This digital currency makes use of sophisticated obfuscation protocols to allow parties anywhere in the world to trade coins without fear of outside observation or intervention. The complexity and effectiveness of this underlying technology have made Monero the most popular privacy coin in use today.
Users who wish to accumulate, trade, and grow Monero-based assets must do so through specialized wallets that are frequently optimized for exclusive use with XMR. The unique configuration of the Monero wallet, as well as its security focused-features, is what grants Monero transactions the high levels of privacy for which they’ve become famous.
If you are curious about how users choose the best Monero wallet or about how the many wallets available for this coin differ, read on. We’ll show you all you need to know about XMR wallets at a glance.
How Monero Works: A Basic Rundown
All transactions made with Monero, like other cryptocurrencies, are recorded on a digital ledger. It is important to note that this ledger is not stored in any singular, centralized location. Instead, copies of it are distributed across a network of thousands of computers around the world.
The individual computers that make up this network are commonly referred to as nodes. To access and add transaction information to the ledger, XMR wallets need to be able to connect to one of these many nodes.
This may surprise many users, but Monero wallets don’t actually store any coins. They function more like shared ledgers that record information on the coins you own. These wallets also provide you with specialized codes, known as “keys,” which you need to interact with your coins—such as to send coins to other users, receive incoming Monero transfers, and do other activities.
The first essential key an XMR wallet provides its users with is known as the view key. This key allows the user to read any copy of Monero’s distributed ledger and see only the transactions in which they are involved. The other key is called the spend key, which allows users to send Monero to other wallets connected to the network.
However, the act of “sending” Monero is also purely metaphorical. Rather than transferring any currency from one account to another, spend keys allow users to declare on the network’s ledger that a certain number of coins they once owned now belongs to someone else.
Differentiating XMR Wallets
Several distinct types of Monero wallets are available for users to use. Each type functions a bit differently from the others and, more importantly, offers users different benefits in terms of privacy and security.
Let’s explore a few of these wallets and their various advantages in more depth below.
i). Full Wallet
The official XMR wallet is commonly referred to as a full wallet because it stores its own complete copy of the Monero ledger.
In essence, it comes with its own node in the network and can thus connect to the network independently of other users. Using a full wallet affords you more privacy than a wallet that would need to connect to another person’s node.
On the other hand, users interested in a full wallet should be aware that it is going to take up a substantial amount of space on their computer. A complete copy of the Monero ledger is upwards of 50 GB in size and grows a little more with every transaction.
You’ll need to be prepared to allow at least that much hard drive space for a full XMR wallet, if not more.
ii). Light Wallet
Light wallets don’t store their own copies of the distributed ledger and therefore take up much less space than the full wallet, so you can run them easily on a mobile device. These wallets work by connecting to an external node, from which they can then check the ledger for the specific coins that match a user’s key.
When you use a light wallet, however, the owner of the node will be able to see that someone from your computer’s particular address is using the node to conduct Monero transactions. This isn’t a huge problem for the majority of users, as the node owner still won’t be able to see the exact transaction amount or any specific identifying information.
It might, however, pose a problem for users interested in the highest possible levels of privacy and autonomy when transacting with XMR.
iii). Hardware Wallet
A hardware wallet works similarly to a light wallet, but keys are generated locally from a dedicated device and subsequently stored on the device rather than on the internet. This grants users an extra layer of safety, as keeping your keys offline protects them from being stolen, falsified, or otherwise compromised.
Your hardware wallet does still need to connect to an online wallet in order for you to interface with a node and use the keys. However, the keys remain hidden on the device. You can then use the device to authorize transactions through the online wallet, similar to remote control.
As you can no doubt already tell, when it comes to picking the right XMR wallet, there is no single answer that will work for every user and situation. It is best to consider your specific needs and the associated risks you think you can handle before making your choice.
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