What are cryptocurrency
wallets?
What they differ each
from a another and on what purses
keep the most crypto currency
safely.
You are on the CryptoInside channel, and this
complete guide to wallets
for crypto currency.
To begin with, let’s figure it out,
what are the wallets
for cryptocurrency and what they are
are different.
Cryptocurrency wallets
are divided into cold and hot.
Cold wallets are
those wallets that store
private keys or Seed
a phrase without access to the Internet.
Hot wallets, these are wallets,
which store private
keys or Seed phrase at a constant
connection to the Internet.
To cold wallets, you can
carry:
• Storage of private keys
on paper
• Storage of private keys
on a hardware device,
for example, a flash drive or
specialized devices
– Ledger Wallet or Trezor Wallet.
To hot purses are:
• Online wallets,
such as blockchain.com, coinbase, bitpay, etc.
• Desktop wallets,
such as Exodus, Electrum
• Purses for mobile phones
devices such as BitWallet,
Copay, Jaxx
• Well, if someone keeps
Cryptocurrency at the Exchanges,
then the exchanges are also
hot storage.
Hot wallets are
thick and thin.
Thick wallets, these are those
wallets that download
full copy of the blockchain
to you on the computer.
To such purses it is possible
carry BitcoinCore, Bitcoin Knots
or a purse Mist for the etherium.
When installing these wallets
the full
copy of the blockchain.
In the case of bitcoin, its
blockchain at the moment
weighs about 150 GB.
Light or thin wallets
interact with the blockchain
through the network nodes of other
users.
That means that downloading
the whole blockchain is not necessary.
Now, let’s figure it out,
why mobile and desktop
wallets are hot,
because they do not store your
private keys
on servers, as they do
exchange or online wallets.
If you do not know what is
private key and where to store
bitcoins, I advise you to look
our video, go to it
you can at a prompt
in the upper right corner of the screen.
Exodus, Electrum or Jaxx Wallets
are in fact
hot, though not stored
your private keys are
yourself on servers.
In this case, private
keys are stored in your
computer, but the computer
connected to the Internet and
in the event that an intruder
will have access to your
computer, then private
keys can be stolen,
and you will lose your means.
Some Mobile Wallets
work according to the same scheme.
Private keys are stored
on your phone, but the phone
almost always connected
to the Internet and your keys
are under threat.
Undoubtedly, the chance that
private keys are stolen
from your phone very much
small, but the probability is present.
Online wallets and exchanges
keep your private keys
on their servers that
even more puts your
keys are under threat.
There have already been many cases
hacking exchanges and online wallets
for a round sum.
However, hot wallets
very convenient for
small transactions and everyday
payments.
Well, larger amounts are better
store in cold
wallets that we now disassemble.
As mentioned earlier,
cold wallets keep
private keys without connecting
to the Internet.
Let’s start with paper
wallet.
Paper wallet – one
of the most reliable ways
storage of cryptocurrency.
In this case, you print out
on paper private key,
public key and Seed phrase
and keep this paper in
safe place.
About what a SEED phrase is
and how to restore it
Access to the wallet you can
find out by clicking on the card
in the upper right corner of the screen.
Let’s create Bitcoin
wallet on paper.
What we need for this:
• Generator SEED phrases
• Sheet of A4 paper
• Electrum interface for verification
First you need to generate
The SEED phrase that contains
private keys and Bitcoin
address.
To do this, go to the site
– https://iancoleman.io/bip39/ This site
designed to generate
SEED phrases.
If you want to generate
SEED phrase in offline mode,
then you can download the distribution
This site is on github and run
in your virtual machine
without an internet connection.
Most often, the SEED phrase consists of
of 12 words, so choose
12 words and press the button
Generate.
The site will automatically generate
a random set of 12 words.
This SEED phrase contains all
your private keys and
Bitcoin Addresses.
Scroll slightly below and
you will see 20 Bitcoin Addresses
and 20 private keys, which
were generated.
Let’s check the possibility
restoration of all private
keys through the SEED phrase.
To do this, go to Electrum,
choose Standart Wallet and choose
item “I already have a seed”.
Electrum will prompt you to enter
SEED phrase of 12 words to restore.
Enter the phrase that was generated
On the site.
Standard, Electrum accepts
BIP32 phrase, and we have BIP39.
Therefore we go in Options and
put a tick before “BIP39”
Seed. “
Click “Next”, select
type “Legacy” and click Next.
Enter the password for encryption
private keys and ready.
We have restored all private
keys that were generated.
How can I check this?
Go to the wallet>private section
keys>Export.
Enter a password that
introduced earlier.
Electrum will give us a list
from public addresses and
private keys that
contains our Seed phrase.
Now, go to the site,
and see that the keys on the site
and in the wallet coincide.
They are not arranged in order,
but all keys are identical
the ones that generated
site.
All of these private keys
You can not only recover
using SEED phrases, but also
using the Master key.
The master key is in
field, called “Account
extended Private Key “.
We copy it and select Electrum
Use a Master Key.
Insert Master Key, enter
password for encryption and
done.
Using the Master key
we have restored the same ones
private keys that
has generated a website for us.
What you need to print
on paper, so you have
access to all necessary
private keys and addresses.
The paper wallet should
contain:
• SEED phrase of 12 words.
• Master Key
• Public Bitcoin Address.
This address you will give
people who want to send
you bitcoins.
• Private key from public
bitcoin address.
In order to find out,
did you come to the Bitcoins
to your address – there is no need
use Electrum and private
keys to check the balance.
It is enough to enter your public
Bitcoin Address in any blockchain
explorer.
For example, blockchain.com.
By entering the address in this explorer,
will show all incoming,
outgoing transactions, and
also the balance of this address.
If you want to send
someone bitcoins, you use
certain private
key in any interface,
for example, Electrum or Bither.
After sending the funds,
delete private key
from the computer and ready.
If you want more
security when sending
bitcoins, you can create
bootable USB flash drive with
OS Tails.
By sending money, you simply
turn off the boot
a flash drive and all history of use
automatically deleted,
since the Operating System
Tails is loaded into the
memory, and after shutdown
from it is unloaded, deleting
all stored data.
With a paper wallet figured out,
now let’s move on
to hardware wallets.
We already have a video on
channel about storing Bitcoins
on the usual flash drive.
You can watch it,
by clicking on the card in the right
the top corner of the screen.
The principle of storage on a USB flash drive
almost the same as
on paper.
You generate a Seed phrase
through the site or through
Electrum.
Write a Seed phrase, some
public addresses and private
keys, as well as the master key
in a separate file.
Encrypt a file with any algorithm
encryption and drop
file on the USB flash drive.
Flesh drive store in a reliable
place and use the boot
flash drive with Tails to send
bitcoins.
This method of storage is sufficient
reliable, but there are
special devices
for storage, which provide
a higher level of security.
The first of these devices
– Trezor Wallet.
This device, especially
intended for storage
cryptocurrency.
Trezor Wallet on first start
automatically generates
you have a SEED phrase of 12 words and
provides an opportunity to establish
PIN code for accessing the device.
It is worth noting that the creators
Trezor Wallet is well thought out
security system.
Entering a SEED phrase when restoring
is carried out on the device,
not on the computer.
Thus, even if
your computer is infected with viruses,
an intruder will not be able to
learn your seed phrase.
What will happen if you lose,
will you break Trezor Wallet?
In case of loss or breakage
Trezor Wallet do not bother
about your means, because
Access to them other than you get
no one can.
You just need to buy
new device Trezor Wallet
and conduct a recovery procedure
using Seed Phrase.
Trezor Wallet has an open
source code that is available
on GitHub.
Private keys are stored
solely on your
device and do not go out
beyond its limits.
Buy Trezor Wallet you can buy
on the official site – trezor.io
(links in the description).
Trezor ONE will cost you 89
euro, and the version with a touch
display and more convenient
interface Trezor Model T will cost
you are at 149 EUR.
I advise buying Trezor Wallet
only from the official site
trezor.io.
Other sites can sell
you fake device
or sell Trezor Wallet a lot
more expensive than its present value.
Official and unofficial
resellers in Russia are selling
Trezor One for 10-11 thousand rubles,
which is 25% more expensive than the original
prices.
It is better to buy a wallet with
official site for 7000
rubles, wait 10-14 days
and be sure,
that you have a quality
products.
Next, specialized
hardware wallet for
crypto-currency – ledger Wallet.
The company began to produce
devices for crypto currency
in 2015 and excellently
has recommended.
In principle, Ledger Wallet is practically
is no different from
Trezor Wallet.
The difference is only in support
some cryptocurrency,
which one wallet supports,
but the other is not.
Again, buy Ledger
Wallet only with the official
site ledgerwallet.com.
It is better to wait 2 weeks
delivery than lose
all your money because of your
recklessness.
Now, let’s analyze
hot wallets that
keep your private keys
on their servers.
To such storages it is possible
carry almost everything
browser wallets, such
such as blockchain.com, cryptonator, Bitgo
well, and the crypto exchange.
All these services have
access to your private
keys and tools.
In case of server hacking
these wallets can be
private keys are stolen
a large number of users.
I think everyone knows how
hacked well-known exchanges
and steal a huge amount
bitcoins and other crypto-currencies.
These services may be appropriate
to store small
amounts for daily
transactions.
But to save big savings
on such services is absolutely
insecure and unreasonable.
Now let’s look at it.
with Electrum and Exodus wallets.
These wallets have an open
source code, and you can
make sure that they are
do not store your private
keys on their servers.
All private keys are stored
on your computer in an encrypted
form.
In case your computer
infected with a virus, these
private keys can be
received by intruders.
Again, these wallets are suitable
to store small
sums.
But, you can export
Private keys and Seed of
these purses to
flash drive.
And after each use
purse, delete from your computer
private keys.
Thus, private
keys are stored in your
flash drive.
And you use them you
through bootable
flash drive with Tails.
Now, let’s figure it out.
with the restoration of their
means through the SEED phrase
or the master key.
Very often given
the question: “What if the server
Electrum or Ledger Wallet, or any
another purse will be lost
and stop working? “
The main thing that is necessary
understand – Bitcoins or
any other crypto currency
are stored at addresses in the blockroom,
and private keys are used
to access these addresses.
If Electrum disappears, Ledger
Wallet or Exodus – with your means
nothing will happen, so
as it’s just an interface
for interaction with the blocking
and addresses.
All you need to recover
Is a Seed Phrase or Master
key.
We have already spoken about this
in the video: Where are stored
Bitcoins.
Let’s analyze more
detailed restoration
and consider
set of options.
Let’s say you had a hardware
wallet Ledger Wallet and suddenly
the company announces the closure
and stops support
devices, official
The site and the application stop
work.
Using a SEED phrase that
was obtained at the first
You can launch Ledger Wallet
restore your funds.
For example, this SEED phrase you
can enter into Electrum, and
you will get full access
to their means.
Conversely, if Electrum stops
support your application
and its server will stop
work.
You will be able to use
this phrase to restore
and in Ledger Wallet and Trezor Wallet and
in any other purse,
supporting a certain
type BIP
Not so long ago, under our
the video was left here
such a comment: “Seed
this of course is still hemorrhoids
and all sorts of bip’y.
It is better then to store
not Sid phrase, but private
key”
It is very important to understand how
transactions operate in Bitcoin.
One private key gives
access to one public
bitcoin address.
Seed the phrase or the Master key,
contains several
private keys and
several public bitcoins
addresses.
I will try to explain how
can be simpler.
In bitcoin transactions there is
surrender, which can come
not at your primary address,
but to another address associated with
with your Master key.
This is called the inputs and
outputs.
Simply put – necessarily
store the SEED phrase
and Master key, since they
contain all private
keys and public addresses,
necessary for the commission
transactions.
If you save only
one private key, from
one main public
address, then you can lose
a number of bitcoins,
which were sent
as surrender to another public
address.
Let’s sum up a small
total, to consolidate the material:
There are Cold and Hot
wallets.
Cold wallets keep
private keys without connecting
to the Internet.
Hot wallets store
private keys on their own
servers, or have a permanent
Internet connection.
Advantages of cold
wallets:
• Highest degree of safety
of your funds
• Access to your tools
have only you
Disadvantages of cold wallets:
• Not suitable for
daily transactions
Advantages of hot wallets:
• Great for
day-to-day transactions
and micropayments
• Convenient and easy to use
• Do not require physical
carriers
Disadvantages of hot wallets:
• Such purses can
be hacked
• In the case of online wallets,
private keys are
on third party servers.
In the case of desktop
private key wallets
are in an unreliable
place, since the computer
connected to the Internet in
working hours.
The most reliable cold
wallets: Ledger Wallet, Trezor Wallet,
paper, separate
flash drive.
Be sure to save
Seed Phrase and Master key,
not just a private key.
If you have any
questions, it is mandatory
write in the comments.
Be sure to answer all
and we will take a closer look at your
question.
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