What is a blockchain wallet?

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Blockchain wallet

An important part of the digital currency Bitcoin is the blockchain technology, which allows decentralized exchange of values. In this article we focus on blockchain applications and Bitcoin wallets in particular. What potential have blockchain wallets for the future?

Blockchain Wallets

A Blockchain Wallet – or Bitcoin Wallet – is a software program in which Bitcoins are stored. The word “wallet” means nothing more than a virtual or digital wallet for Bitcoins. A wallet has a private key (a secret passphrase) and a public key (the Bitcoin address). The private key is the only access to a bitcoin address and therefore the only way to receive or send bitcoin.

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As with “normal” money, you should not store all your money in a wallet and make sure that it is safe. In this case, with backup copies and secure passwords. The wallet can also be used as an online savings book. This has no internet access and is therefore not vulnerable to hackers.

The private key is the only access to a bitcoin address and therefore the only way to receive or send bitcoin.

There are different providers, but all of them are compatible with each other. The wallet is also available in different forms, which we will explain later. The five best known are desktop, mobile, online, hardware and paper wallets.

Bitcoins only have a certain value, because we give them a value. But at the end of the day, this is similar with “normal” money. The value of the bitcoins depends heavily on the exchange rate, which is subject to strong fluctuations.

Different Types of Wallets

Desktop Wallet

Have you already installed an original Bitcoin client on your desktop? Then you may already be using a wallet without knowing it. This enables you to forward transactions in the network, create a Bitcoin address to send or receive credit and store the corresponding keys.

Mobile Wallet

The mobile wallets are installed as an app on the mobile device and deposit the private keys directly on the smartphone. In this way, the device can receive and send bitcoins within seconds.

Online Wallet

Your private key will be stored on an online wallet. A server that is controlled and managed externally. This gives you access to your bitcoins everywhere. The disadvantage, however, is that you cannot be sure that the external providers are sufficiently secure the online wallet.

Hardware Wallet

Hardware wallets allow private keys to be stored offline and to carry out payments. Hardware wallets (aka cold wallets) have become quite advanced in terms of security features and are almost as secure as paper wallets. However, most of the cold wallets on the market support only Bitcoin, Bitcoin Cash and the most popular altcoins.

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Paper Wallet

These paper wallets can be stored 100% offline and are therefore safe from cyber attacks. In addition, they are a reasonably inexpensive and safe method. The providers create a bitcoin address for the user and print two QR codes on paper: a code with a public address to receive the bitcoins and a second QR code with the private key for storing and sending bitcoins. It is also the most commonly used type of wallet.

Which Blockchain Wallet Apps already exist?

As we know, there are several suppliers of blockchains. In the meantime, Blockchain and Bitcoin Apps are also shooting out of the ground. The advantage is that you can see and use your Bitcoins everywhere. In theory, you can pay with it anywhere by scanning the QR code. Unfortunately, there are not many dealers in Germany who make this possible.

One of the most popular apps is the Bitcoin Wallet from Blockchain.info. So far, there are more than 13 million users around the world. The app is available in more than 25 languages for Android and iOS and is free of charge. This also serves to bring the technology closer to the users. There are also apps to follow the price trend of Bitcoin.

The Risk of Blockchain Wallets

Bitcoins are known to be very transparent and safe. However, the user also attaches great importance to ease of use. In general, the following applies to bitcoins: The safer the method to use and store bitcoins, the more difficult it is to use them.

One risk is the loss of the wallet. Because that’s how you lose your bitcoins. Regardless of whether the user forgets his password or if someone gains access to the password, the loss is irreversible. Without the password, you have no way to access the Bitcoins in your wallet again. Therefore, make sure that you have a good password, even if it is complicated. Your first name and “12345” do not suffice!

Another risk is the fluctuation in the price of blockchain and the potential loss in value that this entails. So only invest as much money as you can afford to lose if the price falls.

To avoid these risks and to keep your Bitcoins available in case of an emergency, there are two things you can do. Firstly, you should make a backup of the wallet so that you can restore the values in case of loss of the key. On the other hand, you should involve a trusted third party. If you forget your password or something happens to you, they will have access to your wallet in an emergency.

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