The FTX collapse was a major event in the world of cryptocurrency. It was a reminder of the need for secure and reliable cryptocurrency wallets. A cryptocurrency wallet is a digital wallet that allows individuals to store, send, and receive digital currencies. These wallets are essential for anyone looking to invest in or use cryptocurrencies, as they provide a secure place to store your digital assets.

FTX, a major cryptocurrency exchange and its US branch FTX.US filed for bankruptcy.

This news sent shockwaves throughout the whole industry. The company's business was predicated on risky trading options that are illegal in the United States.

The Collapse of FTX explained...

FTX misused user funds.

Let's try to understand it by keeping it simple:

• Traders use FTT tokens for performing operations like paying transaction fees.

• FTX token(FTT) is the exchange token of the FTX ecosystem.

• Changpeng Zhao(CEO of Binance) sold his stake in FTX back to Sam Bankman-Fried, in part for FTT tokens.

• On November 2, Coindesk reported on a leaked document showing the massive amount of FTT tokens held by Alameda Research.

• This disclosure prompted the CEO of Binance to sell his FTT tokens.

• Its price thus plummeted and traders rushed to pull out of FTX.

• FTX wasn't able to fulfil the enormous number of withdrawal requests and entered a liquidity crunch.

To the rescue: Cryptocurrency Wallets!

A cryptocurrency wallet is similar to your regular wallet. The crypto wallet is a place to store your digital currency.

You just need two things to start transacting in cryptocurrency:

1. Your Wallet Address(Public key)

2. A password(Private key)

A public key is similar to your bank account number. It lets you receive transactions from anybody who has your public key or from anyone you provide your public key.

Your private key, on the other hand, is comparable to your bank account password.

So, while anybody may submit transactions to the public key, you must have the private key to accept them and confirm your ownership of the cryptocurrency received/transacted.

One important thing to note -

Your wallet does not directly store cryptocurrency. The wallet merely keeps track of your public and private keys, which serve as proof that you own a particular stake in cryptocurrency.

Types of Cryptocurrency Wallets

Hardware Wallets

• They are sometimes referred to as "cold wallets" because they save the information of your public and private keys totally offline on a device that is not connected to the internet.

• These types of wallets are the most difficult to hack but that does not mean there aren't any risks associated.

• The risks included are:

1. Can be misplaced/stolen.

2. Risk of the device being tampered with (if brought from a 3rd party website).

Software Wallets

• These are also called "Hot wallets" and are connected to the exchange you use to buy cryptocurrency.

• Because they are linked to the internet, they are handy and simple to use.

• Only pick this option if you perform day-to-day trading and are mindful of your convenience.

• The risks included with this option:

1. Vulnerable to online attacks.

2. Higher risk of Hacking.

The graph above clearly illustrates that an increasing number of people are thinking about getting a crypto wallet. The number of crypto wallet users continues to expand, which is encouraging for individuals that do not have a crypto wallet.

Given the bankruptcy of FTX, now is the time to consider getting a crypto wallet to guarantee that our assets are properly secured and under our control...

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