Crypto Wallets – Best Way to protect your Cryptocurrencies

Cryptocurrencies, just like the fiat currency, are needed to be stored and secured. And just like the physical wallets, the cryptocurrencies also are kept in the wallets and generally, referred as Crypto wallets. In Crypto wallets, it is not the real coins that are stored inside, rather digital codes or two types of keys i.e. Private and Public key. Public key is visible to everyone and is used by others to send money. On the contrary, private key is used only by the owner of the wallet to perform send transactions. Losing the Private Key can result in loss of the currencies, since you lose whole control over your wallet and this is the reason it is recommended that at least two different techniques should be used for saving and storing of the private keys.

Cryptocurrency wallet is a digital wallet that is used to send, receive and store various cryptocurrencies safely and in secure manner. The process of getting a crypto wallet can be quite confusing when it comes to choosing the safe cryptocurrency wallets since making a wrong decision can cost you dearly. Some basic features that should be noted and followed before opting for a wallet are:

how to choose a crypto wallet

  • Good Reputation: It is necessary to make sure that the wallet you are using has good reviews and reputation. The status of any wallet including the pro and cons can be known by checking out the features and feedbacks.
  • Software solutions: It is always recommended to avoid using certain software solutions that carry the malwares under the disguise of wallets. Wallets with such software solutions are always prone to be attacked and infiltrated. The best way to choose safe wallet is sticking to reputed providers.
  • Best Practice: Apart from the above considerations, the principle of sticking to the best practices helps in keeping the crypto wallets safe. It is a wise practice to keep a backup of your private keys using a storing device. It is also recommended to add an extra layer of security, for example, one can use Google authentication etc.

Types of Wallets

There are several types of wallets and choosing one depends on the requirement of the user and also on their purpose. Crypto wallets differ from the features point of view and can be selected on the basis of their pros and cons. It is essential to understand the difference between the cold wallets and hot wallets.

Hot wallets: Hot wallets are like the cash in your pocket and it is accessible through a web portal or mobile app. It is called Hot because of its ability of greater accessibility and activity. It facilitates an environment where easily the activities like trading and other transaction can be performed. But this feature also poses threat since it makes it more vulnerable to attacks

Cold wallets: Cold wallets are analogous to the saving accounts that are more secure and harder to access. It is less prone to attacks as compared to the hot wallets because it is held offline. It is best suited to the cryptocurrency that is not meant to be used frequently but meant for long-term holding. Although the accessibility in terms of performing transactions is limited but it also reduces the chances of loss of your fund.

Furthermore, different kind of wallets has been categorized and discussed below in detail.

1. Hardware wallets:

Hardware wallets are considered as the most secure form of wallets for storing cryptocurrencies and accessing them is easy but relatively less friendly than a web or desktop wallets. They are in form of a portable device like the USB drive. It acts as wallet that can store various cryptocurrencies and are offline, thus, also considered cold wallets. Trezor, KeepKey and Bitbox are some examples.

2. Software wallets:

These are considered as ‘Hot’ wallet as software wallets are frequently used with the internet. These can be stored on different devices such as a computer, phone etc. and thus provides easy accessibility to tokens. Software wallets are of different types and it can be described as following:

– Desktop wallets: It is one of the most secured options available for keeping the cryptocurrency. It is accessed through the software installed in the devices and the private key is stored locally. Desktop wallets can be used with the system or other device connected to internet and it can also act as a cold storage device if used without internet.

– Mobile wallets: Wallet for the cell phones are very convenient to be used and come with decent security features. Easily a mobile app can be downloaded and quick transactions can be performed using features like QR codes.

– Online web wallets: Online wallets require internet connectivity for operation and used online only. These are also referred as “cloud wallets” as several third-party wallets allow their software to be used through the cloud. Here the major issue is that the private key is generally stored on the centralized server.

– Multi-Signature Wallets: Multi-signature wallets make use of multiple keys to operate. It reduces the chances of attacks to minimal since it is very difficult to get access to more than one private key. Another advantage is during the incidence of loss of a private key, the alternative key may help in getting the backup. The main motive behind deploying multiple keys are:

  • Adding an extra layer of security to the wallet and preventing the possible attacks from hackers.
  • Creating a wallet that can be used by one or more user.

3.Paper wallets:

Paper wallets provides a way to keep the cryptocurrencies completely in undigitized form or in hard copy format. These can be termed as the true cold storage wallets for cryptocurrencies. The process of using these wallets involves printing out the public and private keys (in the form of QR codes to be scanned for performing the future transactions) or the generated paper wallet and then, storing it safely. Here there is no scope for any form of online attack or malware.

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Hashgraph & Blockchain: Similarities & Differences

The world is finally moving to the next level of revolution in IT & Internet. The Blockchain is tout to be ‘the internet 3.0.’ It is based on the distributed ledger technology, though the real potential of this technology was realized only when the Blockchain came into existence. And when, still many people are in the process of understanding use cases of the Blockchain Technology beyond Bitcoin, a new technology is making news, hyped as the ‘future of distributed ledger,’ the Hashgraph.

What is Hashgraph?

Hashgraph is based on distributed ledger like Blockchain, however, it offers an alternative consensus mechanism. It uses techniques like ‘Gossip about Gossip’ and ‘Virtual Voting’ to achieve fast and secure consensus.

‘Gossip about Gossip’ technique attaches a small additional amount of information with the two hashes containing information about the last two people talked to. Utilizing this information, a Hashgraph is built and is regularly updated when more information is gossiped on different nodes. Once it is ready, the system knows what a node would vote, since it is aware of information that each node has and when they knew it. This data is further utilized to find which transactions have reached consensus quickly and as an input to the voting algorithm.

The detailed explanation is as follows:
A node in Hashgraph can spread signed information called events of the new transactions and transactions received from others, to randomly chosen neighbor nodes. These neighbor nodes will compile received events with the events received from other nodes into a new event and the process continues. Eventually, all the nodes are aware of the information created or received.

What Hashgraph offers over Blockchain

difference between hashgraph & blockchain
Blockchain is an immutable distributed ledger of transactions which can be coded to record not just financial transactions but anything that has a value. On the other hand, Hashgraph claims to support a superior data structure capable of solving the major problem which the Blockchain community is facing, the consensus mechanism.
The consensus mechanism which Blockchains offer can be divided into two categories based on the type of Blockchain i.e. Public or Private.

The Public Blockchain relies on consensus mechanism such as ‘Proof of Work’ or ‘Proof of Stake.’ For these, every node must agree with the order of the transactions in which they have occurred, which narrows down the number of applications where such technologies can be practically employed.

On the other hand, Private Blockchain relies on leader-based consensus mechanism which restricts usage only to trusted partners. However, it has loopholes in the form of relaxed security standards make these networks potential targets for DDoS attacks.

Read About : Different types of Blockchain

Compared to these, Hashgraph consensus algorithm overcomes these shortcomings as it requires neither ‘Proof of Work/Stake’ nor any other leader-based mechanism. It is expected to deliver low-cost quality performance with no single point of failure. Low-cost quality performance means less energy consumption as compared to Bitcoin and Ethereum. Also, Hashgraph is 50,000 times faster than Bitcoin and offers up to 250,000+ transactions per second.

Hashgraph – The Reality Check

Hashgraph is no doubt a promising technology, but declaring that it will outdo Blockchain or make it obsolete would be a bias statement. Let’s do a reality check on what Hashgraph is and what it is not!

  • The Hashgraph claims to be very fast as compare to the Blockchain. However, till now, Hashgraph is only deployed in private, permissioned-based network. Its potential in a public network is yet to be discovered.
  • Hashgraph uses ‘Gossip of Gossip’ technique for faster and secure consensus. However, when a node chooses its successors uniformly at random, there is some probability that all the chosen nodes may be malicious. And in case these malicious successors node stop passing the transaction to the next group of nodes, it will prevent the transaction from reaching two-thirds of the network and eventually that would result in unfair outcome for the authentic creator.
  • Hashgraph employs ‘coin toss’ protocol for nodes to make decisions when there is no progress in the consensus protocol. There is a non-zero probability that all of the honest nodes will have the same value, after numerous rounds of coin toss. In case the malicious nodes disrupt the mechanism by manipulating the gossip protocol, it may take numerous rounds to reach consensus, decreasing the effectiveness of the protocol.

Conclusion

Hashgraph is another great technology like Blockchain and is surely promising. However, while we appreciate this technology we should not underestimate the original underlying technology i.e. Blockchain which has paved the way for this new technology. But like Blockchain has grown in last few years, and many of its limitation has been found and resolved, Hashgraph would also have to go through the similar stages of maturity and only then, its true potential would be revealed.

Blockchain Smart Contracts- Logical or not-so-logical

Where ever there is a mention of Blockchain on the internet, you will always find reference to Smart Contracts too. The word Smart Contract originated in 1997, when Nick Szabo, used it to describe physical objects that change their behavior based on data. Today, in Blockchain, we used this word in a different sense. It is used to describe a computation that happens on the Blockchain which is influenced/triggered by external events/information such as the weather.

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Smart Oracles – How Blockchains Communicate With Outside World

Blockchain is a closed network utilized for secure transfer of value. There are public chains which allow anyone to become a part of the network and there are private chains which allow only certain authorized individuals or institutions to become a member. However, there will always be a world outside this network which might need to be contacted. Hence the question, “How Blockchains communicate with outside world?

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