Right now, there are more than 10,000 cryptocurrencies that one may purchase or invest in. Cryptocurrencies are a kind of digital store of value—like coins or tokens that may be used for trading that exist digitally.
The price of cryptocurrencies fluctuates depending on the market and value perception, similar to any other investment, but more volatile than others. Also, these digital coins, though they work just like currency, have different values compared to fiat currencies like the dollar or the pound.
For instance, one Bitcoin Core (BTC) token is currently worth about $30,000, but it reached its peak last year at over $68,000. Its value may drastically rise and drop depending a variety of reasons. In 2021, after Tesla CEO Elon Musk discontinued the use of BTC for its car purchases due to its extremely high energy consumption, the price of BTC plummeted from $56,800 to $49,500
If one has done enough research and has made up their mind to get into cryptocurrency, it is important to look for a legitimate and efficient cryptocurrency exchange platform where coins may be are available for buying and trading.
When opening an account in these platforms, one must also open a digital or crypto wallet where the acquired cryptocurrency may be stored. With this crypto wallet, one can control fund transfer, make payments, purchase goods and trade.
It is important to make sure that the crypto wallet is non-custodial or self-custodial, meaning the platform does not have access at all to its clients’ cryptocurrencies. Funds are sent directly to the recipient’s wallet without going through intermediaries.
A crypto wallet has a private key and a public key. A private key is made up of a mnemonic passphrase that will be used to access the wallet and use its contents. This passphrase is made up of 12 to 24 words that the owner must never forget and never share with anyone.
A public key is a cryptographic code linked to a private key. It can be sent to others so they can transfer funds to that specific wallet. However, the private key is still needed in order to verify the owner’s identity. Only then will they gain access to the funds transferred.
A crypto owner may choose to store their assets on web, desktop, mobile and hardware wallets. Hot wallets are apps that are connected to the Internet, while cold wallets are wallets that exist on an external device, such as a flash drive.
Still, an Internet connection is needed when performing actions like transferring funds, only the passphrase and the wallet itself may be saved in a hardware. When it comes to securing assets from cyber-attacks, many experts suggest that wallets be taken offline.
Keeping assets in a cold wallet is preferred even if this may not be as convenient compared to a hot wallet. A hot wallet is always connected online which makes transactions faster, but it also leaves one’s assets vulnerable.
It might take a while for a beginner to learn the ins and outs of crypto transactions, the market and the differences between coins. The proper storage of wallets and passkeys is especially important because if one of these is lost, it will be impossible to access the acquired cryptocurrencies again. Lost wallet and passkeys are equal to lost cryptocurrencies.