Blog manager: Giovanni Capaccioli

Translated by: Lawlinguists

The Wallet: ways of use, features and some numbers

Intro

The wallet

In previous articles we described blockchain: the reason why it was born, the nodes and the miners, the transactions that once validated come into blockchain, the main validation methods of transactions and blocks (consensum) used in it .

We have learned to understand what happens when two users create a transaction and put it in blockchain.

We have learned about 3 types of consensums that are most commonly used for the 2000 and more cryptocurrency currently in existence: PoW (Proof of Work), PoS (Proof of Stake), PoA (Proof of Authority).

We then talked about the token: the various types of tokens,  what they are and what they are for.

We discussed Smart Contracts, understanding how they are composed, what they are for and why they were born and then implemented in blockchain.

We then widely understood the reasons why the blockchain is today considered as important as the revolution (technical and thought) of the world wide web , so much so that even Facebook with Libra has decided to officially take part in it.

The wallet as a tool

But once we decided to try to enter this world, testing its potential, what tools should we learn to use?

Taking advantage of the blockchain from the user side (without participating in the construction of the hardware and software substructure necessary for its development) is not as complicated as one might think: it is sufficient to have a wallet . It is not necessary to be forcibly miners and / or nodes in order to use the blockchain.

The word wallet stands for “digital wallet. Its purpose is comparable to a home banking, a smartphone credit top up dashboard , or to our PayPal account that we use to buy for example on the internet: it has the purpose of transferring money, but, in this case, with the difference which allows access to the potential of the blockchain.

Types of wallets

It is basically a software that allows you to buy or sell cryptocurrency. The software version is actually the most used: it can be installed on desktop PCs, laptops, tablets, smartphones or even to be consulted online from anywhere without having that particular device (computer or smartphone) at hand.

However, they also exist in a hardware version: for example, as USB pen , easily transportable, it can then be quickly connected to any device (PC, laptop, smartphone tablet) to complete purchases or sales in cryptocurrency.

Paper wallets are very popular from the very beginning: these types of wallets require a Qr-Code, which can then be scanned by any device equipped with special software to enable a money transfer ( for example).

The use of the Qr-Code is very developed, especially in asian countries: this easy to use tool allows it to be “read” by the camera of mobile phones or tablets (previously enabled for this type of reading). Reading this Qr-Code allows the user to quickly send the desired sum (money) to the merchant who exposed this Qr-Code.

What is the wallet and its advantages for?

The advantages of a system of this magnitude are considerable, starting with the payment and filing speed of the receipt and/or invoice, both on the user side and on the merchant side, allowing (for example) the operator to be able to generate a history of invoices or receipts “certified” by the blockchain itself.

As we previously learned in the transaction article, the blockchain system involves the use of public and private keys. They are of great importance here too, in personal wallets. Inside the wallets they work for:

● enable user recognition: if a user loses the private key he could not access his wallet;      

● start the transactions: when the user “A” creates a transaction, the software, starting from the private key, generates a “digital signature”, as we learned in the transaction article;      

“geolocate” the correct wallet with which to communicate to buy and/or sell and/or simply transfer money: each wallet has an address, comparable to a banking IBAN. It is an alphanumeric code which we must then use as a personal “address” to communicate to those who must send us some money.      

Just above we have taken PayPal as an example: here we have our first and last name as identification, but above all our e-mail. In blockchain, everything is replaced by alphanumeric codes generated automatically and randomly by the wallet software.

To date there are no particular limits to the number of wallets a user can create, unless a rule is entered by the used blockchain system. Once the wallet has been created, we will have a platform (dashboard) with which we will be able to perform operations such as:

● keep cryptocurrency;                    

● send or receive cryptocurrency;                    

● check the history of transactions that have been stored here.                    

By connecting your wallet to the various e-commerce (e-bay and similar) present on the network that enable the payment and receipt of cryptocurrency, we can even use it to buy and/or sell on the internet.

Wallet: a bit of numbers

There are really many wallets available on the market, only for Bitcoin we can see some examples here .

At numerical levels, only for Bitcoin reliable sources speak of a number that exceeds 40 million open wallets

Wallets available on the market

While for Ethereum the figure surpasses 70 million

Ethereum wallet

Being a digital tool, all the rules that we follow with any other digital tool apply to the wallet, that is to pay attention to viruses and / or trojans that could be present on the devices we use to connect to it, whether we do it through software or through usb or Qr-Code (or NFC).

The wallet itself, leaning on the entire blockchain structure, is an instrument of high security, but being digital, it must be used with common devices such as a computer or a smartphone. For this reason we need to follow the same rules of any other digital tool, for exemple pay attention to viruses and/or trojans that could be present on the devices we use to connect to it, whether we do it via software or via USB or QR-Code ( or NFC).