Skip to Content

👨🏻‍🎓 Register for live classes

Crypto wallets basics

What are crypto wallets?

A crypto wallet is a key manager that allows you to manage your cryptocurrencies. That is, you can check the balance, store, receive or make cryptos transfers.

Some of them also allow you to sign messages, proving that you own an address associated with your wallet. The most common are applications for the computer or mobile.

Our course starts with wallets because they will be in your day-to-day.

In this module you will already use your first wallet :)

Your wallet during the course

You will use a crypto wallet during all course.

  • It will be used to register, create your profile and manage the course progress.
  • All your projects will be associated with an address in your wallet.
  • The certificate's course will be issued to you, according to the same address.

If you lose control of your address and need to use another one, you will have to do all exercises again, associating them with the new address. It will not be possible to change your wallet address during the course.

Public key and private key

It was previously said that a crypto wallet is a key manager.

But ... what keys are these?

We are talking about:

  • public key
  • private key

This pair of cryptographic keys guarantees possession of your cryptos.

Public key

A public key generates addresses for several Blockchains.

These addresses can be shown to anyone who will be sending cryptos to you.

Private key

The private key, as the name implies, is to be private, that is, must be kept confidential.

Anyone who knows the private key proves that he owns the cryptos and can send them.

The private key gives access to your cryptocurrencies, regardless of which wallet you use. So even if your computer or smartphone gets compromised, you can still access your funds on another device, if you have the corresponding private key (or seed phrase).

Address

Crypto wallets also includes one or more addresses.

An address is an alphanumeric identifier that is generated based on the public / private keys.

It can be defined how a specific "location" on the Blockchain to which coins can be sent to.

This means you can share your address with others to receive funds, but, like we said before, you should never disclose your private key to anyone.

Cryptocurrencies and tokens never leave the Blockchain, they are just transferred from one address to another.

Crypto vs bank account

If we make an analogy to a bank account:

  • The public key represents your account data: bank, branch, and account number.
  • In order for you to receive money from someone, you will disclose your account details.
  • The private key is your password. You don't tell anyone and only you can use it to withdraw funds.

There is a difference in cryptos in relation to the banking environment: if a person knows your account details, they cannot see your balance and transactions.

But the Blockchain is public and transparent, so whoever knows that you are the owner of an address, can track your balance and transactions.

There are some Blockchains not fully public, permissioned, but they aren't the subject now.

Mnemonic

It is possible to generate a single address from a key pair, but wallets often use a mnemonic as the basis for generating several key pairs.

A mnemonic is a set of words generated from a list of predefined words. Usually 12 or 24 words are used.

Anyone who knows a mnemonic is able to access and transfer all cryptos from all addresses that have been generated from this menmonic.

If you lose your wallet, you can use the mnemonic and set it up again in another application, another computer or another cell phone.

You can even use the same mnemonic in different wallets.

Attention: the mnemonic is the most important part of a wallet!

If you forgot or lose your mnemonic, you will have no backup of your wallet.

If something like this happens, but you still have access to the wallet, I strongly recommend transferring all cryptos immediately to another wallet (another mnemonic) before any catastrophe happens to it.

Mnemonic is also known as:

  • seed
  • seed phrase
  • recovery phrase
  • backup phrase

Conclusion

Our goal was to present an overview of wallets.

In the next lesson you will create your first wallet :)