Although cryptocurrencies have existed for more than a decade, their popularity truly blossomed in 2017, bringing thousands of platforms and millions of users to the forefront of finance in the digital age.
Indeed, Bitcoin, along with dozens of other digital assets, is one of the most notable investment vehicles today, competing, and often winning, against other commodities like stocks, bonds, gold, and oil.
Despite its burgeoning popularity and profit-making opportunity, cryptocurrencies are still relatively new, which means that it is especially crucial that crypto traders – both those that have been involved in the market from the beginning that those that are just getting initiated – understand the tools of the trade.
These tools certainly include things like hardware adoption and exchange participation, but every crypto trader needs to start with the right crypto wallet.
Crypto Wallets 101
To some extent, understanding a cryptocurrency wallet is as simple as the name implies. Just as people in the past would store their cash in a physical wallet, cryptocurrency users store their tokens in a digital wallet. However, crypto wallets do more than store money in a digital billfold. They are akin to a bank, a safe deposit box, and a vault all combined into a single service. Simply put, a cryptocurrency wallet is a technology used to store, protect, and share digital assets.
Because digital assets exist only in code, choosing the right wallet is critical. It’s the digital fortress protecting your assets, and it’s the exchange mechanism that makes crypto trading possible. What’s more, users have a seemingly endless array of options to choose from. CoinMarketCap reports on more than 2,400 different digital currencies, and each project typically comes with its own wallet service. In addition, there are hundreds of companies offering their own wallet services that are compatible with multiple projects and that adopt different priorities.
Fundamentally, these services are accessed using a unique address comprised of both a public address and a private keys, but, beyond that, the distinctions are numerous and nuanced. As “Assurance in a Blockchain World,” a report by big ten accounting firm Deloitte, notes, “While there are several wallet providers, it is important for entities to consider the risks associated with the security of the platform and the availability of the assets.”
In other words, making the right choice is a critical decision point for every crypto trader.
Understanding the Options
There are numerous cryptocurrency wallet services, and they each fall into one of five categories. Understanding the purpose and process of each wallet service can help make the selection process easier and more accurate.
Also known as cloud-based wallets, these services are famous for their convenience and usability because of their always-on, always-accessible nature. Unfortunately, what online wallets gain in convenience, they exchange for security. Online wallets are susceptible to fraud and theft. As a service that is continuously connected to the internet, online wallets face a litany of potential attacks. Also, fake bitcoin wallet scams can be especially prevalent.
For instance, a 2017 scam related to Bitcoin Gold cost investors $3.2 million, in just one example of how fraudsters are looking to take advantage of cryptocurrency investors.
Desktop wallets are wallet applications downloaded directed to a user’s computer. This service is only accessible on the device to which it is installed, making desktop wallets significantly more secure than online wallets. While viruses or malware can still impact desktop wallets, users have much more control over the wallet’s protective status and overall integrity.
In today’s mobile-first digital environment, mobile wallets are especially enticing. These services download as smartphone apps. Mobile apps share many of the security features of a desktop app, but they do carry additional risk because of the precarious nature of smartphone security. For instance, if a user loses or breaks the phone, they may be unable to access the crypto assets.
As the name suggests, hardware wallets use a physical device to store users’ private key. Often, this means that the information is kept on a USB drive that users insert into their computers when they want to exchange tokens online. Hardware wallets are often considered to be one of the safest storage options because they are almost always offline, meaning that bad actors don’t have an opportunity to steal your tokens when you’re not looking.
Widely considered the most secure approach to cryptocurrency storage, paper wallets are a physical expression of ownership. In this case, the public and private keys are printed on a piece of paper that typically includes a scannable QR code that provides quick access to a crypto wallet.
Of course, other distinctions should be considered when choosing a crypto wallet. Most importantly, users should access a service’s reputation and functionality related to security. Certainly, convenience and usability are essential, but if crypto investors lose control of their digital assets, the forever nature of decentralized assets makes it difficult or impossible to recover lost or stolen tokens.
Moreover, consider a service’s coin support. Make sure that your wallet selection can support the currencies that you trade most. Having to manage and oversee dozens of different wallets is a hassle and a security vulnerability. As much as possible, bring your business under one roof.
Few decisions will be as important to crypto traders as the wallet service that they select. Don’t make your decision to quickly, and don’t miss an opportunity to explore the ways that Coin Wallet can up your trading game with comprehensive crypto wallet service.
Is it just me, or does it feel like you’ve had hundreds of cryptocurrency wallets?
Every time I find a new coin, hear about a new feature or want to liquidate some funds, I seem to create a new wallet. And it’s been this way for years. In other words, my cryptocurrencies are forever on the move.
For example, in the beginning, Satoshi Client did everything we needed. Until Namecoin appeared. Then Bitcoin actually became valuable, so it was time for a more secure solution. Now, we’re going mobile. I can’t hate on cryptocurrency wallets. They are a necessity and they have to continue evolving. So instead of getting upset, I decided to reminisce a little, to take a step back and see how far cryptocurrency wallets have come.
Satoshi Client, now called Bitcoin Core was the first wallet designed by the mysterious inventor of Bitcoin. From its 2009 launch, Bitcoin wallets were attached to the full master node meaning users were required to download and maintain the entire blockchain to access inbuilt wallet generation
Users can still do this, but in the early days, it was the only way to interact with the blockchain. To begin with, this was not a problem as there were minimal history and data stored on the distributed ledger. But as Bitcoin grew, it soon found scalability issues as Ethereum creator Vitalik Buterin explains in 2012:
“Because it is a full node, the client must download the entire (currently 6 gigabytes) blockchain to operate, which can take up to a few days the first time you start the client and several minutes to an hour every time you start the client afterwards if you do not keep it running constantly.”
The blockchain download now exceeds 250 gigabytes and only continues to grow as more data is recorded.
The original wallet is somewhat recognizable holding the same basic functionality as we still see in all cryptocurrency wallets ten years later.
A single wallet to send and receive Bitcoin which you could even mine from your home PC.
Multiple Cryptocurrency Wallets
In the following years, others were quick to see the potential of Bitcoin. Developers started to fork the network, facilitating new coins with specific wallets like Namecoin and Dogecoin.
Although the original core wallets served the industry faithfully for years. Growing databases combined with multiple assets required a smarter wallet. Multicoin desktop wallets were introduced to make life simple. Operating with the same basic functionality but with two marked differences. Firstly, users could store multiple coins or private addresses in one neat wallet platform. Secondly, there was no longer a need to download and sync the whole blockchain. Users could now transact without running a full node.
Security Becomes Paramount
The exponential growth of active addresses from 2011 to 2014 shed light on a serious problem. Private keys were always stored on a desktop file in a file labeled ‘wallet.dat’. There are countless stories about users accidentally deleting this file or malware designed to search for the file.
Plus MT. GOX experienced two hacks in 2011 and 2014, during a period where the infamous exchange handled 70% of Bitcoin transactions worldwide. Custodial wallets and exchanges, like Coinbase, started to offer alternatives. Breaking down the door to the mainstream making it easy for anyone to buy and store cryptocurrency securely. Coinbase has gone on to have over 30 million users and trade more than $150 billion.
Custodial wallets and exchanges, like Coinbase, started to offer alternatives. Breaking down the door to the mainstream making it easy for anyone to buy and store cryptocurrency securely. Coinbase has gone on to have over 30 million users and trade more than $150 billion.
While users can’t accidentally expose or delete private keys with platforms like Coinbase, you don’t gain the decentralized benefits of cryptocurrency. The alternative? Hardware wallets. A single-purpose computer in an isolated environment to protect private keys. Amusingly, first named Piglet. A crowdfunding campaign preceded the 2014 release of the product we now know as Trezor. Everyone could have secure, recoverable, easy to use wallets without entrusting 3rd parties.
Cryptocurrency wallets gaining sophistication
Bitcoin hit a tidy milestone in 2019 – 400,000,000th transaction.. and it didn’t need permission from anybody. With an average of 350,000 daily transactions, you feel there is still a way to go before we see numbers representing mainstream adoption.
The race continues to add more sophisticated features day by day to make using cryptocurrency more accessible. From mobile mulitcoin wallets like Coin Space, to Fintech banking integration, to DEX connection. For example, Coin Wallet offers users security and privacy on the move. Wallet apps like this are growing in popularity as more vendors start to accept crypto payment methods.
Other hardware wallet options now boast in-built exchanges or connections to decentralized exchanges like BinanceDEX. This gives users the ability to trade an abundance of coins without entrusting funds to a 3rd party.
Millions celebrated as more and more states legalized it, thousands and thousand shook their head in outrage. As with all divisive topics, the pros and cons are piling up on both sides but the truth is this: marijuana is here to stay and strive and so does the multi-billion dollar business that’s built around it. But the cannabis business has its own problems that can’t be ignored – namely the lack of banking services available to such entrepreneurs.
But the solution might already be here, hidden in a technology and innovation we all love. One divisive topic paired with another.
Cryptocurrency and blockchain might just be the exact thing that marijuana businesses are looking for. And here’s why.
Why can’t cannabis businesses get banking services?
Although marijuana usage is still deeply rooted in disapproval (everybody can judge for themselves whether they agree with that or not), using weed for medical and recreational purposes in many states across the country is completely and fully legal.
But unfortunately selling legal merchandise is not the only requirement of running a successful business. Unless you only want to deal with cash-based purchases (which is actually an issue in the sector that we’ll touch upon later), the need for banking services to carry out digital payments is crucial.
There’s only one small problem here: selling and buying marijuana is still illegal on a federal level. And as the federal government oversees all US banks and credit unions, the banks are, to somewhat level rightfully, squeamish to provide services to marijuana businesses – even if purchasing weed is perfectly legal in that given state and under that specific legislation.
According to a CNN report, only 1 in about 30 banks accept a marijuana business as a potential client – and even that one charges premium for that. That also leaves the other 29 in a vulnerable position – the position of the unbanked.
Selling and buying marijuana is traditionally cash-based. Illegal merchandise is usually like that for all the obvious reasons, and traditions like that are hard to erase. But an industry that is estimated to be worth several billion dollars is not something that can be carried out solely in cash – entrepreneurs and business people in the sector need a solution for conducting digital payments.
The banks are not willing to provide that solution. Lucky for us: banks are not the only option here.
Stablecoins and blockchain might just be the saviour for the marijuana business
Stablecoins are a great alternative for these businesses – and not simply because, due to cryptocurrencies being anti-discriminatory, they are truly available to everyone no matter the product they are selling.
The problem of not having access or being denied access to banking services is one of the original issues that bitcoin and other cryptos set out to solve, so it fits perfectly into the banking problem of the marijuana businesses across the US and even Canada.
Stablecoins – those coins whose value is tied to a traditional currency or commodity like the US dollar – are again a little divisive in the crypto community. While they definitely have advantages – no one can deny that – they are, in a way, against the whole ‘to the moon’ ideology that is deeply rooted in the crypto community. As they are tied to a traditional currency, their value will never double or triple and they will always be partly influenced by governmental and centralized financial decisions. But because of the very same reason, they are also protected from the volatile nature of the ‘true’ cryptos – which might make them just the perfect solution for marijuana businesses that need a trustworthy currency to conduct their business with.
And misfits have always liked each other – the cannabis business and stablecoins could truly be a match made in heaven.
Stablecoins like USDC and Tether are available, they are legal and they are also way cheaper and easier to handle than cash. As they are cryptocurrencies, they also have the additional benefit of anonymous transactions which is something that a lot of customers in the cannabis business still prefer to have.
Using blockchain system is also beneficial as transactions are almost instantaneously verified – so there’s no worrying about a declined credit or other traditional banking related problems.
Bitcoin can also be a good solution as it is widely accepted and considered to be the most trustworthy out of all the cryptocurrencies. It can be a great way of turning revenue from cannabis businesses into an investment. The only problem is the volatility of bitcoin which might not make is the most suitable for the cash flow of a business.
Using Coin.Space for digital payments as a business
So maybe now you are convinced that stablecoins and cryptos in general could be a great solution for the banking problem of the marijuana business. But how would that work exactly?
If you are not familiar at all with how blockchain works and how exactly a cryptocurrency transaction is carried out, you might want to dedicate a bit of your time to research those topics in depth. But once you are familiar with the basic principles and concepts, a really user friendly solution can be Coin.Space.
The Coin Wallet offers an integrated and unified crypto wallet service where customers can buy and sell more than 20 thousand tokens including the most popular ones like bitcoin, litecoin, bitcoin cash, ethereum and ripple and several stablecoins. It also places huge emphasis on security and anonymity which is a big advantage for a lot of customers in the sector.
Sending and receiving crypto payments are also made very easy with the wallet – you only need to know the other party’s crypto address to carry out a transaction. After the transaction is completed, you can also easily exchange the different cryptocurrencies which means that your customers do not have to pay in one specific coin but they can choose from a variety of different currencies.
Dealing with your finances or generating cash flow directly in cryptocurrencies solves the issues of digital payments – without having to deal with banks that do no want to associate with cannabis businesses due to federal regulations. This can be the perfect method for businesses who are looking to switch from a heavily cash-based system to a digital one with easy, affordable and available digital payment systems using cryptocurrencies. The added benefits of traceability and security of using blockchain technology is really just the cherry on top.
While banks can always refuse service to any customer, cryptocurrencies are available to everyone – no matter where they live, no matter what legislation they are under and no matter what they sell.
Federally chartered banks cannot and will not accept money made from selling cannabis (even it is completely legal for recreational or medicinal purposes). Crypto wallets can and will.
Crypto has long been the solution for the unbanked – now it’s time the unbanked knows about it too.
CashAddr is a new Bitcoin Cash address format. If you’ve ever seen a Bitcoin address or a Bitcoin Cash address, then you’re at least somewhat familiar with what addresses look like – basically a whole bunch of letters and numbers.
This is what is getting a new format. Technically, it’s a new ‘encoding’ and visually, it will appear differently.
What do the new addresses look like?
Here’s an example: bitcoincash:qpmn3s0nm8wrdzzh0j42xtnk9z6mxwstfs6cfhkf3r
Note the prefix “bitcoincash:”, which is technically always part of the address, although the prefix may be optional or missing entirely, depending on the wallet or the implementation.
How does all this affect me? What do I need to do?
We encourage you to use the new addresses, but this is not mandatory. You may experience “wallet incompatibility” and need to use an address converter tool (more on this in a moment).
If you notice that your favorite wallet or service is not yet upgraded to support CashAddr, it is helpful to make them aware of the new format.
Can I still use the old ‘legacy’ addresses?
Technically yes, but we strongly encourage you to upgrade. If you have a legacy address that is currently being used, it will continue working. However, most users should upgrade because the new addresses are safer. Moreover, the user experience will be enhanced when everyone is using the same format.
Can I send from an old address to a new address or vice-versa?
Yes. The address format is just an encoding. To use an analogy, think of the encoding as just a wrapper, or “clothing”. Consider the fact that you can always talk to your friends, regardless of what clothes either of you happen to be wearing.
In this analogy, what’s underneath the clothes is the raw public key hash (pubkeyHash).
Can I start using the new addresses immediately?
Yes. Please do.
Is there a one-to-one “mapping” from an old format to a new format?
Yes. Any legacy Bitcoin address format will convert to one and only one CashAddr format, and the same is true in reverse. So there will always be 2 versions (legacy and CashAddr) of any given address, and they are interchangeable because they correspond to the same set of private and public keys.
What happens if I convert an old address to the new format and have sent the coins to my friend, but his wallet doesn’t support the new format?
That’s ok. The money will still show up at his old address (since its really the same address, just encoded differently)
Why did the Bitcoin Cash development community decide to create a new address format?
As a distinct ledger and cryptocurrency, Bitcoin Cash should have its own address format, which will reduce errors and confusion for users.
What are the benefits of this particular address format?
Aside from offering a distinct address format, the new format is case-insensitive, which makes addresses easier to type and communicate between humans. It is also extensible, so that the format would not need to be changed in the future as new Bitcoin Cash functionality is added.
Can you explain what it means, technically, to have a new format?
When you conduct a transaction to “send” Bitcoins to an address, what you’re really doing is unlocking unspent outputs and then locking them again so that only someone who can sign for the public key (with their private key) can control them.
The new address format does not change the format of these transactions on the blockchain, but rather: only the visual representation which is presented to the user.
Is this a protocol change, soft-fork, or hard-fork?
No, it’s none of those things.
Do any of my private or public keys change?
Is there an official CashAddr specification for developers?
Coin.Space now supports Dogecoin
Dogecoin is a cryptocurrency that was created as a joke — its name is a reference to a popular Internet meme. It shares many features with Litecoin. However, unlike Litecoin, there is no hard cap on the number of Dogecoins that can be produced.