This guide aims to explain what IOST wallet entails and how they work. This is a series on IOST wallet and subsequent editions will feature IOST wallet security, IOST resources and other things pertaining to IOST wallet.
What is a wallet?
A cryptocurrency wallet is a software program that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency, monitor transaction history, their balance, and on some blockchains interact with Smart Contracts.
Misconception About Blockchain Wallets
Millions of people use cryptocurrency wallets, but there is a considerable misconception about how they work. Unlike a wallet that one would carry in their purse or pocket to hold physical currency, digital wallets don’t store currency. Technically, cryptocurrencies don’t get stored in any single location or exist anywhere in any physical form. What exists are records of transactions stored on the blockchain.
Cryptocurrency wallets are software programs that store your public and private keys and interact with various blockchain so users can monitor their balance, send money and conduct other operations. When a person sends you IOST token, for example, they are essentially signing off ownership of the coins to your wallet’s address. To be able to spend those coins and unlock the funds, the private key stored in your wallet must match the public address the currency is assigned to. If the public and private keys match, the balance in your digital wallet will increase, and the senders own will decrease accordingly. There is no actual exchange of real coins. The transaction is signified merely by a transaction record on the blockchain and a change in balance in your cryptocurrency wallet. This applies to all digital cryptocurrencies without exception.
Different Types Of Cryptocurrency Wallet
There are different types of cryptocurrency wallets that provide different ways to store and access your digital currency. Wallets can be broken down into three distinct categories:
Software wallet – They are based on computer software. Your keys will be stored locally on your device, allowing you to control your keys from your computer, laptop, phone, etc. However, if your computer gets hacked you risk losing your keys, and consequently, your funds.
IOST as only one desktop wallet currently iWallet Google Extension and iWallet CLI, for mobile phone wallet we have TokenPocket and Purewallet which are the most preferred wallets there is also, Huobi Wallet and Cobo wallet.
Hardware wallet – These wallets differ from software wallets in that they store a user’s private keys on a hardware device like a USB. Although hardware wallets make transactions online, they are stored offline which delivers increased security. Users simply plug in their device to any internet-enabled computer or device, enter a pin, send currency and confirm. Hardware wallets make it possible to easily transact while also keeping your money offline and away from danger.
NOTE: IOST does not have a hardware wallet yet, but a team is working on support.
Paper wallet – These wallets are easy to use and provide a very high level of security. While the term “paper wallet” can simply refer to a physical copy or printout of your public and private keys, it can also refer to a piece of software that is used to securely generate a pair of keys which are then printed.
Paper wallets are considered one of the most secure options to store private keys as they are not connected to the internet and cannot be hacked. Another plus is that they are practically free as you can print them out on paper via a printer. However, it is still risky to import a private key into a compromised computer.
With the knowledge of different types of IOST wallets and how to get them, there are still other wallet related terms that you should be familiar with and here are a few of them.
Public Key: A public key is the publicly known portion of the private key/public key pair that a user will generate when creating a wallet. There is no harm in giving out your public key, as it exerts no control. Your public key is also your IOST wallet username. Rather, the private key should never be shared because you cannot stop someone from transaction on your behalf.
Private Key: A private key is what can be used to sign a transaction that authenticates the holder, and instructs the blockchain to only allow authorized actions that are listed as permissions on an IOST account. It is linked to a corresponding public key counterpart.
Owner Key: Owner key = ownership of an account. The owner key allows you to do anything that the active keys do. In addition to this, with the owner keys, you can change both the account’s owner and active keys.
Active Key: These are the keys that carry out daily operations on your IOST account. This private key tends to be used for tasks like transferring funds and voting.
Every IOST account has at least two types of permissions; owner permissions and active permissions. Each transaction needs to be verified and signed by one of these permissions to be considered valid. Transactions are signed by a wallet that stores key pairs associated with your account.
Other Useful Resources
Guide: How to create new IOST wallet using TokenPocket wallet-https://iost.watch/guide-create-new-iost-wallet-using-token-pocket-wallet/
IOST iWallet Native CLI wallet- https://iost.watch/iwallet-windows-64-bit/
Easy 3-Steps Tutorial: IOST Mainnet Account Creation and Wallet-
https://medium.com/iost/easy-3-steps-tutorial-iost-mainnet-account-creation-and-wallet-activation-guide-aac89ce35c6f
[Video] How to Create an IOST Account – https://www.youtube.com/watch?v=MrVmToZZzog#action=share
IOST Account Doc – https://developers.iost.io/docs/en/2-intro-of-iost/Account.html
IOST FAQ – https://forum.iost.io/t/faq-most-frequently-asked-questions-in-iost-official-international-telegram-group/85