What does digital wallet mean?

What does digital wallet mean?

What does digital wallet mean? Life has become more and more networked, and assets have adapted to a more digital era. Everything is represented digitally, enabling its value to be instantly transferred and liquidated globally. So what does digital wallet mean? Let’s find out together. What does digital wallet mean 1

What is digital wallet

A digital wallet is equivalent to a bank account. Users can store, receive and send to others in a decentralized manner. Digital assets. Anyone with an internet connection can create their own unique wallet that registers its own private and public keys when interacting with the cryptographic network for such assets. The private key is the unique identity or password that gives the owner access to such a wallet. A public key is the address used by the owner to send or receive digital assets. Because every transaction is recorded in a cryptographically secure distributed ledger, anyone on the network can audit it while retaining the anonymous component of the sender. This enhances a more transparent, trackable and secure online experience for users, allowing them to look for more decentralized options in banking.

Creating a digital wallet is very easy. This is why people believe that blockchain applications can solve the problem of unbanked people, because more people in the world have access to the Internet rather than bank accounts. The new accounting system provided by blockchain simplifies the process of transferring value without the need for intermediaries.

Cryptocurrency Asset Wallet

Cryptocurrency uses blockchain technology for transactions. Each cryptocurrency asset such as Bitcoin, NEM, Ethereum and Komodo has its own native wallet that you can download from their official website. You can also find wallets that support multiple crypto assets. Remember, when you transfer cryptocurrency to another cryptocurrency, you are actually transferring the value that represents the currency. An Ethereum transaction could represent a real estate purchase in Dubai, a ship arriving from the port of Cartagena, or even a trading card. This is why we use “cryptocurrency assets” as the terminology discussed here, rather than the term “cryptocurrency.”

There are two types of wallets: hot wallets and cold wallets, which are stored securely on websites, applications.

Hot Wallets

The easiest and most convenient way to create your own cryptocurrency asset wallet is to use a hot wallet. It can be an app on your phone, computer or tablet, which are always connected to the web. When you store your crypto assets on an exchange like Binance, Huobi, or Coinbase, you store them in a hot wallet, they generate your private keys, and you don't necessarily have access to them.

Be careful when storing crypto assets on an exchange because if you are not the owner of the private keys, you do not own the crypto assets.

Cold wallet

The most secure wallet - stores crypto assets offline, making them impossible to hack. Users can use their private keys to enter the wallet interface and connect to the network to view their balances and exchange with other supported cryptocurrency assets. You can also memorize a 10-12 word seed phrase password and use it as the entry point to your digital wallet. What does digital wallet mean 2

1. The difference between digital wallet and ordinary wallet

1) Ordinary wallets put paper money directly. If it is lost, the money inside will be taken away by others. .

2) Digital currency wallets do not actually store assets directly. Use your private key, or the core key that controls your digital assets, to view or use your digital assets.

2. Differences from exchange accounts

There is a difference between placing assets in a digital wallet and placing them in an exchange. Strictly speaking, the assets stored in the exchange account are not at your own disposal. The digital currency wallet is the tool for you to truly control your own assets in the blockchain world.

And when you store your assets in an exchange account, the exchange here generally refers to our most commonly used centralized exchange. You deposit your coins into the exchange's large wallet, and the exchange will help you manage it.

In other words, from a security perspective, the assets stored in the wallet are completely at your disposal; but in a centralized exchange, if the exchange is stolen or the account is hacked, If so, you may not be able to get your assets back.

3. Functions of digital wallets

What are the main functions of a typical digital asset wallet?

The first is to save the key to control your blockchain assets, which we call the private key.

Secondly, it can check your assets. Based on your private key, public key and address, you can check how many Bitcoins, Ethereums, etc. you have on the blockchain.

Third, when transferring money from the wallet, the signature required during the transfer process and the function of broadcasting to the blockchain network will be used.