Bitcoin
Crypto Wallets, Explained. What is a crypto wallet? | by Blockchain.com | @blockchain | Jul, 2022
Published
2 years agoon
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adminA crypto wallet is a digital or software-based way to access your cryptocurrencies.
Unlike a regular wallet, a crypto wallet doesn’t actually hold your assets. Instead, it stores credentials called private keys that give you access to your assets on the blockchain.
Depending on the type of crypto wallet you have, you can:
- Send, receive, and pay with crypto
- Store crypto
- Create a digital “vault” online that’s only accessible to your loved ones
- Interact with web3 applications that let you lend and borrow against your crypto
- Buy, sell, and store NFTs
- Earn on your crypto in a crypto rewards account
To recap: crypto wallets store your public and private keys as well as a linked receiving address so you can send and receive crypto securely
Crypto wallets consist of three parts: a public key, a private key, and a public receiving address.
Whenever someone sends crypto from their wallet, they must use their private key to “sign,” or confirm, the transaction. This digital signature is like a fingerprint, unique to each individual and their private key, proving that the transaction is coming from the legitimate owner of the wallet and hasn’t been tampered with.
Crypto wallets all begin with a private key, a long, randomized string of letters and numbers. These private keys can also take the form of a QR code or mnemonic phrase.
This private key is used to generate a public key through an encryption process. While it’s easy to verify that a specific private and public key fit together as a pair, you can’t “work backwards” and figure out a private key from its public key.
This “one-way” — or “trap-door” — encryption, makes it possible to share a public key without worry that someone will figure out your private key and steal your crypto.
Next, the public key undergoes a mathematical function that “compresses” it into a receiving address (either a QR code or a shorter string of numbers and letters) where you can actually send crypto.
You can generate many public keys — each with their own separate receiving address — from one private key.
Most of the time, you don’t interact directly with these digital keys. Instead, they get stored in wallet files or managed by crypto wallet apps.
Cryptocurrency relies on cryptography, the art of protecting data through codes and digital puzzles called ciphers.
When you use your private key to sign a transaction, the network can verify that the private and public keys represent a pair — while still maintaining the privacy of the information.
Since anyone can remove funds from an address with that address’s matching private key, it’s critical to protect your private key information.
Again, crypto wallets usually manage your private and public keys for you, but it’s important to know that they exist and what they do.
A crypto wallet provides a secure way to store your cryptocurrency, send, and receive it. You can also track your crypto balance and transactions and swap one cryptocurrency for another.
Arguably, though, the greatest benefit is the ability to custody your own funds, or “be your own bank.”
When you hold assets at a traditional financial institution, like a bank or broker, you entrust them with your private information and rely on them to keep your funds safe. They may also charge fees for their services.
With any cryptocurrency wallet that lets you remain in control of your private keys, you are in complete control of your assets. No one can access your funds without your permission, and you don’t have to pay anyone to custody your funds.
This gives you full control of your cryptocurrency and helps keep it safe from hacks, scams, and theft. In countries facing high levels of inflation or capital controls, crypto wallets give people a way to store value that can’t be confiscated by their governments.
To recap: Crypto wallets that let users hold their private keys make self-custody possible for everyone.
That said, not all crypto wallets are created equal. Read on to discover the different kinds of crypto wallets you can select.
There are two main types of crypto wallets: custodial and non-custodial.
Custodial wallets vs. non-custodial wallets
Custodial wallets
Custodial wallets are like bank accounts.
They are managed by a third party, which could be an exchange, a company, or even just another crypto user. These wallets are convenient because you don’t have to worry about losing your private keys or managing them yourself.
However, custodial wallets come with risks. Because a third party manages your crypto, they also control your crypto keys. This means that if the company goes out of business or is hacked, your crypto could be at risk.
Non-custodial wallets
Non-custodial wallets are the opposite of custodial wallets.
With a non-custodial wallet, you are the only one who has access to your private keys. This might sound like a recipe for disaster (after all, if you lose your keys, you lose your crypto), but non-custodial wallets actually offer two big advantages.
First, because you are the only one who has access to your private keys, non-custodial wallets are much more secure than custodial wallets. If a non-custodial wallet is hacked, your crypto is safe because the hacker does not have your private keys.
Second, non-custodial wallets give you full control of your crypto. This means that you can use your crypto however you want, without having to worry about third-party restrictions.
When choosing between a custodial or non-custodial wallet, there is no perfect choice. Each has tradeoffs. The key is finding a wallet that best fits your needs.
If you are new to crypto or just want to dip your toe in the water, a custodial wallet might be a good choice. These wallets are easy to use and require no special expertise.
If you want total control over your crypto or plan on using web3 applications, a non-custodial wallet is the way to go. These wallets might be slightly more complicated to use, but they offer greater security and flexibility.
The Blockchain.com Wallet gives you custodial and non-custodial wallet options in the same app, making it easy to buy, sell, store, and secure your crypto with less effort than managing multiple wallets or apps.
We call our custodial wallet a ‘Trading Account’ and our non-custodial wallet a ‘Private Key Wallet’.
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The Bitcoin price has experienced heightened volatility over the past week. After recovering from a low of $56,500, the largest cryptocurrency in the market surged to $65,500 within four days. However, it has since retraced some of its gains and is currently testing the $61,000 support level.
Despite this volatility and the absence of strong bullish momentum, venture capital firm Pantera Capital remains optimistic about the future of BTC’s price, citing the recent Halving event as a significant factor.
Pantera Capital Projects $117,000 Price Target By 2025
In a recent investor letter, Pantera Capital revealed its Bitcoin Halving rallies model, which predicts a bottoming out of the BTC price followed by a rise through the Halving rally.
Based on the average duration of previous rallies, the firm forecasts that BTC’s price will peak at $117,000 in August 2025. The average total duration of this cycle, encompassing pre- and post-Halving rallies, has historically been around 2.6 years, with symmetry observed across cycles.
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Pantera Capital highlights the relationship between Halving events and BTC’s price. The firm asserts that if the demand for new Bitcoin remains constant while the supply of new Bitcoin is reduced by half, it will create upward pressure on the price.
The anticipation of a price increase has also historically driven increased demand for Bitcoin leading up to Halving events. However, Pantera Capital acknowledges that the impact of each subsequent Halving on price may diminish as the reduction in the supply of new Bitcoin from previous Halvings becomes less significant.
Moreover, the firm notes that, on average, the Pantera Bitcoin Fund has nearly doubled in value for eleven years. Based on this historical performance, Pantera Capital envisions a scenario in which the price of Bitcoin reaches $117,000 by 2025.
Bullish Bitcoin Price Predictions
Renowned crypto analyst Titan of Crypto has recently taken to social media platform X (formerly Twitter) to share bullish predictions for the Bitcoin price. With forecasts ranging from $75,000 to $110,000, Titan of Crypto highlights various factors and patterns that could potentially drive BTC’s growth.
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Titan of Crypto also identifies a current head-and-shoulders pattern in the Bitcoin price chart. If this pattern holds, the analyst suggests that BTC could rise to the $75,000 mark. If confirmed, this pattern could signify a bullish trend reversal and further support the projection of Bitcoin reaching higher price levels.
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The analyst also highlighted $61,500 as a critical point to monitor due to the possibility of “panic selling.” The analyst suggests many market participants might react to this level, potentially increasing selling pressure.
Lastly, based on his analysis, the analyst suggests a conservative price prediction of $108,000. However, Titan of Crypto believes that BTC’s price may exceed this projection, indicating a more optimistic outlook.
Featured image from Shutterstock, chart from TradingView.com
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Bitcoin
Bitcoin About To ‘Blow Higher’ Despite This Week’s Pullback, According to Glassnode Co-Founders – Here’s Why
Published
1 week agoon
May 9, 2024By
adminThe founders of crypto analytics platform Glassnode are predicting that Bitcoin (BTC) will soon soar even higher after being up 7% in the last week.
In a new thread, the co-founders of Glassnode, who go by the handle Negentropic on the social media platform X, tell their 62,900 followers that key indicators suggest Bitcoin is gearing up from a massive breakout.
The analysts say Bitcoin appears to be forming a bullish pennant pattern. They also suggest that Bitcoin is correcting to a Fibonacci retracement level, in the low $60,000 range, which often predicts a continuation of an upward trend.
“BTC still looks like it is about to blow higher! Last week’s candle was a reversal candle – a hammer with a long wick. Price moved back into the pennant structure. This candle still dominates the structure. This week’s pullback, hence, seems like a healthy correction before higher. Corrections often pull back either 50% or 61.8% of the previous impulse move.”
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The analysts believe Bitcoin could break through the $85,000 level before the start of summer, which officially begins on June 20th.
“BTC is currently in the process of breaking the trendline of pennant and the 50-day SMA (simple moving average). When the level of $65,000-$66,000 is broken, BTC will move on to first $73,500, then $76,500, and chances are that we see $85,200 before the summer.”
Bitcoin is trading for $62,016 at time of writing, down slightly in the last 24 hours.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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Bitcoin
Analyst Benjamin Cowen Warns Ethereum ‘Still Facing Headwinds,’ Says ETH Will Only Go Up if Bitcoin Does This
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adminThe widely followed analyst Benjamin Cowen is saying that Ethereum (ETH) is at risk of facing more downside over the coming months.
In a new video, Cowen tells his 801,000 YouTube subscribers that monetary policy is likely to negatively affect Ethereum.
“I think that ETH/USD is still facing some headwinds here, especially following the potential rejection of the spot exchange-traded fund (ETF)…
…I think the impact that people are going to feel is just from tighter monetary policy. They’re going to blame it on the spot ETF and they’re going to capitulate potentially into that.”
According to Cowen, the Ethereum could go up on one condition.
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ETH is trading at $3,002 at time of writing.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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