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What is a blockchain wallet?
A blockchain wallet means you are responsible for your own security. Blockchain aims to provide a highly secure environment and the wallet also offers two-factor authentication for every transaction made.
The best way to understand how a blockchain wallet works is to compare it to a bank account. A bank account is exactly what the name implies: a bank account with money. All of your deposits, withdrawals, and transfers are tracked. This applies to your checking and savings accounts. Sure, you can write checks to these accounts at any time, but if you go into the red on your checking account, you’ll be charged high fees.
A blockchain wallet has one significant difference beyond simply tracking your transactions: it is not owned or operated by a bank. Instead, it is owned by you and secured by cryptography. This means that no single entity should be able to control your money without access to your private passphrase, which only you control.
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This wallet is not limited to just Bitcoin wallets; many other types of cryptocurrencies like BonkEthereum and Dogwifhat rely on blockchain technology for their wallets. For example, Ethereum wallets are also based on this technology, with the bonus of smart contracts for Ethereum users.
If this all sounds too good to be true, it might be. It’s still early days for cryptocurrency wallets, and they’re not without their flaws.
How do they work?
A user enters their public wallet address and the amount they want to transfer into the program. It will automatically calculate the transaction fee (if any) and the exact amount of each cryptocurrency which will be transferred.
Then, the program creates a unique code consisting of 26-35 alphanumeric characters. The recipient uses that code to claim the money. Only when the recipient enters this exact code will they be able to receive payment from the sender. The code can be stored on paper or on the computer in an encrypted file.
Examples of wallets
There are many different wallets to choose from, and each has its own advantages and disadvantages.
Electro
Electrum is a user-friendly Bitcoin wallet. It is designed to protect an individual from losing coins due to a backup failure or computer malfunction by allowing the individual to recover the wallet using a passphrase that can be written down or memorized. There is no time delay since the Bitcoin blockchain is not downloaded.
Blockchain is one of the most popular Bitcoin wallets online, and for good reason. It has an easy-to-use interface with multi-device functionality, secure storage, and more.
Jaxx
Jaxx has been around for a while now, and it’s very popular too. It supports dozens of cryptocurrencies, including Bitcoin, and has an easy-to-use interface.
Mycelium
Mycelium is another popular option for mobile wallets. It is known for its user-friendly features and excellent security options.
Bitcoin Paper Wallet
A paper wallet may be one of the safest ways to store your bitcoins, as it does not require any digital storage device and therefore eliminates the threat of hackers stealing your wallet. However, because it does not provide easy access to your bitcoins, it is a poor long-term solution to storing your cryptocurrency.
This content is intended for informational purposes only and should not be construed as investment advice. As with all investments, there is risk and past performance of a particular asset class does not guarantee any future performance. The publisher does not represent or warrant that the information in this content is accurate or complete as this article has been provided by an outside contributor. The views, thoughts and opinions in this contributor content are solely those of the content provider.
The editorial and writing staff of Lee Enterprises were not involved in the creation of this content.
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