Basic Q&A about Crypto Wallet for beginners
i tried to simplified some of basic things about wallet in q&a form. here it is-
Q 1) when there are already a lot of crypto wallets in the tech world, why is hardware crypto wallet needed ?
A. - Software wallets have proven to be vulnerable to security risks associated with online services and/or centralized third party providers . Hard wallets provide a secure alternative.
PR. 2) technically, how crypto wallets store crypto assets?
A.- Crypto assets are not stored in crypto wallets. Assets exist on a blockchain. Wallet software allows to inter act with existing crypto assets on that blockchain. The wallet itself stores addresses and allows their owners to transfer crypto assets elsewhere.
Q. 3) Does crypto wallet have the same address for all crypto assets to be send and receive somewhere via exchanges?
A.- No, usually crypto exchanges have different addresses for all crypto assets/ecosystems. When making crypto assets transactions always make sure that you are sending to the wallet address of the same type of crypto currency. For example, if you send bitcoin (BTC) to a Bitcoin Cash (BCH) address, those funds will be lost forever. wallets have different analogy.
Q. 4) assume you want to receive a crypto asset ETH, you chose the ERC 20 format as the deposit address . On the other hand, bep20 was selected for ETH during sending by the user. Will you be able to get crypto assets ?
A.- ERC20, BEP20, bep2 etc.tokens are standard to send or receive any crypto asset , the crypto assets of both users and the network format must be matched.
Q. 5) will the asset also go with it if your cold wallet is stolen ?
A.- Your assets are safe even if the cold wallet is lost or stolen or damaged (as long as you have protected your private key and Nemonic key). The device stores only the “access code”.
Q. 6) if your hardware wallet stops working, is it possible to transfer asset to it when you create a new wallet ?
A.- Absolutely. For this, create a new wallet using your recovery seed phrase this will restore access to the asset (on a cold wallet or hot wallet).
Q. 7) if you are a brand new user in the cryptocurrency market, which wallet is more suitable for you in terms of usage ?
A.- Starting with some free hot wallets will be useful and you will be familiar with the functionality and features of the wallet. Place a small amount of crypto assets at the beginning. As your portfolio grows, you can transfer assets to your wallet to provide the best possible security
Q. 8 )What is the fundamental difference between cold wallet and hot? When we should use them?
A.- Cold wallets are completely offline. Hot wallets are connected to the internet. Offline or cold wallets are more suitable if the amount is large enough.
Q. 9) What Will you do if someone sees your private key ? What possible ways can there be to change the private key ?
A.- It is impossible to change private key due to the immutable nature of blockchain technology and the cryptographic derivation of private key. The only possible way to secure the asset whenever someone sees the private key is to create a new wallet and transfer the asset to it. Private keys should always be kept in safe places by making notes on two different papers.
Q. 10) What call cold wallets?
A.- Both hardware wallet and paper wallet are alternatives to cold wallet. Trezor, safepal are examples of hardware wallets. Some cold wallet types include smart cards and sound wallets, which store private keys as audio on CD or vinyl records though not so popular.
