to cyber attacks.
  • Cold wallets, on the other hand, are not connected to the internet and are more secure, but also less convenient.

When a user wants to send cryptocurrencies to another person, he or she must enter the recipient's wallet address and the amount of cryptocurrencies he or she wants to send. The digital wallet then verifies the transaction and sends it to the blockchain network for processing1.

In short, digital wallets are a secure and convenient way to store and manage cryptocurrencies, tokens and other digital assets. Users can send and receive cryptocurrencies using unique public and private keys. In addition, digital wallets allow users to maintain full control over their digital assets without having to rely on third parties.