🤡 How can you be considered a crypto person without a wallet? However, many newcomers do not understand what this wallet actually is or what it can be used for.
Joker will translate for everyone with his own understanding, hoping to help everyone ⤵️.
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1. What is a blockchain wallet?
✨ As the saying goes, 'To do a good job, one must first sharpen their tools', so we first need to understand what a blockchain wallet is.
This wallet is not a physical wallet that holds cash, but a software program that stores key information related to cryptocurrencies (such as private keys and public keys) 📒.
The key information stored in the blockchain wallet not only proves the user's ownership of cryptocurrencies but also allows the user to conduct transactions.
Therefore, this wallet is very important for everyone.
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2. How does a blockchain wallet operate?
First, let's briefly talk about the generation logic of blockchain wallets:
The system algorithm first generates a random number as the private key 🗝️, then this private key can be used to generate a mnemonic phrase through an algorithm, and it can also be used to derive the public key through an algorithm. The public key is then hashed to derive the wallet address.
This makes it clear that a blockchain wallet includes: private key, public key, wallet address, and mnemonic phrase.
Let's put it this way, the private key is equivalent to your 'payment password' used for transaction confirmation, and this password should not be shared with anyone. The public key is similar to a bank account number, which can be shared publicly. The wallet address is used to receive cryptocurrencies. The mnemonic phrase is a simple and memorable tool used to back up and restore the private key, so this should also be kept confidential.
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3. What types of blockchain wallets are there?
Generally, blockchain wallets are divided into two categories: hot wallets and cold wallets. In fact, based on the names, we can roughly guess that 'hot' means liquid, while 'cold' means fixed.
A wallet that can connect to the internet is a hot wallet, which is more suitable for daily transactions and has relatively lower security.
For example, the Binance Chain Wallet is a hot wallet, and other common hot wallets include: OKX Web3 Wallet, MetaMask, etc.
Conversely, a wallet that cannot connect to the internet is called a cold wallet.
For example, hardware wallets like Ledger Nano S/X and paper wallets.
Finally
I believe everyone has a certain understanding of blockchain wallets. Generally speaking, the most commonly used ones are hot wallets created on exchanges.