Blockchain wallet can be defined in three different ways: A blockchain wallet is a digital wallet that enables users to manage and store cryptocurrencies such as Ether, Bitcoin, and much more.
Besides, blockchain wallet may also refer to a wallet service by blockchain or a software company established by Nicolas Cary and Peter Smith. Blockchain wallet enables users to transfer cryptos and convert them into local currency.
Blockchain Wallet: What You Need to Know
Typically, e-wallets are designed to store and manage digital assets such as cryptos. With blockchain wallets, users can manage, transfer, or convert cryptocurrencies such as Ether, Bitcoin, Paxos Standard, or Tether to their local currency.
It’s easy and free to create a blockchain e-wallet; the whole process is done online. All you need is to visit the site, provide an email address, and set a strong password. The system will automatically send a verification request to your email to verify the account.
You will get a unique Wallet ID similar to a bank account once the account is successfully created. All wallet holders can access the services via the blockchain website or download mobile applications available on the Google Play Store or App Store.
The wallet interface displays your crypto balance and your most recent transactions. You can also access the value for your crypto in your preferred currency, price charts, and other educational content like news or crypto facts.
How Does Blockchain Wallet Work?
Blockchain wallet offers an easy way of managing crypto assets, selling, buying, or transferring cryptocurrencies to other users. For instance, a user might request another user for a certain amount of crypto like bitcoin. The system will generate a unique Quick Response code (QR code) that stores the financial information. A unique QR is generated automatically every time a user makes a request.
Besides, every user can send digital currencies to anyone who provides a unique address. The process of sending or receiving cryptos on the blockchain wallet is similar to PayPal’s. Besides, a blockchain e-wallet allows you to exchange bitcoins with other cryptocurrencies through a process as known as swapping.
However, the swapping of cryptos might take some hours for the transaction to be concluded. It’s important to note that blockchain wallets only allow swapping of 6 cryptos, including:
- Bitcoin Cash
- USD Digital
- Stellar Lumens
- Wrapped -DGLD
On the other hand, you can sell or buy cryptos through blockchain. You can either use your balance or transfer cash from your debit or credit card to buy the digital assets. However, blockchain e-wallets limit how much you can transact on their platform. For instance, the daily limit is capped at $25,000 and $100,000 per week.
Blockchain Wallet Security
Digital wallets are prone to cyber-attacks and online fraud. However, blockchain wallet features a powerful security system to keep your account safe. Ways of securing your digital wallet include:
To use the blockchain wallet accounts, you must have a strong password that you’re required to set when creating the account. The company doesn’t reset the password; it’s only the user who can recover it using the mnemonic seed. This measure ensures your account is safe all the time.
2. Mnemonic Seeds
This is a random string of English words and works the same way as a password. If you forget your password, you can regain access to your wallet using the mnemonic seeds. Besides, the company doesn’t store your mnemonic seeds. The seeds follow crypto industry standards which means you can still recover your wallet even if the company is no more.
3. Optional Security Methods
Blockchain company allows users to enhance their account security through IP whitelists or two-factor authentication to prevent logins from unknown devices. Again, you can access your wallet via the Tor network to protect possible hackers from accessing your IP address.
What Are The Blockchain Wallet Types?
There are two main types of blockchain wallets; Hot wallets and cold wallets.
- Hot wallets: These are the ordinary online wallets used to make quick crypto transactions such as blockchain.info or Coinbase. Hot wallets are easy to access via your smartphone or computer.
- Cold wallets: These are offline digital wallets maintained via a cloud system. Examples are Ledge and Trezor. Cold wallets are highly protected from unauthorized access.
The blockchain wallets can be broken down further into three types:
These wallets can be downloaded and installed on your smartphone, desktop, or laptop. It’s also a web-based wallet that you can access via a web browser. Some of the popular software wallets include Copay, Jaxx, and Breadwallet. Software wallets are also divided into:
These are cold wallets whose private keys can be stored in your cold serve or desktop. Users can unplug the wallet, do offline transactions, and get it back online again. Your desktop is used as a backup server. The wallets are cost-effective and easy to use. Electrum is amongst the most popular desktop wallets on the market.
These are the blockchain wallets operated on the internet. You can access the wallet using any internet supporting device like a smartphone, tablet, or desktop. A good example is the Bitcoin wallet known as GreenAddress.
These wallets are similar to online wallets; you can access them via your mobile phone. They come with a user-friendly interface for easy transactions. Mycelium is an excellent example of the available mobile wallets.
Hardware wallets fall under the cold wallets category. Here, your private key is stored in a protected device like a USB. Connect the hardware wallet device to your computer when you need to make a transaction. They’re hack-proof and highly protected from malicious attacks or access. KeepKey, Ledger, and Trezor are some of the popular hardware wallets on the market.
This is an offline way of storing your cryptos. It is a printed paper containing your public and private keys and can only be accessed via a QR code. Paper wallets are safe compared to other crypto wallets and are ideal for storing huge amounts of cryptos.
However, the paper wallet works with your software wallet. Users Park the funds on a software wallet then transfer the cash to the public address on the paper wallet.