The digital currency trend continues to boost and has even offered opportunities for the cryptocurrencies such as Bitcoin, Ethereum, and more. More industries and individuals are adopting digital currencies, but still, there is uncertainty about blockchain wallets.
Do several questions arise, including what are the blockchain wallets used for? Are these wallets safe? You must be looking for answers to these queries!
Well, we have got you covered. The article covers comprehensive details about blockchain wallets, their benefits, and much more.
What is Blockchain Wallet?
A blockchain wallet is also known as an e-wallet that allows individuals or companies to manage and transfer their cryptocurrency like Bitcoin, Ethereum, and more. It is decentralized that means there is no central authority to manage the currency.
The wallet uses blockchain technology, and anyone can view it. Transactions are in the form of blocks, and these blocks link together to form a chain of cryptocurrency transactions.
A Market Overview of Blockchain Wallet
Investment in blockchain technology and increased venture capital funding are a few driving factors that contribute to market growth.
Blockchain market size will grow from USD 4.9 billion to USD 67.4 billion by 2026, at a CAGR of 68.4% during the forecast period.
The global cryptocurrency market size was USD 826.6 million in 2020.
With the pandemic spread across the world, the relation between Bitcoin and the equity market expanded, and the growing adoption of digital currencies continues to have a profound impact.
What are the types of BlockChain Wallets?
There are generally two types of blockchain wallets-hot wallets and cold wallets. Hot wallets are for day-to-day transactions and are user-friendly, while cold wallets are similar to the vault and help maintain security. Let’s dig deeper.
Hot Wallets and Cold Wallets
Hot wallets are online wallets that allow cryptocurrency to be transferred instantly. Private key is stored in the cloud for a faster transfer and is easy to access via your mobile phone. Hot wallets are not as safe as cold ones, and there are chances of theft or hacking. A popular example includes Coinbase.
Whereas cold wallets are digital offline wallets where you sign the transactions offline and then disclose them online. These transactions are not maintained on the Internet, but are maintained offline. The wallets are safer comparatively and there is no unauthorized access. An example includes Ledger.
Here are the different types of wallet available:
1. Desktop Wallets
These are the common and popular wallets that allow the user to store the crypto on their desktop. Users can install the wallet, as they do for the other software. These are a type of cold wallets where private keys are in the cold server. Electrum is one of the most popular desktop wallets.
2. Online Wallets
These are other popular wallets that need a unique key to operate. These are the hot wallets and are prone to hacking. The users can access the wallet from anywhere from their mobile phones.
3. Hardware Wallets
These are cold wallets like USB and stores user private keys in the hardware device. These are the ideal choice for users who do not actively buy and sell crypto.
4. Paper Wallets
These are the least secure wallets and has printed paper that has access to both private and public key. If the user loses the paper, they simply lose access to their crypto wallet.
5. Mobile Wallet
These are a mix of online and desktop wallets and allow the users to use mobile apps and access the wallet from anywhere. The wallets generally have a user-friendly interface.
Why are businesses investing in BlockChain Wallet Development?
1. Security and Privacy
Crypto wallets offer higher security as the data is encrypted and can not be seen by anyone apart from the wallet holder. Also, the additional layers of security and two-factor authentication make them more secure.
2. Cost savings
Blockchain wallets are cost-efficient as it ensures a considerably lower cost of fund transferring as compared to traditional banks.
3. Stability and Integrity
Blockchain is one of the most reliable and stable systems. At every step the data is verified, and it guarantees no corruption or tampering.
Although the wallet offers a high level of security, it is easier to use. Simply, users need to install the application and start using it.
A guide to working of Blockchain Wallet
The wallets generally represent and reflect your account balance, tokens, and other assets. In a nutshell, it works as a safe bank locker. So when you develop a blockchain wallet, you get the public and private keys. The private key is not shared with anyone, especially the untrusted entities. Whereas, you can share the public key with the person you want to transfer the crypto to.
A public key is similar to your email address, which you can share with anyone to receive the funds. When someone sends you crypto, they include their private key of their bitcoin and the public key of your wallet. It follows a simple process of making the transactions, making the fund transfer easier.
When you spend your bitcoins, you give their ownership to another person. And for this process, the private key of your bitcoin should match with the public key of the person you transfer the bitcoin to. Ensure your private key is the topmost secret, in case if anyone gets access to it, you might end up losing the deposits in the account.
Practices to follow for your wallet security
1. Backup your wallet timely
Online wallets are highly prone to attacks by hackers, there are many other security risks associated. Malware attacks can even rectify and steal your private key, so it becomes vital to ensure and keep it safe. The only possible way here is to back up your wallet. You must only keep a small number of assets in an online wallet, and the rest you can transfer to the cloud storage. Make this practice your regular habit and keep your wallet secure!
2. Strengthen wallet’s security
Passwords play a crucial role in fortifying the security of your wallet. Ensure you use a complex password and generate a wallet from a reputed organization.
3. Upgrade wallet regularly
Software upgrades are a must whenever you get a notification. The upgraded software has the latest and advanced security features. It offers more security and better features to your wallet.
We hope now you have a clear idea about the functionality of blockchain and how to keep it secure. To choose the right wallet for you, you must know your needs. You can safely manage and organize numerous currencies.
Businesses are eager and investing in the app development of multiple-currency crypto wallets to boost their business. And ToXSL is one of the top-notch organizations that have to work on the same.
We have a decade of experience in the domain. We help you develop applications that are more secure, accessible, and user-friendly.