Crypto Wallets are not Money Wallets
There are hundreds of thousands, if not millions of users that have cryptocurrency wallets. If your new to the space its definitely confusing. Your traditional every day ‘money wallet’ you carry around, actually stores fiat cash. Legal tender issued by governments is Fiat money. But more importantly, your digital cryptocurrency wallets do not store currency.
Cryptocurrencies are not stored in centralised locations. These do not exist in a tangible profile. You cannot hold it or manipulate it in your hand. All that exists of your cryptocurrency, is evidence of your transaction history. All Inputs and Outputs are on the blockchain which you can see using a block explorer or inside your crypto wallet.
How do Cryptocurrency Wallets actually work? Cryptocurrency Wallets are software programs installed on phones, smart tablets and computers. Cryptocurrency Wallets essentially store your public and private keys on them. The wallets can connect to various other blockchains depending on what they are.
This means you can, see different Crypto Coins or Tokens on them. You can send and receive, see your balances, transaction history, timestamps and various other MetaData. If somebody wishes to send you cryptocurrency, their coin/token claim is given up. The claim is then passed onto your Cryptocurrency Wallet address.
Private and Public Keys
Coins are spent transactions when a ‘sender’, sends funds to a public key. Your public key is used to encrypt messages and your public key address is exposed for anyone to see and send funds to.
Your private key is used to decrypt the message encrypted with your matching public key. The private keys are secret, and you must never ‘Ever’ show this to anyone. The public and private keys are called ‘Key Pairs’.
If the public and private key match, then the balance will then be increased whilst your senders Cryptocurrency balance will decrease.
Cryptocurrencies are not physical objects
There are no physical coins in storage. In other words, you cannot move them around like Fiat Currency (dollar, euro, pound). The transaction is just a record on the blockchain of the Cryptocurrency you are using. You can see this using your Cryptocurrency Wallet. The Blockchain is decentralised and a direct transaction happens between you and the other person. Third parties are exempt from transactions like banks. Therefore when you accept the senders payment, records are placed on the ledger and passed onto you.
