Keeping Cryptocurrencies Safe: Wallets
Now you know about the blockchain technology and its practical implementation, you may be wondering where people keep their digital assets on a network where transparency and openness are key.
Just like with real currencies, people need to store cryptocurrencies until they want to use them – and digital wallets provide the solution. Unlike the leather wallet in your pocket, digital wallets are typically software programs that secure your currency for as long as you require it: a good comparison might be your own private bank.
To access your wallet, you need two things: a public key and a private key. A public key is essentially an address to which people can send or receive money. Public addresses provide a string of letters and numbers, giving users anonymity on top of the transparency provided by the blockchain.
In other words, even though people can see exactly what movements are happening to and from your wallet on the blockchain, there is no personal information to identify you – unless you divulge that information.
A private key is something that should never be revealed to anyone. Only the wallet owner should know it, as it unlocks the power to make transfers out of the wallet. Just as you shouldn’t share your credit card details, you shouldn’t share your private key. Many people choose to encrypt and even back up their private keys on paper to maximize security.
Even safer than a private key is a multi-signature wallet. These wallets store multiple private keys over multiple locations and require two of these hidden, separate private keys to confirm all and any transactions.
This exponentially boosts the wallet’s security, which is why Bitcoin Retirement Solutions only uses multi-signature wallets to store Digital IRA investments.
Xapo has been described by Wall Street Journal as the “Fort Knox” of digital currency storage, thanks to its multi-signature security along with its dedicated protection of confidential information in guarded offline servers.
If you would like to find out more about cryptocurrencies and the technology that drives them, call 800-214-2277 to speak to one of our specialists. Our team is also on hand to help you enter the exciting world of cryptocurrency with your own Digital IRA.