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Introduction to Cryptocurrency Wallets

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Because of the increasing advancement in technology, there have been various developments made in the economic sector. The multiple improvements made in the financial industry due to technology include introducing e-commerce and digital currency. These forms of advancements put in place were to help curb the previous problems that existed with the old ones. Digital currency is also known as cryptocurrency, which was put in place to tackle the issues associated with the old forms of currency. Cryptocurrency is a digital asset that acts as a medium of exchange (Ranch’s & Hileman, 2017). The digital assets are available in different forms, which vary in popularity and demand.  The cryptocurrency is also available through different crypto wallets. Crypto wallets are devices, physical mediums, programs, or services whose main function is to store public and private keys for cryptocurrency transactions. In addition to storing these keys, crypto wallets also help in encrypting and signing information. In simple terms, cryptocurrency wallets are a representation of a bank where all transaction information is kept. This paper looks into cryptocurrency wallets.

Cryptocurrency Wallets

Ledger Nano S

This cryptocurrency wallet is a USB-sized hardware wallet mainly used in Ethereum transactions. The USB can cater to many assets and always looks like a folding flash disk. The major advantage of Ledger Nano S is its wide application. The cryptocurrency wallet can be used in transactions involving different cryptocurrencies, including Bitcoin, Ethereum, Ethereum tokens, and another additional 30 types of different cryptocurrencies. The wallets work just like the normal flash drives, which need to be connected to a device before a transaction can be carried out.

The advantages of this cryptocurrency wallet are a wide range. The first advantage is that it can hold multiply apps used in cryptocurrency. The implication of this is that one can have a majority of apps used to trade cryptocurrency just in one place. The advantage of this is that when one fails, there is an option for another; thus, transactions are not delayed. Additionally, the wallets have reduced the risks of being hacked by software terrorists. This is because it is easier to hack the information available in software or the internet than hardware. The implication of this is that the transaction information of a person will always be safe.  Lastly, the wallet can store more than 30 cryptocurrencies and work with a wide range of cryptocurrency software.

Ledger Blue

The wallet at times is known as the Rolls Royce cryptocurrency because of its advanced technology and security. The same company makes the wallet like Ledger Nano S wallet. This wallet’s major feature is being lightweight, making it easier for transportation and storage. Generally, the wallet looks like a mini iPad or tablet. The wallet can work with most cryptocurrencies and apps.

The disadvantage of this wallet is its cost. The wallet is expensive to acquire. Despite the high cost, the wallet is the best option for guaranteeing security to transaction information. This is it’s an advanced hardware technology that exists.

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Learn Web3 in 100 Days – #1 What is the Internet and How Relevant to Web3

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I launched this new series to help people learn Web3. Web3 is not really a new idea but a progress idea builds on the top of Web2. And there is no way you can learn Web3 by ignoring Web2. There are many hypes around the Web3 but it is really just hype. The true Web3 is many decades away from us. However, it does not mean we will wait for Web3 to just come to us. Rather, we should explore Web2 and see how it can further improve through a Web3 idea.

This article will just touch a basis about the internet and the website.

TL;DR

What is the Internet

How the Internet Works

Internet vs. Web

How does  the Web Work

How It Matters in Web3

What is the Internet

Image Credit: https://en.wikipedia.org/wiki/ARPANET

The idea of the internet came from the project ARPANET. A project connects all university computers together and shares their research knowledge. But there is a rumor to believe the government was trying to build a  survival network to be resistant to nuclear war. It wasn’t available until officially decommissioning in 1990 and the internet started to flourish without potential threats from nuclear war. But the technology matured during the 70s and 80s as known as TCP/IP or Transmission Control Protocol and Internet Protocol.    

How the Internet Works    

The internet is a way to communicate between two computers. TCP/IP has a two-layer program. The higher layer TCP disassembles the message into little pieces called “data packets” and is transmitted into the internet to be re-assembled by the receiving computer’s TCP back into the original message. The lower layer IP is an “address manager” and gets each data packet to the correct destination. IP addresses are checked by every computer in a network to make sure messages are forwarded as needed.  

Internet vs. Web

The internet is different from the Web. Although people use them interchangeably, the internet is the infrastructure that runs the web. The World Wide Web was invented by Tim Berners-Lee in 1989. You need a web browser to view information from the web.

How does the Web Work

Thinking about when you are surfing the web. 

Step 1: Connect your internet

You will turn on your modem to connect your computer to the internet service provider. You will need the IP address ready to receive information from the internet service provider through TCP. 

Step 2: Enter a web address into the browser

You will type a web address into the browser called URL or Uniform Resource Locator. Then you will process and push the internet service provider to provide data of such address you input and the browser looks up the IP address for the domain name through DNS or Domain Name Server which translates the text into a number of IP addresses so that it can be easier to search.

Step 3: The browser sends an HTTP request to the target server to send a copy of the web page

HTTP or Hypertext Transfer Protocol is a language used for internet communication and is being encrypted. 

Step 4: Server approves the request and provides data

Once the server receives the request and decrypts the request message upon approval, it will transmit data into your computer through a browser.

Step 5: Load the data

Then, your browser will through the TCP/IP process download the data and reassemble packets to present messages into your browser.

How It Matters in Web3

The above steps can easily translate into the process of the wallet with only a simple twist: instead of one-to-one communication from the internet, the crypto internet runs on multiple nodes. 

Step 1: Connect your internet

You will turn on your modem to connect your computer to the internet service provider. You will need the IP address ready to receive information from the internet service provider through TCP. 

Step 2: Enter a wallet address into the browser

You will activate your wallet with your private key and input the public key address you want to send to. Then click send. 

Step 3: The browser sends a request to the crypto network and all nodes work to validate the transaction

Each block of a transaction is an unspent transaction output or UTXO. All nodes will work to validate the previous block to make sure such transaction does not duplicate in the previous records as the process to validate the transaction. Of course, validators will compete with each other to win this type of work known as a mining process and to win incentives to complete such work.  

Step 4: Miner approves the request and completes the transaction

Once miners confirm the transaction, it will be included in the block as the record and broadcast in the blockchain. Assume every condition has been met and a security check is passed (private key signature).

Step 5: Post the transaction

Then, you can find your transaction post in the blockchain and mark it as a success. The party who is supposed to receive the transaction will receive it.

In conclusion

You can easily imagine how the crypto and blockchain work to resemble how the internet and web work.  

The next topic I will touch on is server and browser to blockchain and wallet.

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Crypto Comics – What is Protocol

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Crypto Comics – What is Protocol

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I shared my thoughts about Protocol.

TL;DR

I shared what protocol is and how to use it in the crypto space.

Some Takeaway

A protocol is a set of rules for a computer program to run and follow. In crypto, a protocol is a pre-set of rules to establish the structure of the blockchain. Everyone has to follow the rule to join the crypto. It can only be changed through a collectively voting process in an ideal situation or change by the programmer in a real situation. Nonetheless, a protocol is a fundamental layer of the blockchain to build up the system through decentralization, security, and scalability.      

Web2 vs. Web3 Protocol     

Internet protocol is the most common protocol that you are using but never bother to learn from it. It is a foundation for many applications to run on top of it including well-known companies Facebook, Amazon, Twitter, and many others. Similarly, the crypto protocol is a foundation for many of their applications to run including Bitcoin, Ethereum, Dogecoin, and many others.   

Thin vs. Fat

Web2 protocol is a thin protocol which means there are many more applications to run on the top compared to a fat protocol in Web3 that only a few run on the top. In some sense, Web2 protocol seems more decentralized than Web3 protocol which is more heavily reliant on a few applications to run.

How to Understand a Protocol

Thinking about your computer system as Windows or Mac. A protocol is like a system from either Windows or Mac. Bitcoin or Ethereum is like software that runs on Windows or Mac. 

Why Protocol

A protocol gives secure access to the blockchain. Particularly on the argument of the double-spending issue. In order to make digital money work, one should not allow spending the same money twice or they can become printing as many as you want to and to diminish the value of the digital money. The protocol becomes critical to allow all participants to follow.

In conclusion

A protocol is a set of rules that the software program follows and allows everyone to interact within the system to follow. It is fundamental security of the system for people to access the blockchain. 

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Crypto Comics – What is Consensus

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Crypto Comics – What is Consensus

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I shared my thoughts about Consensus.

TL;DR

I shared what consensus is and how to use it in the crypto space.

Some Takeaway

A consensus is a process to reach an agreement. Rather than a centralized organization in which one or few makes the consensus agreement, a decentralization organization involves every participant to join the process of consensus. How consensus works may vary from type of mechanism, but the goal is the same at the end to reach an agreement.      

Consensus Through Competition      

Proof of Work is a way to reach consensus through competition. An algorithm to make computers work to find solutions and to compete between and to receive incentives. Such design is to make a fair game for participants to join and to receive a fair share. Only the problem is that participants can invest in their gears and outpaced their competitors. In such a way, it brings up the bar of the game and quickly games out the competitors. Otherwise, PoW still works through a consensus way to reach an agreement through a competition.  

Consensus Through Power

Proof of Stake is a way to reach a consensus through each participant’s stake or power. The way is to try to distribute fairness to everyone to participate. But at the same time, the more stake one controls, the more likely one receives more incentives. Consensus works for whoever has a more stake rather than the fewer stake participants.

Consensus Through Reduction

Proof of Burn is a way to reach a consensus through reduction of the supply. Such short-term reduction boosts the long-term promise returns for participants. This works only if one fairly reduces their shares in the system. Such consensus is harder to balance since everyone is unwilling to reduce their stake because they want to gain from the system eventually. 

More Ways of Consensus

There are many other ways to design a consensus. The goal is to be sustainable in the decentralized system without sacrificing too much on its security and scalability. How to balance these 3 factors is an art rather than science for each creator to discover.  

Why Consensus

Since there is no centralized party to oversee the system, bad actors will always try to gain from the system. To prevent but not to discourage participants, the consensus is a way to involve everyone to reach a balance of agreement that suppose everyone will agree. In reality, it is harder to reach a consensus as it sounds it will. To rule out the odd that someone will damage the system, two-thirds of the number must agree on the consensus as known of the Byzantine Generals’ problem. Such game theory guarantees the security of the system and makes sure such a system is working properly. 

In conclusion

Consensus is a process to reach an agreement in the decentralized system. To ensure the system will work properly, the consensus must make sure two-thirds of the participants agree on one and others without jeopardizing the security of such a system.  

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Crypto Comics – What is Encryption

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