What Is Blockchain Wallet – Why You Need It

In this article Coding compiler will talk about blockchain wallets. The popularity of blockchain wallets has been growing steadily in the recent years. This is showing that the huge demand for various cryptocurrencies. Like any other physical money, cryptocurrencies also must be stored somewhere, this is what Blockchain wallet is used for.

From this blog post you will learn:

  • What is a blockchain wallet and what are its main advantages;
  • How to open a blockchain wallet;
  • What are the methods of depositing and withdrawing funds;

At the end of the article you will find answers to questions that often arise for those interested in Blockchain wallet. The current article will be useful to those who plan to use cryptocurrency regularly.

Blockchain Wallet – what it is and why you need a blockchain wallet

Many professionals argue that the importance of the emergence of blockchain is no less than the creation of the Internet. Experts are sure about that, thanks to this technology, a fundamental change will soon occur both in the financial market and in other areas of the economy.

Today, the blockchain technology continues to be used to store and transfer virtual currency, but the scope of use is constantly expanding. There is an introduction of a chain of blocks all into new areas of finance and economics.

[Related Article: Blockchain Tutorial ]

Theoretically, the blockchain as a method of processing information can be used with respect to any data arrays. It turns out that all information that is currently stored in paper form or on servers, over time can be placed in a chain of blocks.

Already today blockchain technologies are used by many leading companies for the following purposes:

  • Smart contracting
  • Protection of confidential information
  • Control access to internal information

The uniqueness of the blockchain lies primarily in its decentralization . All information is not stored in a single center, but simultaneously on all devices included in the network.

To understand what is the advantage of the principle of decentralization gives users, it is worth comparing traditional money transfers with those carried out in cryptocurrency.

[Related Article: SAP Business Intelligence Software]

In the first case,  to conduct any transaction, you have to contact intermediaries, which are most often banks . For services to transfer funds have to pay a commission. Also, the intermediary can set a limit on the amount of the transaction, increase the period of payment, as well as completely freeze the account.

In contrast to real money, Bitcoins are translated using the principles of Peer 2 Peer , that is, directly from one user to another. This allows you to refuse the services of intermediaries.

[Related Article: Apple Machine Learning Framework]

This state of affairs means the absence of transaction fees, and also ensures the highest rate of payments. Moreover, no one will be able to limit the amount of transactions, as well as freeze the cryptocurrency account.

There are 5 main types of blockchain wallets:

  1. Desktop wallets (software or computer). To create them, you need to download a specialized program on your computer. The main disadvantages of  these wallets are that it takes a lot of time to load and synchronize with the network , and also takes up a large amount of memory on the hard disk .
  2. Mobile wallets. They are very useful in cases when it is necessary to make a payment outside the house, for example, to pay for a purchase in a store. Mobile applications use a simplified payment check , for which only part of the blocks need to be loaded, and the rest of the data is checked using other trusted Bitcoin network nodes.
  3. Online wallets (browser, web wallets). The main advantage of this type of wallet is that you can use it from anywhere and from any device . But there is a significant drawback : the server of the company providing these services can be hacked, and the funds from the wallet are lost .
  4. Wallets-gadgets (hardware). They are specialized devices, which can be either connected to a computer or mobile phone, or work remotely. However, there is a risk of loss or damage to this device. In addition , unauthorized use of these devices in Russia can lead to problems with regulatory authorities.
  5. Paper Wallets. They are a fairly reliable way to store cryptocurrency offline. To create a wallet, you need a computer connected to the Internet, as well as a printer and a sheet of paper. A special program will generate unique keys ( public and private ) that will need to be printed and stored in a safe place.

[Related Article: Convolutional Neural Network ]

There are a number of features inherent in virtual wallets:

  1. All wallets intended for storing cryptocurrencies and conducting operations with it are built on the blockchain principles.
  2. Wallet data is protected using the highest level of cryptographic encryption.
  3. Access to the wallet is available only to its owner, who has a private key.
  4. For carrying out various operations with a cryptocurrency, in addition to the key, a mnemonic code and password are required , providing access to the personal account. This data should not be stored on electronic media.
  5. The system does not require personal user data – blockchain wallets operate on the principles of anonymity.
  6. Theoretically, information about transactions with cryptocurrency is stored in the blockchain forever;
  7. Each blockchain user has the right to view the history of operations.

[Related Article: Deep Learning Framework ]

The blocks inside Blockchain are interconnected using cryptographic encryption , as well as on the principles of chronology. In this case, hashing (or encryption) is carried out immediately by all computers connected to the network.

As a result, each link in the chain gets its own unique signature , as well as a timestamp. When conducting an operation in the wallet, the network is replenished with a new unit. The result is an update of the information database on all computers. Such a process is called cryptocurrency mining (We also recommend reading our journal’s article “ What is Bitcoin mining and how it works”).

Blockchain wallets have a huge amount of advantages. However, they have disadvantages.

In addition, Cons of the systems are:

  • Operations are performed much slower than necessary. This is due to the fact that the modern level of computers is not able to provide the system with sufficient performance;
  • The possibility of losing personal passwords. The access key may be stolen or the user will lose it. However, traditional currencies are also at risk.

In other words, a blockchain wallet will be needed when making a transaction, transferring cryptocurrency, and paying for goods or services. For example, you can take bitcoin, earned on Bitcoin cranes , on your wallet.

[Related Article: Artificial Intelligence And The Blockchain]

Advantages of Blockchain Wallets – TOP – 6 Main Advantages

Regardless of what kind of Blockchain wallet is decided to use, the principle of their operation is absolutely the same. Each user will ultimately receive all the advantages inherent in the blockchain technology . Below are considered the main advantages of such wallets.

Advantage 1. Cheap operations

The commission for transactions performed in cryptocurrency is significantly lower ⇓ than the fee charged for such operations by banks and payment systems. The fee for the transfer of cryptocurrency from one wallet to another is measured in hundred-thousandth of a bitcoin.

Advantage 2. High level of transaction security

Absolutely all transactions conducted using blockchain wallets are protected by the highest level of cryptography .

Due to the lack of intermediaries in conducting transactions, information about the transfer of Bitcoin is available only to the sender and the recipient. While banking operations are always known to the credit institution.

[Related Article: Machine Learning vs. Deep Learning ]

Advantage 3. High speed operations

Theoretically, the blockchain technology allows you to conduct transactions instantly. However , this is practically impossible due to insufficient data processing speed in the Bitcoin network.

Similar problems arise when converting Bitcoins to fiat money. But this does not depend on the blockchain, but on the exchange services .

[Related Article: Artificial Intelligence Vs Augmented Intelligence ]

Based on the pace of technology development, experts suggest that in the near future, speed limits will be eliminated. This will lead to the fact that transactions in blockchain wallets become instantaneous.

Advantage 4. Anonymity of operations

Operations on the blockchain network are performed anonymously. To use cryptocurrency will not have to enter real personal data. No one will require to provide scanned documents.

Transactions are not tied to the user’s identity and are conducted through P2P channels selected at random.

[Related Article: Amazon Machine Learning]

Advantage 5. Detailed transaction report

Information about all transactions in blockchain wallets is reflected in the general register . The blocks contain the data unchanged, they are accessible to all members of the network.

In the personal account, each user can see their own detailed history of the operations performed.

[Related Article: Most Popular UX Trends 2019 ]

Advantage 6.  Free storage of cryptocurrency in blockchain wallet

For bank accounts often have to pay a commission . At the same time, the blockchain wallets are maintained free of charge.

The advantages described above significantly influence the popularity of blockchain wallets.

How to Create a Blockchain Wallet – 4 Simple Steps to Open a Blockchain Wallet

The theoretical foundations of blockchain wallets have been reviewed by us. Now we turn to practical knowledge.

First of all, it is useful to familiarize yourself with the step-by-step instructions that will help you get the blockchain wallet yourself.

Step number 1. registration on the site

First of all, select one of the active sites.

The most popular sites are the following:

  • Blockchain  (in the section below we described in detail how to open a wallet on this site);
  • Haro , having a minimalist design, as well as excellent functionality;
  • Bitcoin Core is a website developed by the creator of bitcoin Satoshi Nakamoto.

When the site is selected, it remains to register on it. To do this, go to the resource and click the button to create a new wallet .

Step number 2. Password creation and registration confirmation

Completing the registration form on the site, it is important to come up with a strong password . It must contain at least 10 characters . Since the invented password will be used not only to enter the system, but also to access the wallet, it is important to keep it in a place inaccessible to third parties.

Registration must be confirmed. To do this, an e-mail will receive a letter that will contain the wallet ID (ID) , which is a unique sequence of Latin letters and numbers.

Step number 3. Save the mnemonic code

After trying to exit the wallet, its owner will be asked to save a backup mnemonic code that has a phrase and is recorded in  4 English words by the continue button . These are usually meaningless words. You should not store this code on your computer or mobile device .

In order to preserve the mnemonic code, it is better to use the following options:

  • write it down and hide it;
  • print the code on the printer, especially since the system automatically offers to do this.

Step number 4. Authorization and further work with the wallet

In the future, to enter the wallet, you will need to enter an ID and password . Remember the first is not easy, so many users copy it directly into the form.

As soon as the authorization passes , the user gets access to the contents of the blockchain wallet. After that, the owner can enter or withdraw funds, as well as transfer them to another user. To make a transaction, you will need to know the address of the recipient’s wallet.

The procedure described above allows anyone who wants to become the owner of the blockchain wallet. Enough to clearly perform the steps described. By the same principle, you can create a bitcoin wallet and other wallets of other cryptocurrencies.

[Related Article: Programming Languages]

How to Recharge Blockchain Wallet or Withdraw Money from it

There are several ways to enter and display cryptocurrency using the blockchain of the wallet. The following are the most popular methods of depositing and withdrawing money from a blockchain wallet.

Method 1. Through exchange offices (exchangers)

Today, the Internet offers a huge number of convenient services, the user can choose any of them. In most cases, preference is given to the exchanger that offers the best rate of the necessary currency.

To purchase bitcoins and credit them to the blockchain wallet , first of all you need to transfer fiat money to the exchanger. This can be done using a bank card or electronic money ( for example , Yandex, Webmoney, Qiwi ).

When exchanging bitcoins for real currency, the procedure is exactly the opposite.

Naturally, with the currency exchange will be charged commission . It can reach 5% . To find the best exchanger, you can use specialized services for comparison. In Russia, the most reliable and popular site is called by many as BestChange. .

[Related Article: Microsoft Azure Cheat Sheet]

Method 2. Through exchanges

Another way to enter Bitcoins into a wallet and withdraw from it are Bitcoin exchanges.

You can buy or sell Bitcoins  for the money and other cryptocurrency through brokers who have licenses to carry out this activity.

Method 3. Sales of goods and services for cryptocurrency (bitcoin, etc.)

This option of entering funds into the blockchain wallet is the most profitable . Freelancers , owners of online stores, developers of information products and other people who actually receive payment in cryptocurrencies (for example, Bitcoins) can use this method .

[Related Article: Regular Expressions For Web Developers]

How to Improve the Security of the Blockchain Wallet – 4 Expert Tips

The purpose of creating blockchain technologies was initially to increase the level of security of operations.

However, despite the fact that transaction security is high enough, it will be useful for wallet owners to further enhance security. You can do this using the advice of experts.

[Related Article: Cryptocurrency, Bitcoin, Blockchain Guide]

Council number 1. Access keys cannot be stored electronically.

Experts do not get tired of repeating how important it is to ensure proper storage of passwords. The same applies to access keys to blockchain wallets.

Another important point is that the Bitcoin wallet password cannot be recovered. If you lose it, the funds will be lost. Therefore, the best option is to write the password on paper and hide it in a safe place .

Council number 2. It is worth blocking requests sent by the network Thor

You should not allow anonymous addresses provided by the Tor network to access the blockchain wallet. Thor is often used by attackers in an attempt to crack the office.

Council number 3. It is important to create a complex password

Despite the fact that the rules for creating complex passwords are known to everyone, it is worth repeating them again :

  • do not use personal data;
  • you cannot choose standard combinations;
  • the password must contain numbers, as well as upper and lower case letters.

Compliance with these rules will help make it very difficult to crack a password.

Council number 4. It is worth using authorization in two levels

Two-level authorization allows you to avoid unauthorized access to the wallet. This process is implemented using a one-time password .

Also it is necessary to tie a mobile phone to your account, create a hint for a password.

Observance of the simple rules given above helps to save money in the blockchain wallet in complete security.

Blockchain Wallet – Frequently Asked Questions (FAQ) And Answers

Blockchain is a new technology. Therefore, it often raises many questions. To help our readers, we traditionally respond to the most popular ones.

Question 1. Why is it better to choose a blockchain.info wallet?

The number of services offering to open a blockchain wallet is constantly growing. Recently, Blockchain.info has become one of the most popular .

Consider the benefits of this service:

  • The ability to open a wallet very quickly. In most cases, it takes no more than 1 minute;
  • Excellent design. Register a wallet and use the most convenient;
  • Excellent service reputation. This international platform is one of the most popular and reliable;
  • Wide functionality. If desired, the possibility of using the mobile version;

Question 2. How can I withdraw Bitcoin cryptocurrency from the blockchain?

Consider the withdrawal of bitcoins from the blockchain wallet. This operation is performed using the send money tab .

There are 3 options for transferring funds over the network:

  1. Fast sending. Here it is enough to enter the transaction amount and the wallet number . When using this option, the minimum commission is charged- only one ten-thousandth bitcoin. But it should be noted that the confirmation of the operation when using this form is performed in the order of the usual queue;
  2. Shared Coin involves the creation of a general confidential transaction, during which funds are transferred to several wallets at once. This option is used for group transfer with details on amounts . The size of the transfer should be in the range from 0.01 to 50 bitcoins ;
  3. User transaction In this case, the wallet owner chooses the size of the commission for his transaction. This allows you to speed up the processing of operations.

Conclusion

The popularity of cryptocurrency is constantly growing. Naturally, this requires the creation of a special place to store them. A reliable way to do this is blockchain wallet. Thanks to the technologies used during the creation of the Blockchain Wallet, security and anonymity of funds is ensured. Do not forget to leave comments and comments on the topic, as well as share material in social networks. See you again!

Related JavaScript Tutorials

JavaScript Introduction Tutorials
Introduction to JavaScript
Javascript Code editors
Javascript Reference and Specifications
Javascript Developer Console
Javascript Basics
JavaScript Hello World.!
External JavaScript Files
JavaScript Code Structure
Use Strict in JavaScript

Leave a Reply

Your email address will not be published. Required fields are marked *