What is Blockchain Wallet – How do you Pick a Crypto Wallet?

October 5, 2022

What is Blockchain Wallet? Probably, you have heard of blockchain wallets when the subject of cryptocurrencies is brought up. But what does it mean? A blockchain wallet is a wallet that allows you to manage your cryptocurrencies of different types. This includes Bitcoin and Ethereum and other digital crypto assets.

With the rising of cryptocurrencies over traditional currencies, if you want to effectively manage your crypto assets, then you should know what blockchain is all about and how it works. Read further for a better understanding.

What is Blockchain Wallet

Similar to your physical wallets where you can save funds and access them for use only when you want to, a blockchain wallet allows you to manage and secure your cryptocurrencies. Also, from the blockchain wallet, you can exchange cryptocurrencies easily. A blockchain wallet can be assessed from any web device and the identity of the user is maintained.

Hence, blockchain wallets provide all the features you need to keep your cryptocurrencies safe. In addition to this, it also provides a safe platform for secure trading between two or more parties.

How Does Blockchain Wallet Work?

When you generate a blockchain wallet, you would be given two keys. The public and private keys. The public key is the one that you would give out to anyone you want to make a transaction with. This key is similar to your account number. It is what people will use to trade cryptocurrencies with you and then send your funds to you.

Moreover, a private key is a secret key. This key should be not disclosed to anyone. It is similar to your password. This private key address is used by the owner of the account to decode and access encrypted information from the sender of a coin. This simply means that the private key is what you use to access and spend your funds.

Blockchain wallets do not save cryptocurrencies. Cryptocurrencies are stored in blockchains. However, they show records of transactions made. In addition to this, crypto wallets also store your public and private keys in your crypto account.

Blockchain Wallet Features

Having known how blockchain wallets work, what are the features of this wallet? Well, some of them are given below:

Blockchain wallets are easy to use for your daily transactions.
Also, this wallet keeps your digital keys secure.
Additionally, blockchain wallets allow for transactions across several locations without an intermediary.
Blockchain wallets also allow for transactions across several cryptocurrencies.

Types of Blockchain Wallet

Software Wallet

Software wallets are blockchain wallets that are downloaded on devices. Some popular blockchain wallets that you can download are Breadwallet, Copay, and Jaxx. There are three categories of software wallets. Desktop, online and mobile wallets respectively.

Desktop wallets store private keys in cold servers on the desktop. Meanwhile, online and mobile wallets can be operated to store private keys online. The key is then managed by a third party.

Hardware Wallet

Hardware wallets allow users to store and access their private on a hardware device. This hardware device is usually highly secured and can be connected to a computer with a USB cord or via other ports. To make a cryptocurrency transfer or transaction from the hardware wallet the user has to connect the device to a computer.

This wallet offers some level of security. However, you are responsible for safeguarding your security keys.

Paper Wallet

A paper wallet is an offline wallet for managing cryptocurrencies. It is a document that contains both your public and private keys. These keys can then be accessed through a QR code. This wallet is used for managing large amounts of cryptocurrencies.

This wallet works together with the software wallets. You can transfer the funds you’ve saved on your software wallet to your paper wallet. Examples of commonly used paper wallets are; Bitcoin and MyEtherWallet paper wallets.

What is Blockchain Wallet ID?

To make a cryptocurrency transaction with a person in cryptocurrencies, you need to give out your public key. The blockchain wallet address is your public key. It is a string of alphabets and numbers that acts as your username. With this key, you can make transfers in cryptocurrencies. You also use your wallet ID to convert your cryptocurrencies into local currencies.

Is Blockchain Wallet Safe?

Blockchain wallets are used to store your digital keys. This implies that they are used to secure both your public and private keys. They are highly secure and keep your private key extremely safe from being accessed by invaders. Also, all transaction records are kept secure in the blockchain wallet.

However, you have to also play your part by securing your private key. If you disclose your private key to people, they could use it to hack your wallet. Thereby giving them access to your account and you could end up losing all the cryptocurrencies you’ve saved in your account.

How Much Does a Blockchain Wallet Cost?

The price varies with the platform you are investing your cryptocurrencies. In addition, it also depends on the type of wallet you are using. Generally, hardware wallets are more expensive. However, you might be able to create a software wallet for free on some platforms.

How Do Blockchain Wallets Make Money?

Some blockchain wallet downloads are offered for free. also, some do not charge or only charge low transaction fees for you to store your crypto assets. However, these platforms make money by charging fees for crypto transactions, consulting work, and some transactions.

How Do You Pick a Crypto Wallet?

If you want to generate a blockchain wallet for your cryptocurrencies you have to put certain factors into consideration. The features you need to consider are; security, portability, user-friendly interface, the reputation of the platform you want to generate the wallet from, and multi-currency support.

How Do You Start a Crypto Wallet?

There are some basic steps you need to use to start a blockchain wallet account for cryptocurrencies. They are:

Decide on the type of wallet you want to use
Download or purchase the wallet
Install the software
Create an account and set up security features
Deposit the cryptocurrencies you want to invest

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