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💰 Wallet Operations

A wallet, in the context of blockchain and cryptocurrencies, is a digital tool that allows users to securely store, manage, and transact with their digital assets such as cryptocurrencies and tokens.

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Wallets come in various forms, including hardware, software, and even paper wallets. The primary function of a wallet is to securely store a user's private keys, which are needed to access and manage their assets on the blockchain.

Types of Blockchain Wallets

Hot Wallets

These are online wallets accessible through internet-connected devices. Examples include web wallets like MetaMask, mobile wallets, and desktop wallets. Hot wallets are convenient but more susceptible to hacking.

Cold Wallets

These are offline wallets, including hardware wallets and paper wallets. Cold wallets are more secure against online threats but can be less convenient for frequent transactions.

The closest option to a self-hosted cold wallet that Tatum provides is KMS. Find more in the following article.

Mnemonics in Blockchain Wallets

Mnemonics, also known as seed phrases or recovery phrases, are a series of words generated by a cryptocurrency wallet that allows you to recover your wallet and the funds within it. Typically, these phrases are a sequence of 12 or 24 words.

Purpose of Mnemonics

  • Wallet Backup and Recovery: Mnemonics provide a simple and human-readable way to back up and recover your wallet. If you lose access to your device or wallet, you can use the mnemonic phrase to restore access to your funds.
  • Security: Mnemonics serve as a master key to your wallet. As long as the mnemonic phrase is kept secure and private, it can protect your funds from unauthorized access.
  • Portability: Mnemonic phrases allow you to recreate your wallet on any compatible wallet software, providing flexibility and ease of access. Mind the Derivation Path.

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Get Started with Bitcoin in the following article.

Good to Know

  • Always write down your mnemonic phrase on paper and store it in a secure location. Avoid saving it digitally to protect against hacking and malware.
  • Consider creating multiple copies of your mnemonic phrase and storing them in different secure locations to protect against loss or damage.
  • Never share your mnemonic phrase with anyone. Anyone with access to your mnemonic phrase can control your funds.
  • Find additional information about Safety & Security in the following article.

Updated 5 months ago