A blockchain wallet is a digital wallet that allows users to store and manage their bitcoin, ether, and other cryptocurrencies. Blockchain Wallet can also refer to the wallet service provided by Blockchain, a software company founded by Peter Smith and Nicolas Cary. A blockchain wallet allows transfers in cryptocurrencies and the ability to convert them back into a user’s local currency.
KEY TAKEAWAYS
- Broadly speaking, a blockchain wallet is a digital wallet that allows users to store, manage, and trade their cryptocurrencies.
- Blockchain Wallet is also the name of a specific wallet service provided by the company Blockchain. This is an E-wallet that allows individuals to store and transfer cryptocurrencies.
- Blockchain Wallet users can manage their balances of bitcoin, ether, and other crypto assets.
- Blockchain Wallet charges dynamic fees, meaning that the transaction fees can be different based on factors such as transaction size.
- Blockchain Wallet has a number of security features to prevent theft, including by company insiders.
Understanding Blockchain Wallet
E-wallets allow individuals to store cryptocurrencies and other digital assets. In the case of Blockchain Wallet, users can manage their balances of various cryptocurrencies such as the well-known bitcoin and ether as well as stellar, Tether, and Paxos Standard.1
Creating an e-wallet with Blockchain Wallet is free, and the account setup process is done online. Individuals must provide an email address and password that will be used to manage the account, and the system will send an automated email requesting that the account be verified.
Once the wallet is created, the user is provided with a Wallet ID, which is a unique identifier similar to a bank account number. Wallet holders can access their e-wallet by logging into the Blockchain website, or by downloading and accessing a mobile application.
The Blockchain Wallet interface shows the current wallet balance for crypto-assets and the user’s most recent transactions. Users can also access the price charts and see the value of the funds in the chosen local currency of the user. There is also an educational Did You Know section sharing crypto facts and news.
How A Blockchain Wallet Works
Users can send a request to another party for a specific amount of bitcoin or other crypto-assets, and the system generates a unique address that can be sent to a third party or converted into a Quick Response code or QR code for short. A QR code is similar to a barcode, which stores financial information and can be read by a digital device.
A unique address is generated each time the user makes a request. Users can also send crypto-assets when someone provides them with a unique address.5 The send-and-receive process is similar to sending or receiving funds through PayPal but uses cryptocurrency instead. PayPal is an online payment provider that acts as a go-between for customers and their banks and credit cards by facilitating online transfers through financial institutions.
Users can also exchange bitcoin for other crypto-assets and visa-versa, known as swapping. This practice is an easy way to switch out crypto without leaving the security of the Blockchain Wallet. Users are shown a quote indicating how much they will receive based on the current exchange rate, with the rate changing depending on how long the user takes to complete the transaction. Swaps should take a couple of hours while the transactions are added to each currency’s blockchain. However, if it takes longer than six hours, users should contact customer support.
Blockchain Wallet only allows six crypto-assets for swapping: Bitcoin, Ethereum, Bitcoin Cash, Stellar Lumens, Tether, USD Digital, Wrapped-DGLD.
Users can also buy or sell crypto through the Buy Crypto interface available to Blockchain Wallet. Buy and sell services are not available in all locations. To make a purchase, a user can either transfer funds from a bank, use a credit or debit card, or use the available cash balance. There is a daily limit of $25,000 and a weekly limit of $100,000 as well as a minimum buy order of $5 and a maximum buy order of $25,000.
Blockchain Wallet Fees
However, it’s important to note that the Blockchain Wallet uses a process they call dynamic fees, meaning that the fee charged per transaction can be different based on various factors. Both the transaction size and the conditions of the network at the time of the transaction can greatly impact the size of the fee. Only so many transactions can be processed within a block by the high-powered computers called miners. The miners typically process the transactions that have the highest fees first since it’s financially advantageous to them.
Blockchain Wallet offers a priority fee, which could possibly get the transaction processed within an hour. There’s also a regular fee, which is cheaper but the transaction would likely take more than an hour. Fees can also be customized by the customer. However, if the customer sets the fee too low, the transfer or transaction could be delayed or rejected.12
Blockchain Wallet Security
Wallet security is an important consideration for users, as a compromised account may result in users losing control of their assets. Blockchain Wallet has several levels of security to protect user funds from any possible attacker, including the company itself.
Passwords
Like other digital services, Blockchain Wallet accounts require passwords for the users’ protection. However, the Blockchain company does not store user passwords, and cannot reset the password if lost. This measure prevents company insiders from being able to steal cryptocurrencies. If a user forgets or loses their password, the account can only be recovered with a mnemonic seed.
Mnemonic Seeds
A mnemonic seed is a random string of English words that function similarly to a password. If a user loses access to their phone or device, the seed can be used to restore the wallet, including any cryptocurrencies. Like passwords, the Blockchain company does not store users’ mnemonic seeds. These seeds follow an industry standard, meaning the wallets can be recovered even if the company goes out of business.
Optional Security Methods
In addition to the protections outlined above, there are also several optional security measures that are not required but can help secure user wallets against outside attacks. To reduce the danger of phishing, the Blockchain Wallet allows users to use two-factor authentication or IP whitelists to prevent log-ins from unfamiliar devices. It is also possible to block access through the Tor network, thereby preventing prospective hackers from disguising their IP addresses.
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