Blockchain is a technology that made cryptocurrencies popular. In “blockchain”, a ‘block’ refers to a record of all the Bitcoin owners (and other transaction details). The ‘chain’ states that the record is distributed worldwide, so it is difficult to alter the ownership record.
The primary purpose of a blockchain wallet is to enable users to buy, sell, and monitor the balance of their digital assets.
Unlike traditional wallets, blockchain wallets do not save the cryptocurrencies. Instead, they record all the transactions like selling, buying, exchange, and storing them on a blockchain.
The internal working mechanism of a blockchain wallet
Basically, a blockchain wallet development stores private and public keys that are used for a transaction. The wallet interacts with multiple blockchains to verify and validate a transaction and enable users to buy or sell cryptocurrencies.
Now let us deep-dive and know what exactly happens in the background that makes the digital transaction possible through blockchain technology.
- First and foremost, let us understand the concept of public and private keys that are stored on the blockchain for transactions. These keys are a compound of random numbers and alphabets. The public key is the wallet address, and the private key is the password of the wallet. The public key can be distributed with anyone, but the private key should be kept secret.
- These keys work simple and similar to the lock and key concept. Consider the lock as your private key and keys as your public key. Many crypto users have keys, but the right key will open the right lock. Simply put, the private key is paired precisely with the public key.
- Once the wallet is unlocked, the wallet owner can access the digital assets. Users can monitor the value of digital assets like Bitcoins, ICO tokens, etc. in their wallets.
FOR INSTANCE – If someone sends you a digital currency, the sender is assigning you as the owner of that cryptocurrency to the address of your blockchain wallet. Now, if you want to access those coins, the private key must match the public key of the currency that is assigned to you. If both key matches, then your wallet balance will increase. In this process, the whole transactions are recorded on the blockchain and the changes are then reflected in the wallet.
The Bottom line
There are many blockchain wallets available in the market, and each one of them is designed for different users. It is wiser to select a blockchain wallet that is strong on security and has not suffered from major hacks in the past. If you want to learn even more about blockchain wallets, then approach a cryptocurrency wallet development company that takes your trading career to the next level.