Blockchain Wallet – All That You Need To Know

By | February 9, 2018
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With its market projected to surpass the $2.3 billion mark by 2021, blockchain technology is well and truly emerging as one of the faces of global digital transformation. Apart from finding widespread adoption across several industries (the financial sector, understandably, is the biggest user), Satoshi Nakamoto’s distributed ledger platform is increasingly being used as a secure, user-friendly tool to store popular cryptocurrencies, like ether and bitcoin. From a relatively lowly ~3 million users in early-2015, the total number of blockchain wallet users has surged close to the 23 million mark at the time of writing this. In today’s discussion, we will take you through some of the key features and use methods of blockchain wallet:

  1. What exactly is the Wallet?

    Secure storage of cryptocurrencies can be a challenge – and this is precisely where the Blockchain Wallet proves its worth. It has been designed by the Luxembourg-based company Blockchain, in the form of a seamless digital platform that offers optimized storage services for bitcoin and ether. The Wallet UI is accessible on both mobile and web platforms – and it comes with top-of-the-grade security and reliability features. The intuitive interface of Blockchain Wallet also makes it easy for users to perform cryptocurrency transactions quickly, and without any hassles.

Note: The mobile version of Blockchain Wallet is available on both iOS and Android.

  1. Getting onboard

    Starting to use a free Blockchain Wallet account is literally a matter of minutes. All that a person has to do is visit the official website (blockchain.info), select the option for a free wallet, and provide his/her unique username and password. A session starts with a user entering his/her Wallet ID (which is the username, containing a random string of letters and numbers) and password. Once (s)he has logged in, the ‘Request’ tab has to be clicked/tapped for selecting ether or bitcoin as the preferred cryptocurrency. Once that is done, the user is all set to store his/her balances, or start transacting with fellow-users.

Note: On Blockchain Wallet, cryptocurrencies are sent/received using ‘addresses’ – which are NOT the same as Wallet IDs. No transaction can take place using the latter.

  1. Security levels in Blockchain Wallet

    Last July, ether coins worth nearly $33 million were stolen by professional hackers. Cut to November, and a glitch in a digital multi-signature wallet resulted in the loss of ~$300 million in cryptocurrencies (once again, ether). The Blockchain Wallet endeavours to keep such risks at an arm’s length at all times – with the help of its built-in levels of security. These levels are in addition to the basic overall safety standards of the platform. The first security level (level one) comprises of the creation of a secure ‘passphrase’ (to be used in case a user loses his/her password, and the account has to be restored), along with the email verification (mandatory) and the password hint creation. The second level of security (level two) includes mobile number linking and two-step verification (which ensures that every login attempt is followed by a passcode sent to the user’s phone). Finally, the third level of Blockchain Wallet security (level three) is focused on blocking out requests from the notorious Tor network – which is frequently used by malicious hackers.

Note: BND, a spy agency from Germany, built tools to constantly monitor the Tor network (and also for unmasking users) in late-2017.

  1. Cost and fees

    While there are fees associated with cryptocurrency transactions on the platform, Blockchain Wallet itself is a completely free tool. That, in fact, is a big factor in its exponentially growing adoption rates over the last few quarters. As far as the transaction fees are concerned, the amount associated with each bitcoin transaction can actually be set by the user (from the ‘Customize Fee’ section). More generally though, the transaction fees are determined by the platform based on 2 key points – i) the volume of network activity, and ii) the amount of funds being transacted (i.e., transaction size), and are automatically deducted. The fee amounts are generally small.

Note: According to a December BitInfoCharts report, the average fee for each bitcoin transactions was around $28. Such high digital currency transaction fees pose a big problem for miners.

  1. The concept of addresses

    Blockchain Wallet rules out the possibilities of unauthorized access and thefts during online cryptocurrency transfer. A unique ‘address’ is used to send/receive ether or bitcoin through the Wallet – and this ‘address’ consists of letters and numbers. Each user has a particular ‘address’ – and for each bitcoin transaction, a new ‘bitcoin address’ is generated. On the other hand, the ‘ether address’ remains constant for all transactions. A person can, alternatively, scan QR codes to send funds to recipients. To receive bitcoin or ether, a user has to place a ‘request’ by sharing his/her QR code or ‘receive address’. Special care has to be taken while sending funds to specific addresses. If a ‘wrong address’ (e.g., an ‘ether address’ for a bitcoin transaction) is selected, the amount might get irrevocably lost.

Note: In case a transaction is not approved and does not go through, the funds continue to be in the account of the sender.

  1. Adding cryptocurrency in Blockchain Wallet

    The Blockchain Wallet supports storage and transactions of only digital currencies. To convert fiat money to cryptocurrency, users have to first avail the services of popular ‘cryptocurrency exchange’ channels like Coinbase and Kraken. On these exchanges, fiat can be used to buy digital currency – and the latter can then be processed and added to the Blockchain Wallet. The platform has an embedded ‘automatic conversion’ to feature – to display the total transaction size in terms of the chosen cryptocurrency as well as the local fiat currency of the user. The web wallet can also be paired with a smartphone by scanning the designated QR code.

Note: Broadly speaking, the ‘fiat-to-cryptocurrency’ platforms can be of three types – the crypto brokers, the trading platforms, and the P2P exchange platforms.

  1. Balance checking & transaction feed

    The Wallet makes sure that cryptocurrency users/traders/miners have all the information they need right at their fingertips. On the Blockchain Wallet dashboard (in the top), the respective ether and bitcoin balances in the account of a particular user can be seen. On clicking on these figures, the corresponding balance in terms of fiat money are displayed. What’s more, all recent crypto-transactions are available on the home screen of the platform. A click on the asset in the menu reveals the full transaction feed - ensuring that people can easily and quickly refer to their previous bitcoin/ether transactions, as and when required. In August 2016, the total number of Blockchain Wallet transactions passed the 100 million mark.

Note: The ‘Security Center’ of Blockchain Wallet provides account safety assurance and provides backup services.

  1. Collaboration with reliable cryptocurrency exchanges

    In September 2017, the announcement of a tie-up between Blockchain and Unocoin (an India-based bitcoin exchange) made much news. The Wallet, in general, collaborates with many leading exchange partners – with a view to boost the process of purchasing/selling bitcoin and ether, while making the overall trading process user-oriented and problem-free. There are multiple customization features available, to suit the precise requirements to users. The Blockchain Wallet became operational in August 2011 – and over the years, the number of exchange partners working with the platform has increased steadily.

Note: A factor that has to be kept in mind is that, a cryptocurrency transaction cannot be canceled (or reversed) on the platform, after being initiated. Any mistake at the time of entering the details can be problematic.

  1. The relation between transaction fees and approvals

    On the digital Blockchain Wallet, users have the option of marking transactions as ‘Priority’. This is typically done for getting confirmations/approvals more quickly – and ‘priority transactions’ typically involve high transaction fees. As a rule of thumb, the chance of transactions getting promptly completed/approved is directly proportional to the transaction fee specified for it. In case a very low fee is selected, there can be big delays in the completion of the concerned cryptocurrency transaction. The platform infrastructure costs as well as the mining network charges are covered by the transaction fees calculated by the platform.

Note: Since Blockchain Wallet is compatible with only bitcoin and ether, that somewhat limits its usability.

   10. Using old addresses on Blockchain Wallet

Each time a new transaction is initiated, a new public address is generated by the platform. This enhances the security-factor, and minimizes chances of successful hack attacks. The old addresses are, however, not rendered completely useless. If a user so wants, (s)he can find his/her old addresses (‘receive addresses’) from ‘Settings’. These old addresses can then be shared to receive funds. To ensure confidentiality, users should always refrain from sharing their respective Wallet IDs and other related details with others.

Note: Apart from a few basic and compulsory requirements (for instance, email verification), most other security standards in Blockchain Wallet have opt-in features.

   11. Multi-language support

The Blockchain Wallet is available in as many as 25 different languages. Understandably, this makes it easy for users from across the globe to sign up on the platform and start storing/trading digital currencies. The Wallet supports 22 currencies as well – enhancing the usability of the tool. Changing the language (or the preferred currency, for that matter) is simple enough. From Settings → Preferences, users can do the necessary tweaks to personalize the platform as per their requirements. The currency and language options are present in a convenient drop-down menu. In essence, users can use the Wallet as they want.

Note: In 2017, Blockchain Wallet started working with ShapeShift (a digital asset exchange tool) for quick conversion of ether to bitcoin, and the other way round.

   12. The future of blockchain and crypto wallets

Blockchain technology is all set to move on to the next level in 2018. The immutable distributed ledger is finding rapidly increasing adoption in many different business sectors (apart from fintech). The returns from bitcoin last year stood at a stunning 1278% – and although there have been significant drops in January – and together with ether, these two will be the dominant cryptocurrencies over the foreseeable future. The average number of per-day transactions for ethereum has surged to record-breaking levels. In such a scenario, it can reasonably be expected that the volume of Blockchain Wallet users would also expand rapidly over the coming years.

Note: Interestingly, the debate over whether the cryptocurrency surge is a ‘bubble’ or not, rages on. In a recent survey, 39% of respondents said that bitcoin was not a ‘bubble’, while 48% opined otherwise.

Both bitcoin (30-day volatility index → 7.35%) and ether (30-day volatility index → 5.26%) in particular, and cryptocurrencies in general, are highly volatile. Even so, it has been found that 1 out of every 3 millenials prefer to invest in digital currencies (instead of govt bonds, for example). This, in turn, is pulling up the demand for reliable cryptocurrency platforms – and with its many powerful features, strong security assurance, and ease of bitcoin/ether transactions, the Blockchain Wallet has every chance of becoming even more mainstream over the next few years.

 

Hussain Fakhruddin
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Hussain Fakhruddin

Hussain Fakhruddin is the founder/CEO of Teknowledge mobile apps company. He heads a large team of app developers, and has overseen the creation of nearly 600 applications. Apart from app development, his interests include reading, traveling and online blogging.
Hussain Fakhruddin
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