Etrade Crypto! What are Crypto Wallets? | Trading in Cryptocurrency | Quantra by QuantInsti

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Timestamp:
00:16 - 00:31 - Key wallet terms
00:32 - 02:21 - How to choose a wallet?
02:22 - 03:23 - Risks of wallets
03:23 - 03:48 - Advantages of wallets

Welcome to this video. In this video, we will discuss e-wallets and the risks associated with them. We will understand, how to choose a wallet.
What are the risks and advantages of a wallet? A wallet stores the private key, secure digital code known only to you and your wallet and public key, a public digital code connected to a certain amount of currency. It allows you to send and receive coins and also acts as a personal ledger of transactions. Since most online wallets can convert your cash to one of the top five cryptos, it is very important to choose a wallet that has the lowest transaction cost and maximum features.

Let us discuss how to select a cryptocurrency wallet. Consider these 5 wallets. Here Wallet_1 and Wallet_3 allow the sender to choose their transaction fees. Based on the urgency of the transaction the user can offer more rewards to the miners This will motivate miners to mine and confirm the sender's transaction at the earliest.
Miners pick what transactions they want to mine and mostly they pick those transactions that pay the most. Wallet_2 on the other hand, let us say charges a 0.5% fee for every transfer. For example, if you transfer 10 bitcoins, then you will pay 0.05 bitcoins in fees. Wallet_4 uses dynamic pricing depending on the congestion in the network to calculate the transaction fees.
If the miners are busy and very few are available for mining then Wallet_4 will charge you more.
This is similar to the surge pricing that we experience while booking a cab. Finally, Wallet_5 uses a fixed amount, say an equivalent of 0.000441 ETH or Ethereum on every transaction. We can also see that Wallet_3 provides only 7 cryptocurrencies to convert your cash while Wallet_2 has the highest number of coins at 70, which gives the user more flexibility.

When we choose our wallet we should pay very close attention to whether the cryptocurrency that we want is supported by that wallet and also confirm the cost-effectiveness of that wallet with respect to other reliable ones on the market. To summarize, one should choose a wallet based on their need for a cryptocurrency and the affordability of the transaction fee. Like anything new, these online wallets have certain risks associated with them that you should be aware of.

Spoofing, this happens when a malware changes the sender’s address without your knowledge. Loss of a wallet The wallet information containing your public and private keys are lost or compromised. Since most people save their private key on their local system and for some reason if that system crashes then there is no way to recover the lost money. Centralized structure: This structure provides easy access to hackers, who can identify wallets with significant amounts of money and can compromise their sensitive information and holdings.

Transaction costs: Before opening an account with a wallet make sure you know the transaction fees that are charged by the wallet, sometimes it can be as high as 50%. Ignoring this small detail can cause serious damage to your reserves. Reversing Payment Unlike a bank transaction, the wallets’ cannot be reversed. So, entering the correct receiver’s address is very important. These online wallets also carry many advantages: Simplify the currency conversion for a person who is new and doesn't know how to create his or her own wallet. Fast settlements are offered compared to transactions done without using wallets as they have mining teams of their own. Secure transactions are a mark of the crypto world and these wallets ensure complete anonymity. With this, we have come to end this video.

In the next video, we will understand about trading bots and how they are created. Till then go ahead solve some of the multiple-choice questions. Good Luck.

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