Your treasure chest - Telos Wallet
When starting on this journey into the world of blockchain and the broader tokenomics, it can be quite confusing to get started. One of the questions people usually ask is, “How do I get started with blockchain and tokens?” Our answer is, the wallet! Your wallet is the most important item when interacting with any blockchain.
You can think of your wallet as your treasure chest to store all your treasure safely and securely from pirates.
In a traditional banking system, a bank acts as a means to store your money, but also as a gateway to facilitate transactions. Banks verify the amount of money in your account and enable you to do transactions between individuals and businesses. Banks are the trusted intermediaries through which we transact. Blockchain and smart contracts, on the other hand, remove the need for trusted intermediaries like banks.
But how do we actually interact with the blockchain? In the world of blockchain, you have a decentralised equivalent to a bank account: a blockchain wallet (or an e-wallet).
Let us consider a normal bank account for a moment. Anyone can go to a bank of choice and open an account. Each account is identified by a unique account number, and funds are deposited or withdrawn from that account by means of the account number (or via a linked credit and debit card) in combination with a pin code. The owner of the account can share their account details to receive payment from others, and they use their debit or credit card to transfer money to another entity. The only way to access the funds is by means of the account number (which is public), paired with a pin code (which is private). The combination of public and private codes give anyone access to the account and the money stored in the account.
A blockchain wallet (e-wallet) is a tool that you use to interact with a blockchain. It is a digital wallet that allows users to store and manage their digital money (tokens or cryptocurrencies). A blockchain wallet allows the transfer of cryptocurrencies between users, and it has the ability to convert them back into a user’s local currency (fiat money).
An e-wallet can take the form of software (called a hot wallet), or hardware (called a cold wallet). An e-wallet does not actually store your digital currency, but it much rather acts as a means of keeping track of transactions and interactions with the blockchain. An e-wallet generates all the necessary information to send and receive cryptocurrency via the blockchain.
Your e-wallet is identified by an alphanumeric identifier (called an address) that is generated based on public and private cryptographic key pairs. A wallet address is a location on the blockchain to where your coins are sent or from where you send them to others. The wallet address is shared with others to enable the receiving of funds. A user keeps their private key private and shares it with no one. The private key is the cryptographical equivalent of a password or pin code, and the public key (address) is the same as your account number. The owner of the wallet uses their private key to unlock their wallet to access the funds recorded in the wallet.
If someone might lose their device or log in details, all they need to access their funds are their private key. Furthermore, public keys do not only need to point towards your wallet address to store your digital money. It can also be used to point towards a smart contract location that is stored on the blockchain, and the execution of the smart contract can be initiated by means of a multi-signature authentication.
A multi-signature wallet, also known as a multisig wallet, requires two or more co-signers to validate a transaction. This feature enhances the security of the wallets and eliminates the problem of a single point of failure. Multi-signature wallets are recommended when developing a distributed autonomous organisation.
When interacting with the Telos blockchain, your choice of wallet software for safely storing and utilizing your tokens is one of the most critical decisions that you can make. Make sure that your choice of e-wallet has a good reputation for security, usability, and allows integrations for dapps and trading.
The recommended software-based wallet on Telos is Anchor by Greymass.
For more information regarding Wallets and Accounts feel free to visit https://y-knot.io/learn/ for more information.