Curious about how cryptocurrency wallets work? In this article, I will explain how cryptocurrency wallets generate cryptocurrency addresses and how they secure it. The core component of cryptocurrency wallets is a private key called a seed. Seed is a sequence of 12-24 words randomly selected from 2048 words. These words determine the starting point of the wallet and the algorithm used to generate the cryptocurrency addresses. Seed must be known to the owner of the wallet and must not be shared with others. Because anyone who knows the seed can access the wallet and spend the cryptocurrencies in it. People who lose or forget the Seed will not be able to reach their wallets again. That's why it's very important to store the seed in a safe place.
Cryptocurrency wallets generate cryptocurrency addresses using the seed. Cryptocurrency addresses are like account numbers to which cryptocurrencies are sent and received. Each cryptocurrency address is associated with a private key generated using part of the seed and a public key derived from that private key. Private keys are passwords that allow cryptocurrencies to be spent. Public keys, on the other hand, are the identities that allow cryptocurrencies to be received. Cryptocurrency addresses are shorter and more readable versions of public keys. Cryptocurrency wallets can generate as many private keys and public keys as they want from the seed. In this way, it can use a different cryptocurrency address for each transaction and increase privacy.
In short, the working logic of cryptocurrency wallets is based on a private key called a seed. The seed determines the starting point of the wallet and the algorithm used to generate the cryptocurrency addresses. The person who knows the Seed can access the wallet and spend the cryptocurrencies in it. The person who loses or forgets the Seed will not be able to reach the wallet again. That's why it's very important to store the seed in a safe place.