We are hearing more and more about cryptocurrencies like Bitcoin and Ethereum, which are growing in popularity as they evolve along with blockchain technology. Unlike the beginning, cryptocurrencies are no longer reserved only for the privileged. Everyone can now own crypto, exchange it for another crypto or money, buy other things with it, etc.
However, to perform any of these actions and own blockchain-based cryptocurrencies, you must have a blockchain wallet and understand how it works. To help you get the most out of cryptocurrency development, this article will give you the most common reasons why someone would use a blockchain wallet and offer you different types of these digital wallets.
But before we get into it, let’s comment on why anyone would consider using the blockchain wallet in the first place. We all know how banking systems complicate even the simplest transaction, from being too slow to engaging an intermediary. With blockchain wallets, there is no need to wait several days to complete the transactions, engage a third party, or solve any of the problems you normally encounter when sending the money through a bank.
So, what is a blockchain wallet? It is a cryptocurrency wallet that allows users to manage various cryptos be it Bitcoin, Ethereum or anything else. A blockchain wallet helps people exchange their money seamlessly. Transactions with a blockchain wallet are secure as they are cryptographically signed.
You can access your crypto wallet from all web and mobile devices, while protecting your privacy and identity at all times. These digital wallets provide users with all the features needed to perform secure transactions and money exchanges between different parties, always leaving the intermediary out of the picture.
You can think of the blockchain wallet as sending or receiving money through PayPal or a similar gateway, but instead of traditional money, you use cryptocurrencies. There are plenty of blockchain wallets available to you such as Electrum, Jaxx, Blockchain info, Samurai, Mycelium, etc. The best choice for you will depend on your needs and the level of security you require.
How Blockchain Wallets Work
To understand the security and functionality of blockchain wallets, we must first talk about private and public keys. Every time you create a new blockchain wallet, you will be given a private key and a public key associated with your wallet. You can give your public key to anyone to receive the money from them, but your private key must remain secret.
Think of the private key as your password. You must avoid any possibility of it being hacked or compromised in any way. The purpose of the private key is to use it when spending your money. If someone gains access to your private key, your account will likely be compromised and you could lose all your cryptocurrency funds with just one click.
photo credit: Bitcoinist
Most important features:
There are many features that make blockchain wallets so appealing to a large group of people. These are just some of the key features you’ll want to learn more about:
Simplicity. It works just like any other software or wallet you use for your daily transactions. Strong security. If you take care of securing your private key, you don’t have to worry about any other aspect of your blockchain wallet. It allows you to send money around the world without going through an intermediary. Low transaction costs. Compared to traditional bank charges, transferring money through blockchain wallets is almost free. Allows transactions across various cryptocurrencies. You can convert currencies without any problems.
Types of Blockchain Wallet
Blockchain wallets are generally divided into two main categories: hot wallets and cold wallets. Hot wallets allow cryptocurrencies to be transferred very quickly, but they are only available online. Examples of hot wallets are Coinbase and Blockchain.info. On the other hand, cold wallets allow the transactions to be signed offline and disclosed online. Cold wallets are not stored in the cloud or on the internet, but are maintained offline to ensure high security. The most popular examples are Trezor and Ledger.
Both options have their pros and cons. If you are looking for maximum security, you may want to consider cold wallets, but hot wallets are easily accessible to you at all times. As mentioned, depending on your needs and the security you require, you should opt for one of these two blockchain wallet types.
When we talk about Trezor, it is important to keep in mind that it is considered to be the best Ethereum wallet on the market today. After all, the cryptocurrency you will use will have a major impact on the blockchain wallet that you have to choose yourself. If you are looking for an Ethereum wallet, you should also consider Metamask, Ledger Nano S, and Exodus.
This post Everything You Need To Know About Blockchain Wallets
was original published at “https://www.noobpreneur.com/2022/04/19/all-you-need-to-know-about-blockchain-wallets/”