Most Ethereum beginners wonder what an Ethereum wallet is and how it works. This article explains it all.
It is software or hardware that enables users to interact with the Ethereum blockchain. Before you can have an Ethereum wallet you need an Ethereum account. Having an Ethereum account allows you to send, receive, store, interact with DApps (decentralized apps), keep track of the Ethereum you own, and more.
Ethereum wallets require a private key or password that ensures the security of the user and allows him/her to move funds securely. Only the creators of the wallet can know the private key and access the funds.
Ethereum accounts can be of two types:
· Externally owned Ethereum accounts: Account controlled using a private key
· Contract Ethereum accounts: Account that has its code
There are four components of Ethereum accounts, namely: Nonce, Balance, CodeHash, and StorageRoot.
There are two main types of wallets in the cryptocurrencies sector - Hot and Cold.
Hot wallets are stored on devices connected to the internet e.g., mobile devices, Mac, or desktop computers. These wallet types are user-friendly, connected to the internet, less secure, and have pieces of software stored on the devices.
Cold wallets store the users' private keys offline. This mitigates the risk of attacks by hackers or infecting the users' devices with malware. Malware damages the system to get unauthorized access to data. Cold wallets are less intuitive, stored offline, difficult to hack or exploit, and have pieces of hardware stored physically.
After selecting the wallet type and exploring the network, users must fund it. To do this, the user must purchase the Ether (native currency to the Ethereum network). Users can buy the Ether through a licensed cryptocurrency exchange like Rain. Users can use the local fiat currency to purchase any number of Ether tokens they wish to buy through the cryptocurrency exchange.
Users can buy or exchange the Ether using their secure wallet. Each transaction has a transaction fee. The fee varies based on the block space demand on the blockchain.
Users do not have to worry about the safety of their funds because they are stored in a bank account. There is no third-party accessing the bank account hence no unauthorized activity can lead to you losing your stored Ethereum. So, as long as the users stick to the best practices to prevent phishing, their digital wallets remain secure. Also, the users must never share their private keys with anyone.
For more information or assistance with setting up your Ethereum wallet, feel free to contact Rain's support, which is available 24/7.
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