Blockchain Wallet Basics

A blockchain wallet can be thought of as a tool for managing the blockchain's keys and addresses.

It's a software program that stores cryptocurrency assets.

Can be simply understood as following:

Address = Bank Card Number

Private Key = Bank Card Number + Bank Card PIN

Mnemonic = Bank Card Number + Bank Card PIN

 

The wallets are classified according to the following different criteria for judging:

1. Whether the user has the private key (mnemonic)

2. Where the private key (mnemonic) is stored

3. Whether the private key (mnemonic) is in contact with the network

4. Whether the wallet supports multi-currency or single currency

 

1. Whether the user has the private key (mnemonic)

On-chain wallet: The user holds the private key, and transactions are tracked on the blockchain.

Hosted wallet: The private key is held by a third-party wallet operator, and internal transfers are not recorded on the blockchain.

2. Where the private key (mnemonic) is stored

Soft wallet:In layman's words, it's a computer software or app wallet that doesn't require you to buy any additional specialist hardware.

Hard wallet:It's a hardware wallet. To use it, users must purchase additional dedicated peripheral devices.

3. Whether the private key (mnemonic) is in contact with the network

Wallets can be categorised as hot or cold depending on whether or not they are connected to the network.

Cold wallets are "offline wallets" that keep private keys offline and never connect to the internet, preventing hackers from stealing them.

The following are the several types of cold wallets:

Hardware wallets (similar to U-shield)

Paper wallets (where the private key is written down on paper)

Brain wallet (the private key is written down in your head)

Hot wallets are networked wallets that may be accessed through a browser or on a mobile device.

4. Whether the wallet supports multi-currency or single currency

Only supports single blockchain digital assets with a single-currency wallet.

Multiple blockchain digital assets are supported via a multi-currency wallet.

 

Software wallets from OneKey (software wallets on apps and browser extension):

1.The mnemonic is controlled by the user, and the transaction takes place on the blockchain[on-chain wallet].

2.The mnemonic is encrypted and saved locally[on the phone or in the computer].

3.The mnemonic isn't totally disconnected from the network.[Hot Wallet].

4. More coins are supported [details can be found in the BIP32 and BIP39 protocols].

The hardware wallet from OneKey:

1.The mnemonic is controlled by the user, and the transaction takes place on the blockchain[on-chain wallet].

2.The mnemonic is encrypted and kept in the hardware wallet [the mnemonic is generated and stored using a secure chip].

3.The mnemonic is disconnected from the rest of the network.[cold wallet].

4. More coins are supported [details can be found in the BIP32 and BIP39 protocols].

Note:Users are responsible for their own mnemonics, and OneKey will not assist you in recovering them if they are misplaced.

You may learn more about the differences between software wallets and hardware wallets by visiting: Software Wallets vs. Hardware Wallets.

 

About mnemonics and private keys

The following is an explanation of how mnemonics function:

1. Create a string of random numbers that is then transformed and mapped to words in a dictionary.
2. A longer seed is derived from the aid word (seed)
3. From the seed, generate the private and public keys.
4. The child private key and child public key can be derived from the private key, and the child public key can be derived from the public key.

It can also be written as: mnemonics→seed→master private key→child private key→public key→address (for more details, please refer to BIP32 and BIP39 protocols)

 

1. Why don't I use a hot wallet (software wallet) to import hardware wallet mnemonics?

OneKey hardware wallets are made to avoid interacting with the network.

OneKey hardware wallets use a secure chip to separate critical data from the address, such as the mnemonic, seed, and private key.

Connecting a mnemonic to the network is a high-risk action, and your mnemonic will not be protected by the hardware wallet in this scenario.

2. Why are there so many addresses in the OneKey hardware wallet?

The master public key can generate a higher number of child public keys, which in turn generate addresses, and the mnemonic can be generated from it. (For more information, look into protocols like BIP32 and BIP39.)

3. What should I do now that I've integrated hardware wallet mnemonics into my hot wallet (mobile app, metamask, etc.)?

With coins:transfer the coins out, then reset the hardware wallet and create a new wallet.

No coins:directly reset the hardware wallet and create a new wallet.

 

On mobile apps, how to tell the difference between hardware and software wallets:

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How to tell the difference between browser extension:

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