How does a digital wallet work?
Now that we’ve covered where your digital cards are stored, let’s get to the actual how-to.
These are typically used for when you’re physically in a store. We’re all familiar with retailer’s POS, or point-of-sale system, where you swipe or insert your card, sign, enter your PIN, and transact.. However, with a digital wallet, you don’t need to do any of that. If you see an image on the POS that looks like a sideways wifi symbol, all you need to do is authorize the payment (we’ll get to what that means in a second), hold your phone close to the transmitter, and voila! You’ve just made a payment!
These are used, just as they say, online. When shopping on a website, you no longer will need to enter in all your information every time. Instead, if you see the PayPal option, all you need to do is select and authorize and you’re good to go. Or, if you’d like to send money to a specific person, you can open the Venmo app and your contacts are ready and waiting for you to pay them (or to pay you!).
Like online wallets, desktop wallets need an internet connection, however, your information is only stored on your personal computer. Exodus is often cited as the most user-friendly program for Bitcoin users, so if you’re brand new to the world of cryptocurrency, this one could be for you. However, when it comes to the full package of safety and effectiveness, Electrum is one of the most popular programs on the market. You’ll probably want to hold off on this one for a bit though if you’re a beginner, as it has a steep learning curve!
As we’ve already covered, hardware wallets are physical devices that you connect to your computer. To use, all you need to do is connect, enter your PIN, and send your cryptocurrency. What many like about hardware wallets is the fact that your private keys stay on the device. Essentially, this means that whatever transaction you’re participating in remains on the wallet itself instead of the computer.
In order to get your hands on a paper wallet, you’ll need to go to a wallet generator website. Once there, unique keys and QR codes will be created just for you. (Pro-tip: disconnect your internet while this process is happening for maximum security!) Paper wallets store your cryptocurrency, but in order to access those funds through the keys and QR codes, you’ll still need a wallet that connects to the internet.
Now, that’s all easy and fun, but is it safe?