What’s the difference between Crypto Wallet and Address?
To store any crypto currency whether it’s Bitcoins, Ethereum, NEO or ERC20 tokens, you need to handle an address or a wallet. In this article we will consider the difference between them without going into their technical details.
What is an Address?
A digital address is a random combination of numbers and letters. It looks like a regular postal address. You can create as many addresses as you like, and they will be independent of each other. In fact, in the original work of Satoshi Nakamoto, he / she / they suggest creating a new address for each bitcoin transaction (Bitcoin). Unlike real addresses, owning a digital one is completely free — in order to get such an address, it is not necessary to buy land or real estate.
The Private Key. Imagine your home at some address. Only you can go into because only you have the key to the entrance door. Ideally, people without the key can not get into the house and steal your things. The cryptocurrency address is based on a similar idea. Only in this case, the key is called "private" to emphasize that it can not be shown to anyone. With its help you unlock your address, go inside and send coins. A cryptocurrency private key can be copied via copy-paste commands. Loss of a private key can result in the loss of your coins which can be sent by an intruder to his address.
What is a Wallet?
As mentioned above, Satoshi Nakamoto recommended using different addresses for each transaction. This approach seems very complicated and confusing, but crypto-currency wallets come to the rescue. Each wallet has its own address by default. However, despite the fact that a wallet comes with an address, it is not equal to an address — it can comes as either with a single address or with a whole address collection. It is called a "wallet" by analogy with an ordinary wallet where each address play a role of a credit card inside that wallet. However, this analogy is not quite accurate. It is better to represent a purse in the form of a keychain. It contains a copy of each private key and the corresponding address. Thus, getting a bunch of keys from your pocket (unlocking the wallet), you get access to all rooms (addresses) at once. The wallet can be installed in the browser, on the computer or on a separate device (the most secure variant of key placement).
Browser Walets. The real browser wallet works only with Ethereum and Ethereum-based tokens. MetaMask is a free Chrome Extension which automatically connects your wallet and addresses to websites. Once you log in, you get an access to all addresses stored in MetaMask. MetaMask stores private keys locally, so there is no need to use the clipboard, copying and pasting addresses as in the case, for example, MyEtherWallet. You are also able to import addresses by confirming them with a private key. Next time you log into the wallet you’ll be able to send coins from the imported addresses.
Desktop Wallets. Desktop Wallets offer a wide range of crypto currencies. For example, Exodus wallet allows you to work with various coins, including Bitcoin, Litecoin, Bitcoin Cash, and Ethereum. Private keys are encrypted and stored locally by Exodus. After logging the wallet, you are able to send cryptocurrency without handling the private key — Exodus automatically does this for you.
Hardware Wallets. Consider a hardware wallet in more detail, based on the example of Nano Ledger S. This wallet is recommended for storage of large sums of coins (over $1,000 in coins). Nano Ledger S wallet costs of around $100 — this is a relatively minor costs for holders of a large coins amounts.
A crypto wallet can include both the only one address and many different addresses. And you can use one wallet for multiple transactions from different addresses. This is similar to a keychain (a wallet) with a key or keys (an address or addresses).