Crypto Wallet
Learn what a crypto wallet is, how it works, and what its different types and security implications are.
An EOA is what a user needs to manage their funds, send transactions, and identify themselves on the Ethereum network. The only thing a user must own to control the EOA is a private key, which serves two purposes:
It is how the account address is derived.
It is how transactions will be signed.
In practice, interaction between a non-developer user and the blockchain is allowed by a digital wallet. Despite the name, wallets do not store the currency (the balance is always on-chain) but instead are a tool through which users have a “window” to the blockchain (to view their balance and transaction history) and sign transactions with the private key.
The principal distinctions among wallets are:
Who controls the private keys.
If there is an internet connection.
Next, let’s discuss the categorizations of wallets and the types of wallets based on these characteristics.
Custodial vs. non-custodial wallets
Custodial wallets are wallets where the service provider (usually an exchange or a company) stores the private keys on behalf of the user. The user does not have direct control over the private keys, which means that the user is trusting ...