What is Blockchain Wallet?

Why do people use wallets?

To secure their cash, credit cards, debit cards and other tangible belongings. The same way the cryptocurrency traders or investors require a blockchain wallet to protect their digital assets.

These wallets are created using technologies offered by the Blockchain Development Company.

Currently, along with the increasing demand for cryptocurrency, the appeal for cryptocurrency wallets has also been escalated. This is because, these wallets help the customers manage, secure and use the digital assets, they own.

In this article, we will explain What is blockchain wallet is, why is it needed and how does it work?

What Is Blockchain Wallet And How Does It Works?

Blockchain wallet is a decentralized storage system that enables users to secure and manage their desired cryptocurrency in one place. It also allows them to facilitate a transaction in a secured manner.

In order to process a transaction, the user just requires two things: (i) Their wallet address, which is also called the public key, (ii) the private key.

• Public Key- It is like a bank account number, the user can share this address with other individuals for sending or receiving the cryptocurrencies.
• Private Key- It is like a password. Whenever you process a transaction from a debit card or a credit card, the platform asks for a password to proceed further. In the same way, the blockchain wallet also requires a password or PIN. The user must not share that password with anyone.

It is to be noted that the wallet exactly does not store the cryptocurrency, instead, it secures the details of the public and private key.

Types Of Blockchain Wallet

Based on the private keys of the customer, there are two types of wallets: hot wallets and cold wallets. Both these wallets serve different purposes, depending on their users’ requirements.

If an individual is planning for a long-term investment in cryptocurrency like Bitcoin, they opt for Cold Wallets. But, if he/she is planning for short-term investment and actively wants to process crypto transactions, then they can go for Hot Wallets.

• Hot Wallets- These are online wallets that allow users to process transactions instantly. This wallet secures the private key of the user in a cloud storage system. It is a 24*7 accessible platform but has a risk of unrecoverable theft if hacked.
• Cold Wallets- These are digital offline wallets. That means, the platform signs the transactions offline and later, discloses them online. Unlike hot wallets, the data in cold wallets are secured offline which requires higher security. The private keys of these wallets are protected in different hardware like a paper document.

Features of Blockchain Wallet

• Whether it’s a hot wallet or a cold wallet, both are user-friendly.
• These wallets are highly secured.
• Enables instant cross-border transactions.
• Charges low transaction fees, while transferring funds.
• Offer multiple crypto transactions to the users.

Need For Blockchain Wallet

Now, many of you may ask why do an investor needs a blockchain wallet, when the cryptocurrency exchanges are already securing the tokens on their platform?

Technically, it is not important to have a wallet, but if a trader owns a blockchain wallet, then his/her cryptos are more secured on the platform. But before downloading this application, the user should do fine research on blockchain wallets.