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With the advent of cryptocurrencies, the world is opening up to new possibilities in online, virtual transactions. Today, Bitcoins, Ethereum, and altcoins are gaining popularity rapidly and as a result, we witness growing demand for blockchain wallets.
Here we are going to discuss ins and outs of blockchain wallets from the perspective of a blockchain app development services provider. But before moving forward, we will have an introduction to this concept.
What is Blockchain Wallet?
Similar to wallets or vaults for storing fiat money, a blockchain wallet is useful for storing cryptocurrencies. Users can store and manage different cryptocurrencies in a secure way using a blockchain wallet.
It also offers ease of exchanging funds online across secure and cryptographically signed transactions. What’s more, all the functionalities of a blockchain wallet work seamlessly on the Internet.
Blockchain wallets can be accessed through the web with ease. Also known as crypto wallets, these wallets could show the account balance in Bitcoins and other cryptocurrencies, ICO tokens, or other digital assets. Bitcoin wallets are like a bank vault for crypto assets.
Security and transparency are the biggest characteristics of blockchain. Both these characteristics are reflected in the blockchain wallet. Blockchain app development services can ensure the highest level of security while transferring funds.
A blockchain wallet simplifies the process of cryptocurrency transactions. Users can leverage all the benefits of blockchain technology like that of other technological advancements in digital payment solutions.
Electrum, Mycelium, Blockchain.info, and Bitcoin paper wallet are some of the noteworthy examples of blockchain wallets.
How Does Blockchain Wallet Work?
Users need to download a blockchain wallet. After downloading, it is necessary to set up the wallet in which the wallet generates a private key.
Along with this, users can get a public key for their wallets. Here, the private key is of the utmost importance. No user can risk losing it. It is not advisable to disclose the private key anywhere. If one loses the private key, then all the cryptocurrencies in that particular wallet are lost.
The public key is also known as the blockchain wallet address. It is also a crucial element to operate blockchain wallets. Wallet users can share the public key with people for transferring crypto-assets.
When you want to send cryptocurrencies to the other person’s crypto wallet, you need to include a private key along with the blockchain wallet address (public key) of the receiver. In a way, you can transfer the ownership of your crypto assets.
In this transfer of ownership, the private key of the sender’s wallet must match perfectly with the receiver’s wallet address or public key.
Here, every transaction remains completely encrypted irrespective of the type of wallet. Once the transaction is done, the wallets of the involved parties reflect changes. Let’s go through the types of blockchain wallets.
Which are the Major Types of Blockchain Wallet?
Two major variants of blockchain wallets are hot wallets and cold wallets.
Hot Wallets and Variants
Hot wallets are like normal wallets and suitable for daily transactions. They are highly user-friendly, online blockchain wallets that can enable quick cryptocurrency transfers.
Hot wallets provide easy access on a 24/7 basis using a desktop or mobile device. Hot wallets are also known as software wallets and are available in web, desktop, and mobile versions.
As a variant of a hot wallet, a software wallet is an application on a device like a desktop, a smartphone, or a laptop. The desktop wallet is in the form of an application and users can install it on their computer for generating the private key after a successful registration.
Web-based wallets are accessible through any browser from any device with the help of the Internet. Mobile wallets are like digital payment solutions and similar to web-based wallets in functionality.
Read More : How to Find the Right Payment Gateway for Your Digital Wallet Solution
Cold Wallets and Variants
Cold wallets, on the other hand, act like a bank vault and provide the highest level of security. Cold wallets enable users to do the signing process offline and once the transaction is complete, its information goes online.
Cold wallets have private keys in offline environments for higher security. Users can securely store their private keys in cold wallets either on separate hardware or on a paper document.
These are one of the most convenient variants of cold blockchain wallets. These wallets work as an offline process involving a printed paper that has both public and private keys.
A QR code is necessary to access these keys. Paper wallets are primarily useful for transferring funds to a public address from software wallets or hot wallets.
Hardware wallets have started gaining ground in recent times. The reason is simple- these wallets are offering improved security. Also, they facilitate users to transact in cryptocurrencies with ease.
It is easy to connect hardware wallets just like a USB to a computer or laptop. Hardware wallets enable users to carry out transactions without risking their private keys.
Blockchain wallets are known for their security and apart from the private and public key, the mobile app development company can integrate other security features like email verification, password protection, and two-step verification for enhanced security.
Here are some of the top reasons why people should opt for a blockchain wallet.
Why Should People Choose a Blockchain Wallet?
Most people get generic replies to the question “What is a blockchain wallet used for?”. But, in reality, any digital asset including blockchain tokens and coins can also be stored securely in the blockchain wallet. Some of the noteworthy benefits of blockchain wallets include-
- The blockchain wallet ensures the highest level of security with public and private keys and other security features
- It allows faster transactions irrespective of borders and eliminates the need for intermediaries
- It enables users to carry out transactions across multiple cryptocurrencies
- It reduces the cost of transferring funds considerably as compared to banks and financial institutions
The only condition to leverage the benefits of blockchain wallets is to keep the private key safe and yet accessible.
As cryptocurrency-based transactions are gaining popularity in the business across the world, we can expect that blockchain wallets will remain in focus in the coming years. Blockchain wallet is more than a digital variant of traditional wallets that are used for storing government currencies.
You can consult a reputed mobile app development services provider to know the benefits of a blockchain wallet and its scope for taking your business to a new level.
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