Where do I start?
What is a Digital Wallet?
A digital wallet interacts with various blockchains to enable users to send and receive digital currency and monitor their balance. Several different wallets are available in existence that hold numerous cryptocurrencies including ERC-20 tokens. If however you opt for a fork off of blockchain, a new wallet that is compatible to hold that cryptocurrency must be created. Wallets can be broken down into three distinct categories - software, hardware, and paper.
Software: wallets can be a desktop, mobile, or online. Desktop wallets which are only accessible from a single computer can offer the highest level of security however if the machine were to be compromised there is a chance of losing access to funds. Online wallets which are stored on the cloud eliminate that problem however are more susceptible to hacking and theft because private keys online are controlled by a third party. Mobile wallets run on an application and offer the convenience of being stored on a phone. Due in part to the limited space available for storage, they are much smaller and simpler then desktop wallets.
Hardware: unlike a software wallet users private keys are stored offline. Depending on which one is being used hardware wallets are compatible with different currencies and web interfaces. Transaction are made easy by simply plugging the device into an internet enabled computer to send and confirm currency. Hardware wallets keep money offline and away from danger but fall susceptible to natural wear and tear or physical mishandling.
Paper: Paper wallets are generated from software wallets and offer a very high level of security. It can mean a physical copy or printout of public and private keys for you to store away in a vault or a program that generates a pair of keys which are then printed. The process of transferring funds between software and paper wallets also known as “sweeping” is fairly straightforward and can be done by sharing the public address associated or scanning a QR code.
Full Node: This is the oldest and the most recommended solution. Running a wallet attached to your own full node has the attraction of working from the most trustworthy copy of the blockchain you can get. A full node, in its purest form is downloading and validating all the blocks the Bitcoin network has. This way it can be sure if a transactions happened or not.
Pruned Node: It does the same as the full node, but throws away outputs that are already spent. This way you can lower the blockchain data you are storing on your disk from 150GB to about 1–2GB
Full SVP Node: a full SPV node downloads all the blocks, but from the beginning of the wallet. This, however faster, it is not capable to fully validate blocks. It uses SPV validation instead. Its main advantage is compared to lighter wallet architectures: it provides full node level privacy against network observers.
A Block Explorer is an online blockchain browser which displays the contents of individual blocks and transactions and the transaction histories and balances of addresses. Depending on which block explorer one uses, there are some additional features to be enjoyed as well. Blockchain.info, for example, has become much more than just a block explorer, as it also provides statistics and charts pertaining to the bitcoin network.
Most block explorers will also show the number of unconfirmed transactions – also known as the mempool – and whether the mining difficulty will go up or down. Do keep in mind this last figure is purely estimated and may change several times.
Even though the name “block explorer” would suggest it can only be used to look up individual network blocks, that is not the case. Block explorers can also search for transaction IDs and wallet addresses, making them quite a nifty tool to check on specific transactions to your own wallet address.
Wallet Security Checklist
Application white listing
Ensuring transport layer security
Strong authentication and authorization
Encryption of data when written to memory
Sandboxing of applications
Granting application access on a per-API level
Processes tied to a user ID
Predefined interactions between the mobile application and the OS
Requiring user input for privileged/elevated access
Proper session handling
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