jakiro
introduction:
The Web3 industry is developing too fast, and new things appear every day.Therefore, a lot of daily thoughts are worth recording.
As the entrance to the Web3 world, we use wallets every day, but do we really understand wallets?
If you don’t know all kinds of wallets yourself, how can you dare to put your assets in your wallet?
Therefore, in order for us to live longer and go far enough in this industry, please first have an in-depth understanding of Web3 wallet.
If you want to truly understand the wallet, you need to first understand a lot of underlying blockchain technology principles, but this is actually very costly to learn.
Including myself, I have been making wallet products for two or three years, but many of the concepts I have been used to have often become blurred, which is dark under the light.
At present, wallet products still have a high threshold for many ordinary users. Therefore, this article uses simple language to describe the underlying principles of wallets and helps everyone provide strategies for using wallets.
1. Compare with banks
Let’s not list some obscure concepts here, but try to use the common bank cards we use in traditional finance to make analogies:
Wallet address = bank card number
Public key = bank account
Private key = bank card password
Mnemonic = Master Private Key = Multiple Sub-Private Key = Multiple Bank Sub-Account Password (Auxiliary Word is another form of private key)
Analogizes the real life banks. If we want to trade with others, we need the following steps:
(1) Create a bank card account and set a password
In the blockchain, we first generate a private key through a random number generator. This private key is the bank card password, and then generate a public key through the private key. This public key is the bank account, and the public key will generate an address again.This address is the bank card account.
We can find that this creation process is the opposite of the bank in the real world: the bank first helps you create an account, and then asks you to set a password.
But like a bank, even if others know your public key and address (bank account and bank card account number), you cannot get your private key (bank card password).
(2) Transfer money to another bank card account
If you want to transfer money to another bank account, you need to know the other party’s bank card number first, and then enter the transfer amount (not greater than the amount of your own account). Next, you need to enter the bank card password. After verification, you can initiate the transfer.
Similar to this process, the only difference is that you don’t need to tell anyone or any organization your key (i.e., your bank card password) and just need to digitally sign it through your private key.
In the traditional financial system, the bank stores your bank card password and verifies it when transferring money. This bank is a centralized intermediary.
But in the blockchain world, only you know and save your private key, and it will not appear in any scenario anymore. You only need an algorithm to prove that you have your own private key.
(3) Report loss of bank account
If your bank card is lost or your bank card password is lost, you can freeze the bank account, or verify your identity to the bank and reset your password.
But in the blockchain world, if your private key is lost, it will never be found, and no one can freeze your account or modify your password.
2. The structure of multi-chain wallet
Here are the various concepts mentioned above:
The wallet can generate or import multiple sets of mnemonic words. A set of mnemonic words can generate a master private key. The master private key can derive multiple sub-private keys on different chains, and each sub-private key generates a fixed address.
However, in order to facilitate users to manage multiple addresses on multiple chains, wallet applications are generally encapsulated into the concept of Account, that is, the first address generated on each chain is collected as Account 1, and each chain is covered with the first address generated on each chain.The generated second address is collected as Account 2, and is aggregated in sequence in order of child private key derivation.
In short, wallets and accounts are product concepts, concepts created for the convenience of users; while mnemonics, private keys, and addresses are technical concepts, and they are actual data forms in blockchain.
The current trend is to encapsulate concepts such as mnemonics, private keys, addresses, and chains as much as possible in applications, and use some concepts that are easy for users to understand, such as accounts.
This is also why the “chain abstraction” narrative appears. It is also to reduce the troubles of technical concepts on users’ use of products. Don’t worry about cross-chain, gas fees and other issues, and provide users with similar experiences of Web2 products.
3. What is a wallet?
In fact, there is no money in the wallet, just like the wallet in our real life, the wallet contains more bank cards, keys and other items.
The same is true for the Web3 world, money is stored on the blockchain, and the word wallet refers specifically to the system used to store and manage user keys (i.e. bank card passwords).
Each wallet contains a key management system. Some wallets, the key management system is the only module; while some wallets may have broader functions on this basis, such as as the entrance to decentralized applications, typicallyIt represents OKX Web3 Wallet.
If classified according to whether the private key is directly exposed to the network, it can be divided into hot wallets, cold wallets, and warm wallets.
(1) Hot wallet: Hot wallet is an “online wallet”, an online wallet that can use Bitcoin on a browser or mobile device.
(2) Cold wallet: Cold wallet is an “offline wallet”. By keeping the private keys from being touched by offline, it can effectively prevent hackers from stealing, such as hardware wallets.
(3) Warm wallet: Between hot and cold wallets, similar to hot wallets, Warm wallets are also in the Internet state, but for the sake of safety, Warm wallets have strict whitelist addresses and cannot be used outside the whitelist.Address transfer.
From the perspective of security level, hot wallet It is actually the most important thing to do a good job of asset isolation. You can use the three-layer wallet strategy of cold and warm to divide your wallet into three categories: (1) Hot wallet (10% assets): wallets that are often used for interaction, do not store a large amount of assets, generally just put assets that meet Gas needs. This wallet can be used to play new projects frequently.Even if you are really fished, it will cause some losses, at least it will not hurt your muscles or bones. (2) Warm wallet (20% assets): In fact, it is an isolated hot wallet. Assets with relatively few interaction frequency can be placed in warm wallets. This wallet is suitable for placing liquid pledged assets, because many projects are now pledged projects. It will be dangerous if these assets are placed in hot wallets for a long time, so a hot wallet can be isolated as a warm wallet. The assets of this wallet can also be used at any time, but the frequency of interaction is much lower than that of hot wallets, and the risk is much lower. (3) Cold wallet (70% assets): Large assets are best stored in hardware wallets for cold storage, and it is best not to interact at all. Of course, asset isolation in multiple types of wallets is actually a sacrifice of efficiency for security. The best way to have a one-stop platform for managing assets that integrates multiple wallet types. There is currently no such lightweight tiered wallet on the market, but the OKX Web3 wallet is most likely to come out. Because OKX Web3 wallet, as a super application, has integrated multiple types of wallets, but it still lacks interoperability and fund management strategies for multiple types of wallets. I hope to truly manage user assets in one-stop in the future. After seeing this, you should be able to basically establish an overall understanding of Web3 wallet. More importantly, do not use unknown wallets at will in daily use, because security is not guaranteed, and do not copy and paste your mnemonic words and private keys at will. Once leaked, you will lose all your assets. Since everyone has come to the Web3 world, every step must be like walking on thin ice. Only in this way can you have the opportunity to go to the other side.4. How do ordinary users choose wallets?
5. Summary
