Maybe it was a Super Bowl ad. Maybe it was hearing a colleague talking about Ethereum. Maybe it’s just wanting to know what all this web3 stuff is about. Regardless: in order to fully immerse yourself in blockchain tech, having a digital wallet is pretty important. This post will explore the basics of a wallet that would allow you to access your ETH stored on the Ethereum blockchain.
Having an Ethereum wallet is not only about the cryptocurrencies: it’s also a gateway to using decentralized apps, or dapps.
It’s called a wallet, but…
In the traditional sense, a wallet is where you keep your money. But when you are dealing with cryptocurrencies, you would be storing it on the blockchain. But you need a way to access it.
Just like a credit card lets you access the money in your bank account, right? Not quite.
You see, when you make an online purchase - say ordering a pizza - you make an online transaction through the bank to the pizza shop, saying “Hey, bank, I owe CoolPizza Shop $20, please send it to them from my account.”
Here, your bank manages your money with an account. Your account is your identity within the bank: it provides information about your identity, how much money you have stored in your account, how many people you’ve made transactions to etc.
Now, this bank account is created, managed, and secured by the bank. This means that essentially banks act as a middle man between you and all the transactions you make. And also they ask you to have a minimum balance and charge you a service fee once in a while.
With blockchain technology, we’re removing the middle man.
When you create a digital web3 wallet, you are essentially creating a way for yourself to interact with the blockchain: a distributed ledger that shows you how much cryptocurrency each person in the ledger owns/sent/recieved.
So what is a web3 wallet like?
A web3 wallet is essentially a set of keys that give you access to the blockchain. So let’s get into what these keys look like and how they are generated (spoiler: they’re not made of metal).
When we set up a wallet, for us it’s just a bit of keyboard clicking. But in the background, this is when the beauty of cryptography springs into action.
The concept behind generating a set of keys is called public-key cryptography, and you can learn more about this here. Essentially, it allows for generating a set of keys using secure mathematical functions. This is how we get two keys: a Private Key and a Public Key. The first one is only for you and the other, as you may suspect, is one you share with others. They are strings of numbers and letters, and your private key acts as a password for your cryptocurrency stored on the blockchain. So, remember, folks: keep your private key and the passphrase derived from it safe! No website with good intentions will ever ask you for your passphrase.
What’s my wallet address?
The wallet you set up will have an address. When you want someone to send you some crypto, they need to know where to direct it to.
This address is derived from your public key and the passphrase from your private key. Again, it’s a string of letters and numbers. An Ethereum wallet address may look like this:
0x9966607D1a55bcC2543C58ba16FB37d819B0A4dc
All you need to know is your wallet address is 40 characters long excluding the ‘0x’ which starts off every Ethereum address.
What does signing mean?
Signing a transaction is similar to you signing a cheque or typing in your PIN while removing the money from an ATM. Its purpose is to authorize the transaction and prove that the transaction was made by an authorized user.
Can I see my transactions?
Remember us talking about how the blockchain allows for full transparency of what transcations were made on the blockchain?
Using a website like Etherscan you can look up any Ethereum transaction and find out quite a few interesting stats. The most common way of looking up a transaction with Etherscan is through the transaction ID or TxHash.
This is a handy list of some things you might find useful when searching for transaction information:
So what do you do now, if you’re still interested? There are many different options for setting up Ethereum wallets. This guide from Ethereum goes through 40 different options, depending on what you’re looking for. And remember: stay safe out there!
More follow up reads
- What Is Etherscan and How to Use It?
- The Journey from Mnemonic Phrase to Address
- https://ethereum.org/en/wallets/
Written by Rashmi V Abbigeri