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Cryptocurrency Wallet Guide For Beginners

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Cryptocurrency wallet
Image Credit: mohamed Hassan / Pixabay

If you are just hearing about cryptocurrency or still don’t have a basic understanding of what it’s all about, we suggest you read our cryptocurrency introductory guide before you proceed with this article.

There are no doubt digital wallets forms a key component of the cryptocurrency market. To store money (physical cash), you need a bank. Likewise, in the crypto world, to store cryptocurrency, you need a digital or crypto wallet. 

A cryptocurrency wallet provides users with a platform where they can send, receive and as well keep track of cryptocurrency balance. 

But unlike banks with a vault, a cryptocurrency wallet does not store crypto, instead, it stores the private and public keys and allows users to interact with the different blockchain supported by the wallet.

Cryptocurrency wallet, private and public key pair

While there are different wallets, the one thing common in every cryptocurrency wallet is a pair of keys. They are the public and private keys. These cryptographic keys ensure encryption and decryption of transaction, while a user sends and receive cryptocurrency. 

The private key comes in different forms, for some wallet, the private key is a string of codes, for others, it’s a list of backup phrases. The private key is used to prove ownership and gives a user full control over a wallet.  It’s very important to back up these keys because it’s irrecoverable. Once it is lost, there’s no other way to gain access to the coins stored. The coins will remain stuck in there forever.

While the public key serves as the address of the wallet. It comes in the form of alphanumeric codes. The key serves as the address you are to give out anytime you want to receive coins into the wallet. Let’s look at

How does cryptocurrency wallet work?

Consider two friends, Bob and Sam.

Bob, the crypto guy, had introduced Sam to bitcoin for the first time. For a start, let’s assume Bob decides to send Sam some bitcoins.

Before sending, Sam will need to create a crypto wallet. By creating the wallet, it will generate a public and private pair.

For Sam to receive those coins, he needs to send his public key (address) to Bob.

Bob will then use Sam’s public key to send the coins

For Sam to access the coins sent by Bob, he will use his private keys to decrypt the wallet.

Depending on your preference, there are two main storage options for cryptocurrency wallets. They are hot and cold wallets and come in different forms. There’s a mobile wallet, a desktop wallet, a hardware wallet, a web-based wallet, and a paper wallet. They all vary in their security. 

What is a cold wallet

A cold wallet provides offline storage. Wallets that are cold storage increases the safety of the coins and eliminate the risk of theft and hack. While mobile, and web-based wallets, are easy to use, they are vulnerable to hack as they more online.

What is a hot wallet

A hot wallet provides online storage options and allows users to access and track their crypto on the internet. They are simple to use but need an extra layer of protection. 

Types of cryptocurrency wallets

The paper and hardware are cold wallets. 

Paper wallets provide the highest level of security. The printed paper contains both the public and private key pairs. Paper wallets are not electronic, therefore, they can hardly get damaged

Hardware wallets are probably the most recommended cryptocurrency wallets in the market. They come in the form of a portable device, like a USB. Examples are Ledger Nano and Trezor.

Web-based, desktop, and mobile wallets are hot wallets, but their security features vary from each other.

Web-based cryptocurrency wallets are hybrid wallets. Hosted and operated on a central server where they store the private and public keys. Users operating this wallet can be vulnerable to hacks, which can lead to losing access to their crypto. However, adding an extra layer of security can enhance safety. Examples include Blockchain wallet.

Mobile cryptocurrency wallets come in the form of an Android or iOS app that you can easily install on smartphones. Notable examples are Guarda, Trust wallet, Mycelium, etc.

The desktop wallet is a software program installed on a computer or laptop. Their compatibility depends on the operating system they support. Unlike web-based and mobile wallets, some desktop crypto wallets have no hosted server. That said, a desktop wallet security depends on the computer where it’s installed. If a virus attacks the computer, one might lose the wallet. Examples include; Exodus, Copay, etc.

Finally, It’s important to mention, in the crypto world, YOU ARE YOUR OWN BANK –  meaning you are responsible for your coins. Therefore, before deciding which wallet to use, it’s important you conduct due diligence.

Disclaimer: This guide is purely educational. We advise users to do their own research before taking any decision. Decentralize.Africa is not responsible for any damage caused by the products mentioned in this article.

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Crypto prices drop as global market fear increases

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Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.

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El Salvador’s Bitcoin adoption – What you need to know

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El Salvador made history (and headlines) after becoming the first nation to endorse and approve the world’s most popular cryptocurrency, Bitcoin, as a legal tender. The move makes Bitcoin acceptable for transactions within the Central American country alongside the U.S dollar, which has been serving as the paper currency since 2001. This comes after the so-called “Bitcoin Law” came into force after passing legislation in June of 2021. El Salvador’s government announced that it had purchased 400 Bitcoin in 2 tranches of 200 each and plans to get more in the future.

The move to adopt Bitcoin has been justified by the government’s need to boost financial inclusion in the country. It is estimated that 70% of El Salvadorans do not have access to financial services and the government believes that Bitcoin can help close the gap. The Bank of America has outlined a few benefits that they believe will result from El Salvador’s bitcoin adoption. These include promotion of financial digitization, streamlining remittances as well as opening the country to digital currency miners. However, not all agree that the move is a step in the right direction.

Amongst the detractors of the scheme are the International Monetary Fund and the World Bank, each having warned El Salvador about the risks of Bitcoin’s use as legal tender. The World Bank has been irked by what it described as “environmental and transparency shortcomings” with bitcoin, while the IMF cited “economic and legal concerns” in relation to the move.

Other than the push back from these international bodies, there has been some internal opposition to the adoption of Bitcoin. Citizens had held protests over Bitcoin’s adoption in August and about 67.9% of respondents in a poll said they disagreed with the government’s decision to adopt crypto. The results of the poll showed that 8 in 10 people had little confidence in the use of bitcoin as the currency.

In spite of the criticism, El Salvador’s government is moving forward and has reportedly installed 200 Bitcoin ATMs across the country. And in response to the World Bank’s environmental concerns, El Salvador’s president, Nayib Bukele, has said the country plans to power mining activities using renewable energy from the country’s volcanoes. In order to incentivize the use of Bitcoin in the country, any citizen who signs up for the country’s “Chivo” wallet will get 30$ worth of bitcoin.

All in all, the adoption of a cryptocurrency by a sovereign nation is seen as a testing ground for many, as this is a use case Bitcoin has never experienced in its 12-year history. Countries such as Brazil and Panama seem to be watching the move to draw insights on whether to follow suit.

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6 Cryptocurrencies to leverage for Building Personal Wealth Long Term

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“Investing in Crypto should be viewed as another path towards financial independence that can help people beat inflation over time.”

—Alex Mashinsky (CEO, Celsuis)

The Crypto market is blooming. Nearly 1 in every 3 individuals in Africa, particularly Nigeria, currently trade cryptocurrencies for one purpose or the other. For more than a decade now, blockchain technology has pervaded the financial markets and persistently received traction from various quarters. Its adoption rate in Africa is a force to be reckoned with. The reports are glaring enough. This has then cultivated the growing appeal of the people in trying to employ crypto as a viable tool to build wealth, albeit long term.

Recently, thousands of cryptocurrencies were known to exist in the market and the numbers keep expanding. It is, therefore, imperative that these digital coins are closely observed to identify the favourable ones for a long-term game. We, at Decentralize Africa, know this. You don’t need to make any emotional rush. This is why we’ve put together highlights of sustainable cryptos that can help you build a fortune over time if you play your cards right.

  • Ethereum (ETH)

Coming first on the pack is Ethereum. The reason for this is not far-fetched. Earlier this year, ethereum was said to have amassed a market capitalization running into billions of dollars. As if that is not enough, Ethereum pointed out its plans to remake its consensus algorithm. This will in no small measure help the crypto network perform several seamless operations and that too with reduced energy. 

The major change that was done to Ethereum’s network, i.e, a modification to Proof-of-stake, will enable players in the system to pitch ethers in a more protected and also rewarding account. This is quite comparable to the bitcoin system. So, yes, Etherum is something that should be in the plans. 

  • Stellar (XLM)

Of course, Stellar has to find a place here, innit? For one, the cryptocurrency holds promising potential for those interested in the long shot. It is more or less a fertile space in the string of blockchain networks. Most of us are privy to how tedious, cross-border transactions tend to appear. This is where Stellar comes in. The versatile platform is capable of completing payments in a matter of seconds at a meagre fee; which is payable using the Stellar coins. Stellar’s efficiency is no doubt commendable. Although like most coins, it has had its share of a downward trend in prices, there is no doubt that Stellar is yet to reach its peak. As such, analysts have observed that there’s room for expansive growth as the year’s roll by. 

  • Bitcoin (BTC)

This sequence is deliberate though. We all know the mighty bitcoin will be here, don’t we? Bitcoin has amassed a wild price range, an ever-growing market capitalization and its prospects for investment opportunities speak loud enough. Although there is an influx of cryptocurrencies today, Bitcoin embodies a large percentage of the market value. 

Investing in bitcoin is never a bad business. It has its lows of course, but it jumps pretty back in most cases. Its wide acceptability is a testament to this fact. Several companies are integrating bitcoin in their payment structure, and business-men, banks are not left in the loop as well.

  • Solana (SOL)

Interestingly, Solana is one of the few digital coins to maintain a steady rise in value. It came up the pack in 2017 and has since improved its value system over time. It offers enticing packages, by being used to complete rapid transactions and every other thing that makes it a good catch. Solana might seem a bit obscure at the moment, but it is certainly one of the best to look out for.

  • Chainlink (LINK)

More accessibility means more acceptance, right? Chain-link is that cryptocurrency that’s relatively available to most people. It’s inexpensive and a good store of value as well. This is one of the reasons that attracts many investors to it. If you are looking to invest in a cryptocurrency in this context, this is one of the coins that can help build your financial portfolio in the long run. 

  • Cardano (ADA)

It is observed that the Cardano network holds a somewhat appealing impression for myriads of reasons. It consumes far less energy which then translates to a faster transaction rate. Also, it proves to be secure and it is one blockchain network that is quite keen on developing its systems.

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