Thursday, Jun 30, 2022
Outlook Money

Which Type Of Crypto Wallet Should You Use?

UPI access to crypto exchanges in India may be paused, but the access to crypto wallets continues. Here’s how crypto wallets work

In India, UPI access to crypto exchanges may be halted.

At present, Unified Payments Interface (UPI) services are in a limbo for crypto exchanges in India. Last week, the National Payments Corporation of India (NPCI) had said that it was not aware of any virtual digital asset exchange using UPI for transactions. “With reference to some recent media reports around the purchase of cryptocurrencies using UPI, National Payments Corporation of India would like to clarify that we are not aware of any crypto exchange using UPI,” the NPCI statement read. 

In addition to that, MobiKwik has disabled its e-wallet services from all major crypto exchanges in India from April 1, according to senior executives from different crypto exchanges. This means that the avenues available to crypto investors to transfer money to crypto exchanges are at present very limited. 

The funds the investors transfer to or from crypto exchanges are held in crypto wallets. Investors have full access to their crypto wallets and can continue to buy or sell cryptocurrencies using the funds already in their crypto wallets.  

A crypto wallet is a program in which digital assets and tokens are stored, though technically, cryptocurrencies are not stored anywhere. Crypto wallets keep the investor’s private and public keys, which are used to send and receive coins.  

How Crypto Wallets Function 

Crypto wallets store unique public and private keys and interact with multiple blockchains. This allows users to monitor their balance and transact. To send and receive coins, the wallet generates an alphanumeric address or a QR code that can be shared between the sender and the recipient. 

There are two broad types of crypto wallets: hot wallets (connected to internet and always accessible) and cold wallets (not connected to internet; allow you to store cryptocurrency offline). Desktop, mobile and Web wallets are types of hot wallets, while paper and hardware wallets are cold wallets.  

Usually, a crypto wallet supports most cryptocurrencies and many users simply use a wallet provided by the crypto exchange. But others prefer a higher degree of security and, therefore, use a personal wallet (online and offline modes). Crypto exchanges themselves use cold storage methods as well. For everyday use, an online hot wallet may be better. However, if you want to only buy and hold the crypto asset for long, a cold (offline) wallet may be the right choice