The Bitcoin Wallet is the place where Bitcoin is stored, it is like a kind of «bank account» since it contains numbers / characters that fulfill the function of a «unique identifier», from which you can make transfers with Bitocin (or simply receive Bitcoin). You can also say that a Bitcoin Wallet is a kind of “file” that contains a list of cryptographic keys that are used to create Bitcoin “addresses.”
Bitcoin addresses are intertwined to a specific amount of the cryptocurrency, and in turn, serve to confirm transactions made on the blockchain network. A Bitcoin Wallet is a special type of encrypted file (Wallet.dat), whose password must be known only by the user of the digital wallet, likewise, there are various services offered by wallets to store Bitcoins online.
Another definition of a Wallet
The Wallet or cryptocurrency wallet, is the bridge that allows you to manage the cryptocurrencies themselves, is a piece of hardware or software, which allows you to perform receipt and shipment operations of it through the Blockchain network of each currency. It was designed with the exclusive function of storing and managing keys (both public and private) of the cryptocurrencies of our property.
Operation of the Wallets
The wallets or Wallets of cryptocurrencies, are one of the most important elements when operating with them, since they are the ones that allow the sending or receiving of payments in crypto assets. It differs from the traditional financial system in that both Bitcoin and the other cryptocurrencies are fully digital, do not exist in physical and operate through cryptography.
For this reason, the design of purses is of the utmost importance in order to operate and manage the funds. Although the term “wallet” is similar to the one used to protect physical money, the reality is that in cryptocurrencies, what is actually stored in the Wallets are both public and private keys.
Public and private keys
A private key behaves like the PIN number of a “conventional card” and is what allows access to the account, on the other hand, the public key is similar to a bank account (and has a certain resemblance to an email). For example, when someone sends a Bitcoin, they are sending “a security” in the form of a transaction and transfer ownership to the recipient.
In order for the Wallet to register the entry, and the recipient can use the Bitcoin, the private key must match the address to which the currency was sent. Keeping the private key gives us the “absolute control” over the funds associated with the public keys, which is why it is very important not to reveal that private key to anyone since with it anyone could own our Wallet or cryptocurrencies.
Importance of Wallets
Bitcoin and other cryptographic systems operate fully decentralized (there is no agency that controls them), it is for this reason that the Wallets have a very important role within the system, since they function as «basic infrastructure pieces», allowing to operate with cryptocurrencies , check the balance and see the operations performed. They also allow the funds to operate with “total control” over them.
This means that the permission or authorization of a third party is not required to carry out an operation, in addition to the security and trust it generates to carry out operations, the Wallets also allow us to “sign” our transactions without the need for private keys to have to “ leave »the device. In order for a transaction to be carried out, the network confirms said movement and the recipient can make use of the funds (once the digital signature has been carried out in a mandatory manner), in this way it is confirmed that whoever performs the operation is the real owner. »Of the funds and not a third party.
What do you think about this topic? Do you know how Bitcoin wallets work?
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