Last time, I got encountered from my friend @Calvinpriva with some questions😜.You can see questions are looking simple but actually not, they are technical cryptocurrency and blockchain technology related questions.He asked me questions not due to reason he does not know about them but main intention was to help newcomers on this forum. I tackled his questions in PM and thought like it will be also helpful for this community. Let's see how did I face him.
1. Those who own crypto wallets, where do they store those coins?
Cryptocurrency is utterly into blockchain technology. Blockchain forms an irreversible database where all wallet addresses and funds into it are stored. Your crypto wallet address has two important things or variables i.e.Public key and private key which will be directly related with coins/tokens stored to that wallet and it is followed by complex cryptographic codes.
So if the wallet is non-custodial, you can have full control over your private key but in the case of custodial or hot online wallets, they store your private key in their separate server but still, your crypto will be stored in blockchain.
2. We can stake,save and invest our coins in some exchanges/wallets and earn a profit, how do they get that interest to give us?
It is quite relatable, how your bank gives you interests for saving the amounts😜? They also invest funds collected from their customers into productive fields like agriculture, hydro-power, etc, right? Exactly the same, if exchanges or wallets are giving you returns for investing or saving the amounts means they are also using your funds to invest in something stable or productive sectors to gain profits and some portion will be given you as a return.Staking works to strengthen the network and exchange or wallet give you reward for that purpose.
3. How do crypto wallets generate coin addresses for their wallet users to receive coins?
I give you an answer which will be applicable for all the blockchain networks.Crypto wallets are such special programs that are capable of creating unmatched and irreversible alphanumeric characters(will be stored in blockchain while sending or receiving crypto into it) which you might represent as identifier or crypto wallet address with a set of two variables i.e. public key and private keys. If you have a multi-coin wallet means it is capable of creating addresses to support so many coins or tokens from different blockchain networks.
P.S.I really appreciate your feedback if there are any corrections needed in my answers 🙏