Wondering what Blockchain wallets are and what its advantages are. What are its types, and which one to use? Well, we have got you covered. This article will answer all your questions. So let’s get started and understand the basics of Blockchain wallet first.
Table of Contents
- What is Blockchain Wallet?
- Various Types of Blockchain Wallet
- Advantages of using Blockchain Wallet
- Concluding Lines
What is Blockchain Wallet?
A blockchain wallet can be defined as a digital wallet or E-wallet that allows individuals to store, manage, and transfer their cryptocurrencies such as Bitcoin(BTC), Ethereum(ETH) and many more. With such wallets, users can manage their balances of these two cryptocurrencies by paying transaction fees that depend on various factors such as transaction size. Since digital assets or cryptocurrencies are just a number, that is why wallet keeps the private key of any particular individual and the private key fetches the balance of that individual from the blockchain.
Now comes the question: why is it important to learn about these wallets. The answer is short and simple. If you want to engage in any cryptocurrency business, you should have an E-wallet where you can store your BTC and ETH coins for smooth transactional activities.
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Various Types of Blockchain Wallet
Based on the basis of how and where you store cryptocurrencies, we can categorize wallets into the following categories.
Hot and Cold Wallets
Hot wallets are online wallets through which cryptocurrencies can be transferred almost instantly. In such wallets, private keys are stored on the cloud, allowing the faster transfer of crypto-assets. Since hot wallets are connected to the Internet, therefore they are less secure. But compared to other wallets, these are more user-friendly.
Cold wallets are stored offline, and thus they don’t require internet connectivity, unlike hot wallets. In such wallets, private keys are not stored on the cloud; rather, they are stored in separate hardware. Compared to hot wallets, these wallets offer improved security, thus less risky.
Another point of difference between both the wallets is that Hot wallets are easy to set up and generally used for day to day transactions, whereas cold wallets are used for long-term holdings.
A hardware wallet, you can say, is a type of cold storage device that stores the user’s private key in a protected hardware device. These wallets are similar to portable devices that can be connected to computer systems. In order to perform a transaction using these wallets, all you have to ensure is that your wallet is plugged into your computer system. These are less prone to malicious attacks and hacking activities. Ledger, Trezor, and KeepKey are examples of a few top hardware wallets.
A software wallet is an application that can be downloaded either on a mobile device, desktop, or web-based wallet that is accessible online. These wallets can be further categorized as:
Such wallets are installed on computer desktops and give users complete control over their wallets. Examples include Exodus, Bitcoin core, Electrum, etc.
Thes wallets are similar to desktop wallets. But these are much more convenient as it facilitates payments in physical stores via “touch-to-pay” and uses QR codes for transactions, thus more suitable for daily operations. Examples include Bitcoin Wallet, Hive Android, etc.
These types of wallets are accessed by internet browsers. But the selection of such wallets needs to be done carefully because it stores users’ private keys online. Examples include Coinbase, Blockchain.info, etc.
Advantages of using Blockchain Wallet
Since the advent of cryptocurrencies, the blockchain wallet has been considered as a reliable and trusted digital wallet for storing cryptocurrencies for transactional purposes amongst other crypto-users. If you are planning to run your crypto business, you have to create an e-wallet with Blockchain Wallet, and the account setup process is done online. Blockchain wallets are crucial for all cryptocurrency users because, without a blockchain wallet, the running of your cryptocurrency business is almost impossible.
The best part of using Blockchain wallets is that they are accessible from web devices, including mobile phones, and the privacy and identity of the user are not hampered in any sense. Apart from that, these digital wallets are user-friendly, fit for day-to-day transactions, highly secured, and allow transactions across multiple cryptocurrencies with low transaction fees.
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We have covered a lot about the Blockchain wallet, and here it is important to consider for wallet safety, which is essential as these digital wallets are high-value targets for hackers. Encrypting your Blockchain wallet with a strong password and choosing a cold storage option is one of the good safety measures that you can consider. Apart from that, backing up your desktop and mobile wallets regularly are always advisable. In order to choose a perfect Blockchain wallet, all you need is to understand your needs.
So which, according to you, is the most useful Blockchain wallet? Let us know in the comment section.
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