Cryptopedia
Wallet
As one of the things we use on a daily basis, wallets can store cash, bank cards and ID cards. With breakthroughs in information technology, Wechat pay, Alipay and other digital wallets emerge to facilitate online transactions. However, wallets for trading cryptocurrencies are different from those ones. Addresses and private keys can be stored in a cryptocurrency wallet. Cryptocurrencies are kept in an address; private keys are needed to confirm transactions. Therefore, a cryptocurrency wallet can be viewed as a wallet in which you can keep your bank cards and passwords.
There are 6 types of information stored in a cryptocurrency wallet:
1. Private Keys
A private key, the most important information kept in the wallet, is generated randomly and unchangeable. In effect, through hashing, the private key generates the public key which, in turn, generates the public address. The private key, kept in secret by a person, is required to create a digital signature for every transaction. So the ownership of the private key gives control over assets associated with a particular wallet address.
2. Public Keys
Public keys can be disseminated widely. A person should have your address and public keys for cryptocurrency transfer.
3. Address
Cryptocurrencies are received, paid and stored in an address.
4. The Seed Phrase
A private key is a random 256-bit number, which is difficult to be memorized. To keep a private key, one can transform it into a BIP39 seed phrase, which is an English word list that is easy to be kept in mind. Therefore, transactions can be also confirmed by using a seed phrase.
5. Password
Some cryptocurrency wallets have passwords for greater transaction security. A user should enter his password to transfer cryptocurrencies. The password can be set or changed by the user.
6. Keystore
As a backup of the private key, Keystore is encrypted by using the private key and the password of a user. The user can access his wallet with it. However, a new Keystore should be generated if the user changes his password.
Among the above-mentioned types of information, only the public key and the address can be known to others. The user can trade cryptocurrencies with his wallet as long as he has the private key, the seed phrase or the Keystore. Nevertheless, if the user loses all these three types of information, he will no longer be able to access his wallet.
For new cryptocurrency wallet users, cryptocurrency wallets should be downloaded from their official websites, which can prevent risks. Moreover, the private key, the seed phrase, and the Keystore should be backed up and kept as secrets, for asset protection. The best way to keep them is to write them down on a paper and put them in a safe deposit box.
There are 6 types of information stored in a cryptocurrency wallet:
1. Private Keys
A private key, the most important information kept in the wallet, is generated randomly and unchangeable. In effect, through hashing, the private key generates the public key which, in turn, generates the public address. The private key, kept in secret by a person, is required to create a digital signature for every transaction. So the ownership of the private key gives control over assets associated with a particular wallet address.
2. Public Keys
Public keys can be disseminated widely. A person should have your address and public keys for cryptocurrency transfer.
3. Address
Cryptocurrencies are received, paid and stored in an address.
4. The Seed Phrase
A private key is a random 256-bit number, which is difficult to be memorized. To keep a private key, one can transform it into a BIP39 seed phrase, which is an English word list that is easy to be kept in mind. Therefore, transactions can be also confirmed by using a seed phrase.
5. Password
Some cryptocurrency wallets have passwords for greater transaction security. A user should enter his password to transfer cryptocurrencies. The password can be set or changed by the user.
6. Keystore
As a backup of the private key, Keystore is encrypted by using the private key and the password of a user. The user can access his wallet with it. However, a new Keystore should be generated if the user changes his password.
Among the above-mentioned types of information, only the public key and the address can be known to others. The user can trade cryptocurrencies with his wallet as long as he has the private key, the seed phrase or the Keystore. Nevertheless, if the user loses all these three types of information, he will no longer be able to access his wallet.
For new cryptocurrency wallet users, cryptocurrency wallets should be downloaded from their official websites, which can prevent risks. Moreover, the private key, the seed phrase, and the Keystore should be backed up and kept as secrets, for asset protection. The best way to keep them is to write them down on a paper and put them in a safe deposit box.
