Blockchain and Cryptocurrency Intermediate - Blockchain CryptoGraphy: How Blockchain Wallets CryptoGraphy Works
Blockchain wallets are one of the essential aspects of blockchain and cryptocurrency as it serves as a gateway to store cryptocurrency assets and also interact and make transactions on the blockchain network. A true decentralized blockchain wallet provides the user with both the public key and private key which gives the user full control of the wallet. The private key is very important and must be key secret as that is what gives any user full ownership and control of a blockchain wallet.
The way a blockchain wallet cryptography works is that each blockchain wallet has a unique public and private key. The wallet uses a special algorithm to generate the key pair that consists of public key and private key. This key pair are linked to each other mathematically. In order words, it uses asymmetric cryptography or encryption method. Anyone can produce the public key from the corresponding private key but cannot produce the private key from the corresponding public key. The public key becomes the wallet address that can be used to check wallet balance and also receive cryptocurrency. The private key becomes the proof of ownership of the wallet and is what is used to sign transactions using the wallet. Public key which also serves as the wallet address can be given to anyone or made public without any issue. However, the private key should only be secret and only known by the wallet owner.
Types of crypto wallets
At the moment, there are various types of crypto wallets that can be used to store cryptocurrency, send and receive transactions on the blockchain network. There are four main types of crypto wallets namely; web wallets, software wallets, hardware wallets and paper wallets.
Web Wallets - These type of crypto wallets are very common and popular in the blockchain and crypto space because it is the most easily accessible and anyone can make use of it using any device with a web browser. Web wallets also known as online wallets are wallets that live on the web and requires a user to make use of an internet browser in other to have access the web wallet and interact with the web wallet. A clear example of a web wallet is myetherwallet which is a web wallet for storing and sending and receiving ethereum and ethereum-based tokens.
Software Wallets - These types of wallets does not live on the web, but requires the user to install the software wallets on the supported device which can either be mobile device or computer device. This means that software wallets are both mobile wallets which are installed on mobile devices, and desktop wallets which are installed on computers. Since a software wallet does not live on the web, it does not require internet connect to access them, however, internet connection is needed to process the transactions. A clear example of software wallets are trust wallet (mobile wallet), atomic wallet (both mobile and desktop wallet), exodus wallet (both mobile and desktop wallet), etc.
Paper Wallets - These types of wallets lives offline. It is regarded as one of the safest type of wallet because it does not connect to the internet. Paper wallets are printed on papers with the public and private keys. Cryptocurrency sent to a paper wallet is very secure if the paper wallet is in a secure and safe place.
Hardware Wallets - These types of wallets are very secure because it is a physical crypto wallet and does not by itself connect to the internet, instead, the hardware wallet is used to authenticate the transaction on gateway that is either a web interface or installed software interface on a supported device that connects to the blockchain network through the internet. Since hardware wallets are physical device, they store the keys securely in the chip of the device that is not exposed, and allows the wallet user to access the wallets securely.
