Blockchain Wallets – What are they?

Blockchain wallets are built to make cryptocurrency exchange easier for users. They are software programs that allow users to sell, buy and keep records of balance for the cryptocoins or blockchain asset involved. The choice between software, hardware and paper wallets is made based on the size of the transaction and its frequency. If you have exchanged Bitcoin, Litcoin, or other cryptocurrencies, then you have interacted with the Blockchain technology through the wallet.

Blockchain wallets keeps a record of all exchanges related to transaction with the currency it manages and uploads the on the Blockchain. They do not save the currencies. The demand for Cryptocurrencies has increased the need for more blockchain wallets to be created. According to Statista, more than 21 million users have used Blockchain wallets for transaction by late 2017.

People tend to be curious how exactly these wallets work with Blockchain, how the secure interfaces came by, location for information storage and so on. Here, how these Blockchain wallets interfaces work is examined

How Does a Blockchain Wallet Work?

A blockchain wallet keeps private and public keys used in a transaction. It interacts with many blockchains to authenticate a transaction, which allows users to make transactions in one or more cryptocurrencies. What does a secure user transaction on blockchain entail?

An understanding of the terms public and private keys is necessary to better get a perspective on the operation of a cryptocurrency wallet. These keys are usually stored on the blockchain, and they are non-identical pairs of numbers, in which the public key can be shared with anyone and the private key is kept a secret.

Both keys work together like the lock and key mechanism for doors. Only the right door would be opened by the appropriate key. It doesn’t matter the number of people with the public key, since only its pairing with the correct private key will verify the user. Then the users can have access to the transaction information and the digital access value inside their wallet.

For example, when someone transfers a cryptocurrency to you, they essentially assign ownership of the units of currency involved in the transaction to your blockchain wallet address. You can only have access to these coins when your private key matches the public key of the digital currency assigned to you. At this point, no currency is exchanged but a transaction was made, stored on the Blockchain and the balance reflected as an increase in your wallet.

As mentioned earlier, three types of digital currency wallets exists for storing information on the Blockchain.

• The Software Wallets:
Like the name, these are wallets built into software applications for easy user interaction. They can be downloaded and used on the desktop or mobile devices. They are further classified into desktop, mobile and online wallets.

Desktop – They are used on personal computers and laptops, and can only be accessed through this devices. Here, access to the blockchain wallet is strictly restricted to the pc used. Although a safe choice, they can easily be targeted by malwares that will clear your funds in a blink.

Online – They run on the internet (cloud) through web browsers. Hence, they can easily be accessed with multiple devices. The secret keys used in the online wallets are stored and controlled on a third party platform online. Third party access to your private keys could represent a security threat to your account if they are compromised.

Mobile – It is one of the easiest access users have to participate in the blockchain rave. They are software that are used as mobile applications on devices, which gives unrestricted access from any location. Faster and easier access to transactions is enabled with mobile software.

• Hardware Wallets:

Here, hardware devices, such as USBs, hard drives, etc. are used to store the private keys on blockchain. They are very compatible with many user interfaces on the web and as well, supports multiple currencies. The hardware is connected to other devices with access to the internet, and then access is granted with a pin. All these currencies and transaction information are stored offline, they are the most secure way to interact with the blockchain.

• Paper Wallets:

Paper wallets have the keys generated by software application, which are then printed out to effect the transaction. It usually work with the software wallets to make transaction in cryptocurrencies possible. Digital funds are transferred from software to paper print on the public domain, and the funds are unlocked through the transfer of paper to software wallet through a process called sweeping.
Ultimately, no one user interface system is entirely secure for blockchain activities. Several others are still being built to accommodate many other features built on the technology. In the end, the ease of usage of blockchain for the internet community will be made easier if better interactive and user-friendly interfaces are created.