Financial intelligence is becoming a key tool in the ever-evolving world as individuals and nations are making an effort to transform themselves by equipping themselves regularly with the latest technology. As a wise man once said: “where ignorance thrives, the people end up wallowing in squalor”.
Is money transformable?
The traditional financial system ensured that people complied with the requirements of financial management and transactions globally as to how money should be. This involves the entire qualities of money which include the following but is not limited to:
- Legal tender: It is backed by the laws of that country to serve as a medium of exchange for goods and services and all forms of transactions.
- It must be fungible
- It must be accepted by all within the jurisdiction of the nation
- It must be free from counterfeit or other criminalistic tendencies
- It is tangible
However, this form of money has been a metamorphosis of the previous forms of money which include the barter system, precious metals, use of coins, use of paper money, and currently the card system.
At every stage of transformation, money would always require a system of wallets to hold the money in order to prevent the funds from theft and possible mutilations. At a particular point in time, there were even instances where monies were kept in bags.
Subsequently, we are living through a time where money in the form of paper and smaller coins have been stored in physical wallets which can be kept in our clothes comfortably as we go about our daily activities.
However, the advent of blockchain technology and cryptocurrencies has also revolutionized the types of transactions and how we can execute such transactions using a digital wallet system. There is indeed a striking constant in the evolution of wallets, and it is the ability to hold the funds for safekeeping.
Why do I need a wallet?
It has been iterated above from the various generations of wallet types, that wallets are a form of security for the safekeeping of our funds. This is also applicable to the crypto wallets which are the most current form of security for our funds developed using blockchain technology.
There are several types of crypto wallets such as the hard wallet, soft wallet, paper wallet, centralized wallet, and decentralized wallet.
- Custodial wallets are wallets where the private keys are held by a third party, in essence, it functions in the same way that a traditional brokerage account or crypto exchange would perform in handling customers’ funds. Custodial wallets are owned and operated by a central third party that maintains ultimate authority over the account, wallet, and transactions.
- A decentralized wallet means that the holder of the keys will be the sole person who has access to the crypto wallet. It allows the holder to use the keys to send or receive cryptocurrency anywhere on the planet.
- A hardware wallet is a type of cryptocurrency wallet where you can store your private keys in a secure physical device. The cryptocurrencies stored in the wallet are kept offline, making it more secure against malicious actors. However, when needed, the coins stored are readily available.
- A paper wallet is a piece of paper that contains the private keys that are used to facilitate cryptocurrency transactions. Because they are removed from the internet, at one point paper wallets were considered to be more secure than other forms of cryptocurrency storage.
Do I need a wallet to store Bitcoin?
It is indeed a no-brainer that Bitcoin is a digital currency developed using blockchain technology, as such it would require the same technology to create a safe storage method of keeping funds in a similar manner to that of previous forms of money. Hence the need to store Bitcoin and other cryptocurrencies in a digital wallet in either or all of the above-mentioned wallet formats.
However, there is a high level of ignorance with regard to how crypto wallets work and this has led to the low level of adoption witnessed on a global scale. With some level of education and information sharing, though, people would come to terms with the digital wallet systems.
It would also help to reduce the rate of crypto theft by hacking and phishing scams perpetuated by criminally-minded individuals.
The Klever team would ensure that we continue to educate anyone who is interested in crypto, blockchain, and this new financial era.
It is a Klever thing to do.