TYPES OF CRYPTOCURRENCY WALLETS

Abstract

Honak I.M., Babii S.V.  TYPES OF CRYPTOCURRENCY WALLETS

Purpose. The aim of the article is to study types of cryptocurrency wallets, their features and advantages.

Methodology of research. The following special research methods were used during the writing of the article: direct observation was carried out – collection of information about the number of addresses and the value of Bitcoin crypto-coins; the graphic method of constructing the Lorenz curve is applied; generalization – in the process of formulating conclusions based on the results of the conducted analysis.

Findings. It has been established that when carrying out cryptocurrency business in any form (mining, trading, investing), in order to receive or send cryptocurrency coins, it is necessary to register a cryptocurrency wallet, which is a tool that can be used to interact with the blockchain network, and has an address that is an alphanumeric identifier created on the basis of public and private keys (such an address is, in fact, a “place” in the blockchain where it is possible to send cryptocurrencies). It was found that there are a large number of different wallets on the cryptocurrency market, which can be divided into five groups: electronic wallets (web wallets), which are created on cryptocurrency exchanges or online exchanges; desktop cryptowallets, which is a program that is downloaded and run locally on a personal computer and this program can be downloaded from public sites (desktop wallets are of two types: “thin” (crypto wallets enable the crypto user to quickly carry out transactions, however, have a limited amount of options) and “thick” (represent a full-fledged program with a significant amount of functions and, in particular, with the possibility of mining); smartphone versions (mobile wallets) have advantages and disadvantages similar to desktop cryptowallets; hardware cryptocurrency wallets, which is a physical electronic device, uses a random number generator (RNG) to generate public or private keys and can be stored in the device itself, not connected to the Internet (is a type of cold crypto wallet and is recognized as practically the safest crypto wallet); crypto wallets on a paper medium - mediums the size of a banknote, on which a private key in the form of a QR code and a public access key (crypto address) are placed, and in order to carry out transactions with cryptocurrency coins, these codes must be scanned.

Originality. The basic requirements for ensuring the optimal security of an economic entity in working with cryptocurrency wallets have been formed, compliance with which will enable: secure access to the cryptocurrency wallet; withdrawal address management; ensuring effective protection of private access keys to the cryptocurrency wallet.

Practical value. In the author’s opinion, with insufficient study of the advantages and disadvantages of various cryptocurrency wallets and non-compliance with security rules when registering a crypto wallet and accessing it, restoring unhindered access to wallet assets will be problematic due to the extremely strong protection of cryptocurrency wallets from cyber criminals. The obtained research results will be useful for application in the practical activities of conducting cryptocurrency business.

Key words: cryptocurrency, cryptocurrency wallet, crypto wallet, Bitcoin, cold crypto wallet, hot crypto wallet.