What is a Digital Wallet?
A digital wallet is an electronic device that is used for electronic transactions. This can include online purchases with a computer or a smartphone. A bank account can be linked to a digital wallet. Customers can include additional information like their driverโs license, shop card(s), health card, and other IDs stored on the phone. One of these credentials are usually needed to verify credit card transactions and can be passed to a merchantโs computer terminal wirelessly via near field communication (NFC). Digital wallets were originally made not just for purchases and other financial transactions but also to authenticate the person's credentials. For example, a digital wallet can be used to verify the age of a buyer at a store when purchasing alcohol. The system has already gained popularity in Japan, where digital wallets are known as "wallet mobiles".
A digital wallet in the context of cryptocurrencies is a digital wallet where private keys are stored for digital currencies like bitcoin.
A digital wallet has both a software and information component. The software provides security and encryption for the personal information and for the actual transaction. Typically, digital wallets are stored on the client side and are easily self-maintained and fully compatible with most e-commerce Web sites.
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What is a Private Key?
In an asymmetric key encryption scheme, anyone can encrypt messages using the public key, but only the holder of the paired private key can decrypt. Security depends on the secrecy of the private key.
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A private key in cryptocurrency space is a secret number that allows coins to be sent to another wallet. Every digital wallet utilizes one or more private keys, which are included in the wallet file. Each private key has a mathematical relationship with all wallet addresses generated for the wallet.
A private key is a tiny bit of code that is paired with a public key to set off algorithms for text encryption and decryption. It is created as part of public key cryptography during asymmetric-key encryption and used to decrypt and transform a message to a readable format. Public and private keys are paired for secure communication, such as email. A private key is also known as a secret key.
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The private key is the "ticket" that allows the user to transfer coins so it is extremely important that these keys are kept secure. Private keys are usually kept on computer files, USB drives or even on paper, in cases where they're short enough to be printed and typed.
What is a Public key?
Public key cryptography is also called asymmetrical cryptography. In a cryptographic system that uses pairs of keys, there are public keys which may be widely disseminated, and private keys which only the owner can keep. This accomplishes functions of authentication where any person can encrypt a message using the receiver's public key but the resulting encrypted message can only be decrypted and read with the receiver's private key.
Why is MyEtherWallet Secure?
MyEtherWallet is not the same as other traditional digital wallets because other web wallets keep your private keys online in their servers. If you're using MyEtherWallet, you control your Ethereumโs private key on your machine.
This wallet is open-source and they don't use any third-party servers where you can write and access smart contracts. You can also connect a hardware wallet such as Trezor or Ledger Nano S to access your funds in MyEtherWallet's software interface.
MyEtherWallet never transmits, receives or stores users' private keys, passwords, or other account information. When you create an account with them, you are generating a cryptographic set of numbers: your private key and your public key (wallet address).
The handling of both keys happens only on your computer, inside the browser. They do not charge any transaction fee. You are simply using their interface to interact with the blockchain directly. This means that hackers would need to hack specifically into your computer if they want to get a hold of your private key, or they would have to trick you into giving them your private key. You will be completely responsible for your money and the transactions you make. Just like any other wallet, if you send your private key to someone, they will have full control of your account.
Another good thing about MyEtherWallet is it educates every new user about the basics of the technology behind it. They insist on the user reading a few slides with important security measures and even the basics of blockchain technology before proceeding with the registration process.
I really appreciate the educational prompts and the disclaimers. Theyโre well-intended for everyone to be able to secure their private keys because itโs technically the only entry-point for any thieves to steal. Attacks are mainly phishing attacks since private keys are handled by their respective owners.
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MyEtherWallet even developed a Chrome Browser extension that not only allows you to create wallets but implements countermeasures against phishing attacks.
Please upvote, resteem and follow me, thank you.
Man, would be great if I could find a wallet that could hold all my diff crypto's. I don't like letting them sit in my exchange, but I also don't want to have 5 different websites or wallets on my PC. Wish there was just one wallet to rule them all!
Coinomi
It is only available on mobile devices but has a ridiculous amount of coins/tokens - shapshift and changelly support internal to the wallet so you can change between currencies INSIDE your wallet.
The private keys NEVER leave your phone.
It is anonymous, and you can mine directly to it.
It also has a very complex word series phrase recovery system.
https://coinomi.com/
Now that may be the solution I've been looking for! Going to check that out.
Well, it has a lot of options, but nothing to hold my EOS, ADA, or IOTA :-(
I think ledger nano s has Ada and Iota support coming soon.
Yeah, I've been procrastinating on buying one of those. The waiting list is just crazy. But I really like that better than an online wallet, iphone wallet or PC wallet.
Yes, the wait list got super crazy at the end of last year. I picked up 4 maar the beginning of 2017. They are much more secure than any other option, have you looked also at Trezor?
The problem with all the other wallets are that they are only as secure as your device. I only use them as a hot wallet with minimal amounts for quick use (hardware wallets are a bit more of a pain to use).
Exchanges are only as secure until the day they are not. Don't trust them with anything unless you are day trading and even then...
Actually check out Coinomi -- the recovery seed is a mnemonic phrase that is not stored on your phone or android device -- they recommend storing on an offline device and paper -- without that phrase your wallet is bricked.
Someone has to have physical control of your phone because there is literally no central account, and all keys are stored on the phone itself -- just like a hardware wallet
With shapshift internal to Coinomi -- you can exchange your EOS to a Coinomi supported currency -- and back
https://info.shapeshift.io/about
all inside the wallet
LOOK INTO ETHOS. Will be all your dreams come true if they can deliver and why i'm invested.
Cool, I'll check it out.
I think it's so many peoples' dilemma. I guess coins are just different from each other and the software can't handle so many different types.
I think what would solve the problem is if the exchanges themselves offered a 3rd party website with all the wallets. I mean, they already have 90% of them built into their exchange. But I suppose they have no motivation to do that.
Coinomi supports over 100 coins and tokens including ETH, BTC, ZEC, LTC, etc.
They are working on support for Monero
Scroll down for supported coins
https://coinomi.com/
It can be passed to a merchantโs computer terminal wirelessly via near field communication (NFC).
Hi @hiroyamagishi, thank you for the detailed explanation. This is a big help especially for those who just started on cryptocurrency. I will resteem it so that my friends will be informed.
Hi, I want believe that Luno is a digital wallet, am I right?
Well organized structure, great post, helpful, educated, valuable information thanks @hiroyamagishi
Thank you.
MEW is a great way to store among other things Ethereum. @hiroyamagishi how do you feel about the split between it's developers? Recently it had a fork and one of the original founders of MEW, Taylor started her own project called MyCrypto.
The split was really intriguing and there's a drama behind it, but it doesn't seem to affect users so to be honest, it's totally fine with me. It's newsworthy and worth knowing though.
dear steemer another nice post of yours. I upvote ypu :) and also follow you :) upvote me and follow me please :)
Thanks!
very nice and informative post. great work mate!!!!
It's a pleasure. Thanks for visiting my blog.
MyEtherWallet was the first wallet I had when I got into the crypto world. Itยดs very simple and easy to learn the details, I love it especially because of itยดs utility. (Probably the best to hold ETH)
Security is very important, so no one should hold their coins in the exchange platforms, and one of the solutions is very well presented in this post. Thanks @hiroyamagishi
Kraken is a very secure exchange.
And many of the exchanges have gone to cold-storage of all currencies not necessary for liquidity.
And if you want to trade, exchanges are the ONLY current way to trade pairs.
Really great wallet! I've connected Metamask to it.
Super glad I'm using Myetherwallet! Thanks for sharing this useful post!
MEW security is very influential, on developers who provide free airdrop tokens. Indirectly gives a positive value to ethereum as a benchmark token based on erc20.
articles that are informative friend, you describe very well I also have some articles, maybe you want to visit my blog and read it
Very useful information for a new comer to crypto, and also I think you should make a post about how to use a SHIFT card to spend your crypto on everyday things, it turns your crypto into a visa card that is widely accepted! Followed u,upvoted and resteemed.
Thanks for a good information. My ether wallet is very safe and secure token and all erc 20 technology cryptocurrencies (of course after external wallets like ledger etc.).
But we need to check the correct my ether wallet website adress because it could be easily changed and hacked! Another thing is to remember that after loosing a password and that important file which is gaven in registration - the account is lost.
Grettings
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Moving from MyEtherWallet to Ledger (beginner's guide)
http://bit.ly/2EqEDFh