A Comprehensive Guide On Blockchain Wallet
If you are a crypto investor looking for a wallet to keep your assets systematically, then a Blockchain wallet is exactly what you need.
For anyone who wants to step into the crypto world, blockchain wallets are a must for them. But, there are numerous wallets available and only a few of them are worth it. It can be difficult to choose the finest wallet for yourself as they are available in abundance in the market.
But now you don’t have to worry anymore. We’ve created this detailed blockchain wallet guide for you.
Here we will discuss everything from what blockchain wallets are, how do they work to how they can benefit you? And make sure you don’t miss the list of top 5 blockchain wallets at the end.
Introduction To Blockchain Wallets
In simple words, Blockchain wallets are best known for storing cryptocurrencies securely.
They not only help you to manage your crypto but also allow transactions all over the world. When you create an account on a blockchain wallet, you get two keys named public and private keys. Both are important in their own way. We will discuss it in more depth in the next section.
Many people believe that blockchain wallets are quite complex to use. But that’s not true at all. Now in the market, many companies provide highly user-friendly blockchain wallets, and almost anyone can use them.
Have you ever used digital wallets like PayPal?
That’s it then. You won’t have much problem using crypto wallets as they’ve many similarities.
Some of the most popular blockchain wallets are Coinbase, Ledger Nano X, Exodus, etc.
Remember that storing your crypto in a wallet doesn’t mean they are fully secured. There are still some chances of losing your crypto as it involves third-party risk. When you store your crypto in a blockchain wallet, you lose control over your crypto. That’s why it’s important to ensure if the wallet is trustworthy or not.
The risk of hacking is also involved in crypto wallets. Recently, there have been many cases when a particular blockchain wallet was hacked, and many investors lost their cryptocurrency.
A very recent example is BitGrail. It’s an Italian cryptocurrency exchange. Around $146 million was hacked in 2018. More than 200k BitGrail users had to face loss.
Another major example is MtGox. It’s a Japanese cryptocurrency exchange. More than $400 million of bitcoin was hacked in 2014.
What Is The Mechanism Behind Blockchain Wallets?
To use blockchain wallets in an enhanced way, you will need to understand how they exactly work. Only then can you take full advantage of them.
* Firstly, you will have to download the blockchain wallet and create an account. After that, as we mentioned before you will receive a key pair, which will consist of a public key and private key. These keys will help you receive and transfer funds from your account.
Public key — the name is pretty self-explanatory. It will be distributed to the world. Anyone can send messages and payments to you securely using your public key.
Whenever someone desires to send you some bitcoins, or any other crypto, they will have to include your public key and their private key to complete the transaction.
* Now, if you want to send cryptocurrency to someone, you will have to take your private key in use to complete the transaction. You will have to enter the public key of the receiver and your private key to sign the ownership of the cryptocurrency to the public key owner.
Keep in mind that your private key should only be private to you. Disclosing your private key to someone means granting them full control of your coins. Make sure to keep your private key safely stored.
What Are The Different Types Of Blockchain Wallets
There are mainly two types of blockchain wallets that you will encounter in the crypto world, known as hot wallets and cold wallets. Most blockchain wallets fall into both categories.
Both of them have their own features. And, you will have to choose according to your needs. Let’s understand them in detail.
Hot Wallets
Hot wallets are used with help of the internet and are considered user-friendly. The main problem it has is security. Due to the internet connectivity, it gets more inclined towards the risk of hacking. That’s why experts don’t recommend holding a big amount in a hot wallet.
However, if you are someone who engages in daily crypto transactions, then hot wallets are just for you. The easiness of these wallets will help process the transaction in a matter of time.
Hot Wallet includes:
* Mobile Wallets – The mobile wallets are pretty convenient for users as the interface is very easy to use. You can easily install a mobile wallet on your smartphone. Investors tend to use this wallet to process their day-to-day transactions with the help of the QR code that they get. Mobile wallets can be highly beneficial for many investors. Problems like viruses and malware infections can take place.
* Desktop Wallets – These wallets can be installed on the desktop as software. They can be a great source to keep your crypto. Just make sure to have anti-virus on your desktop so that the risk of hacking can be decreased and security is maintained. They have a very friendly user interface and provide top-notch privacy. Along with that, they are also considered the third most secure wallet for storing crypto.
* Web Wallets – These wallets are only accessible through a web browser. They can be used in a hosted way or non-hosted way. Experts recommend using a non-hosted way because it keeps your cryptocurrency in your control. Because it can be accessed only through a web browser, it makes it vastly prone to attacks. It is considered the very least secure wallet, so we would recommend you not to invest a very huge amount through a web wallet. It’s perfect if you just want to make a small amount of investment or quick transactions.
Cold Wallets
Cold wallets are considered a highly secured option to store cryptocurrency. One of the best things about these types of wallets is they are not connected to the internet. You connect them to the internet only when you are making transactions.
Many crypto investors prefer using cold wallets. Not only because they are secure, but also user-friendly. The best thing about them is they come with customer support.
Cold wallet includes:
* Hardware Wallets – A hardware wallet takes hardware devices in use to securely store your private keys. It is considered one of the best and secured wallets to keep the keys–far from the reach of hackers. Generally, it will cost you between $70-150. It may seem slightly expensive, but it is worth it as you get high security for your keys. As per the appearance, you will find it more like a USB that consists of side buttons and an OLED screen. It has a much better interface compared to the paper wallet. But if you are a beginner, don’t go for a hardware wallet. It may not be pleasant for your eyes.
* Paper Wallets – Paper wallets are similar to hardware wallets. But it keeps your private keys on the pieces of paper instead of a hardware device like USB. They are also highly secured, and hackers find it very difficult to attack. Paper wallets were quite famous in the crypto market until the hardware wallets entered. Hardware wallets had so many better characteristics compared to paper wallets. This is exactly what influenced many investors to stop using paper wallets and opt for a better option.
How Blockchain Wallets Can Be Beneficial For You?
Blockchain wallets have made crypto transactions incredibly straightforward. There is almost every type of wallet available in the market, and anyone can choose any of them. They come along with many benefits, and here are some of the best ones:
* Highly secured – Most of the wallets are highly secured to keep your cryptocurrencies and private keys. But, some wallets that fully run on the internet have some risks–for example, attacks by hackers. Overall, a blockchain wallet can be a good option for anyone who wants to store their crypto in a secured and organized manner.
* Friendly User-interface – Most blockchain wallets are very easy to use. If you are someone who makes day-to-day transactions, blockchain wallets can be a good fit for you.
* Very low transaction fees – This is one of the best benefits. You can make transactions all over the world with minimal charges. Blockchain wallets can be a much better option than traditional banks. Not only in terms of charges but also security.
5 Most Popular Blockchain Wallets
Here’s the list of the top 5 most popular blockchain wallets.
Coinbase
Coinbase is known to be one of the best crypto wallets for people who are just entering the crypto world. Its user-friendly interface will help you grasp things very quickly.
Pros
* Allows you to trade 500 different cryptocurrencies
* They have a backup to refund. In case, if the hackers attack and steal users’ assets
* Easy to use
* It is available in Android and IOS both
* Consists of 2 factor and multi-signature support
Cons
* Security can be harmed as it’s connected to the internet
* High transaction fees
Mycelium
Mycelium is another very well-established crypto exchange available on mobile devices.
Pros
* Offers high-security
* Aids many other hardware storages of crypto
* Allows to make offline transactions
* Have really good connectivity
Cons
* It may not be suitable for beginners
* Allows only Ether, ERC-20 token, and Bitcoin
Exodus
Exodus is known to be the best crypto wallet for desktop users. Now it has also launched its application for mobile devices compatible with both Android and IOS.
Pros
* Allows you to trade 145 different cryptocurrency
* Excellent support service
* Allows to buy Bitcoin using Apple Pay
* Trade and portfolio functions are built-in
Cons
* High charges
* Security issues – hacking may take place easily
Ledger Nano X
Ledger Nano X is considered one of the best offline crypto wallets.
Pros
* Trading on Ledger Live mobile app can be done using Bluetooth
* 8 hours of battery life
* Supports more than 1500 cryptocurrency
* User friendly
Cons
* Expensive
* Bluetooth function may interrupt the privacy
Trezor
Trezor is a hardware wallet that helps you in keeping your cryptocurrencies in the most secure manner.
Pros
* Allows you to trade more than 1000 cryptocurrencies
* User friendly
* Uses offline highly secured method for storage
* Touch screen
Cons
* Provide mobile support to only android
How Do You Choose The Best Blockchain Wallet For You?
There are lots of blockchain wallets, and only a few of them are reliable. The best way to pick up your blockchain wallet is by considering your needs.
1. If you are a beginner, choose a wallet that is easy to use.
2. If the interface is not a big problem for you, and security is a major concern, go for a hardware wallet.
3. Choose the web wallet if you engage in small investments and quick transactions.
You should choose a blockchain wallet that can fulfill your needs. Just make sure that it is trustworthy and reputable in the market.
It should also include the security methods like two-way authentication and email verification. And don’t forget to enter a strong password from your side.
Conclusion
Blockchain wallets have been playing a major role in the cryptocurrency trading world. It has made investors’ lives much easier by providing highly convenient services.
There are many types of blockchain wallets available and all of them consist of different features.
Most expert investors prefer using hardware wallets as it provides high security. However, due to the high rates, many beginner investors can’t afford hardware wallets. And here, mobile or desktop wallet comes into play. They are also considered decent wallets as they are easy to use. But, because of the internet connectivity, the security is at high risk.
If you are planning to become a pro in blockchain, it’s highly recommended to take a blockchain course. Learning from blockchain professionals can be very effective if you want to excel in blockchain technology.