What is a Crypto Wallet (in short)?

A blockchain wallet is a digital application or device that allows you to securely store, manage, and interact with your cryptocurrency assets. It serves as a virtual wallet for your digital currencies, just like a physical wallet holds your cash and cards. However, instead of storing physical money, a blockchain wallet holds digital tokens, such as Bitcoin (BTC), Ethereum (ETH) or Non-Fungible Tokens (NFTs).

Connecting a Wallet

Connecting a wallet is like logging into a website. It allows you to interact with the blockchain and perform transactions. The dApp only gets access to the information you allow it to access.

Wallets for WAX blockchain:

There are two main Wallets for the WAX Blockchain:

WAX Cloud Wallet: A web-based wallet, no additional downloads required. Recommended for beginners.
Anchor Wallet: A desktop wallet for WAX, requires a download and installation. Allows to connect a Ledger Hardware Wallet. Recommended for advanced users, for maximum security.

A more in-depth look at Wallets

A blockchain wallet consists of two essential components:

1. Public Key (Address)

save to share: Every blockchain wallet has a unique identifier known as a public key or wallet address. You can share your public key with others to receive funds or perform transactions. Think of it as your bank account number in the traditional banking system.

2. Private Key

never share: The private key is a secret cryptographic code that corresponds to your wallet's public key. It is crucial to keep your private key secure and confidential. Your private key grants access to your funds and enables you to sign transactions, proving ownership of the cryptocurrency stored in your wallet. Losing your private key may result in permanent loss of access to your funds.

Types of Blockchain Wallets

Blockchain wallets come in various forms, each offering different levels of security and convenience. Here are the most common types:

1. Software Wallets

Software wallets are applications that you can install on your computer, smartphone, or tablet. Alternatively, they can also be hosted in the cloud, requiring no downloads. They offer convenient access to your funds, usually through a user-friendly interface.

2. Hardware Wallets

Hardware wallets are physical devices specifically designed for securely storing cryptocurrencies. They offer an offline storage solution, keeping your private keys offline and away from potential online threats. Hardware wallets are considered one of the most secure options for storing cryptocurrencies.

3. Paper Wallets

A paper wallet involves printing your wallet's public and private keys on paper and storing it physically. It provides an offline storage method, but it's important to keep the paper wallet safe from damage or loss. Paper wallets are not as user-friendly as software or hardware wallets, making them less suitable for beginners.

Custodial vs. non-custodial

Custodial wallets are provided by third-party service providers who hold and manage your private keys on your behalf. They offer convenience and user-friendly interfaces, making them suitable for beginners. However, using custodial wallets means relying on the security measures of the service provider and entrusting them with the custody of your funds. It's crucial to choose reputable and trustworthy providers to ensure the safety of your assets.

Non-custodial wallets, give you full control over your private keys. You are responsible for securely storing and managing them. Non-custodial wallets prioritize user autonomy and security, but they may require more technical knowledge and careful backup practices. With a non-custodial wallet, you have complete ownership and control over your funds, reducing the risk of relying on a third party.

Seed Phrase

Non-custodial wallets often utilize a seed phrase, also known as a recovery phrase or mnemonic phrase. This is a randomly generated sequence of words that serves as a backup of your private keys. The seed phrase is typically provided to you during the wallet setup process. It's important to securely store the seed phrase offline, as it can be used to restore access to your wallet in case your device is lost, damaged, or stolen. The seed phrase adds an extra layer of security and ensures that you have full control and ownership of your funds in a non-custodial wallet.

How Blockchain Wallets Work

Blockchain wallets interact with the underlying blockchain network to facilitate transactions. Here's a simplified overview of the process:

Receiving Funds: When someone wants to send you cryptocurrency, they send it to your wallet's public key or address. The transaction details are recorded on the blockchain network.
Checking Balances: Blockchain wallets can retrieve and display the balance associated with your public key by querying the blockchain network. This allows you to view your holdings and verify incoming transactions.
Sending Funds: To send cryptocurrency, you specify the recipient's public key, the amount to transfer, and sign the transaction with your private key. The wallet broadcasts the transaction to the blockchain network, which verifies and adds it to the blockchain.
Transaction Confirmation: The blockchain network confirms transactions by reaching a consensus among network participants. Once the transaction is confirmed, the recipient's wallet balance is updated, reflecting the transferred funds.

Security Considerations

Blockchain wallets involve managing digital assets and require proactive security measures. Here are some important security considerations:

Backup: Regularly backup your wallet's private keys or recovery seed phrase and store them securely offline.
Password Protection: Set a strong password or passphrase to protect your wallet application from unauthorized access.
Two-Factor Authentication: Enable two-factor authentication whenever possible to add an extra layer of security to your wallet.
Beware of Phishing: Be cautious of phishing attempts and only use official wallet applications or reputable sources to download software.