Archives 2019

Hardware Cryptocurrency Wallets: Advantages And Disadvantages

How Bitcoin Works

Due to the frequent questions about the inability to send payments “although there are assets on the balance”, we decided to describe the principle of operation of the Bitcoin network (and similar Litecoin, Dash, Dogecoin, etc.) in a clear way. Even if you already have an idea of “how it works”, we strongly recommend you to read this article and to “refresh” your knowledge. Perhaps you will learn something new for yourself or “sort out” what you have already known.

Private Vs Public Nodes

Private Vs Public Nodes

A node is any computer that connects to the Bitcoin network and uses the p2p protocol, which allows nodes to communicate with each other on the web and disseminate information about transactions and blocks. These nodes, between which information is distributed, comprise a blockchain network. We have prepared for you the explanation of the main perks and differences of Private and Public Nodes for you to benefit the most! 

How Do Public Nodes Function ….

A public blockchain is an open network. Anyone can download the protocol, read, write an addendum to it and take part in the system.

The public blockchain is distributed and decentralized. Transactions are recorded in the form of blocks and are connected so that they form a chain. Each new block has a timestamp, and it is checked by host computers (nodes) before it is written to the blockchain.

All transactions are public, and all nodes are equal. The data in the public blockchain is unchanged: it cannot be changed after the blocks are verified.

On the most popular public blockchain, the open-source cryptocurrency Bitcoin is built. Another outstanding example is Ethereum, with which you can create and run smart contracts. In Public Blockchain, we need to change a bit the incentive for good behavior, because we don’t know who a user is.

Some of the benefits of public blockchains are: open read and write, immutability, security due to mining.

….And The Private Ones

A private blockchain is a network managed by one organization, and you can participate in its work only at the invitation of such an organization and the corresponding permission from it.

Network participants must have permission to read, write or check the blockchain. There are various levels of access to a private blockchain, and information must be encrypted to protect confidentiality.

Private blockchains allow organizations (companies) to use distributed registry technology while eliminating the possibility of data leakage or publication.

However, the above means that private blockchains lack an essential feature – decentralization. Some critics believe that private blockchains are not blockchains at all, but centralized databases that use a distributed registry.

Private blockchains are faster, more efficient and more economical than public blockchains, which require a lot of time and energy to verify transactions. In a Private Permissioned Blockchain, we rely on the fact that we know who a user is.

Some of the bonuses of private blockchains are permitted enterprise, faster transactions, better scalability, and compliance support.

What To Opt For?

When you contrast a public blockchain to a private one, I think it all starts with managing personal data: in a private blockchain, you know from the very beginning who all the participants are.

Using the public nodes, again, you do not know who all these participants are, but this does not mean that you cannot build a permission model on a public platform. Then you, your architects and developers, will have to develop the logic and mechanism for managing personal data.

They are two completely different blockchains. They serve different purposes, and you will see that many of the real-world use cases that you find easily use both types of blockchain.

Hardware Cryptocurrency Wallets: Advantages And Disadvantages

Hardware Cryptocurrency Wallets: Advantages And Disadvantages

One can often meet the articles such as ‘10 Crypto Hardware Wallets’, ‘Best Hardware Wallet 2019’, ‘Access Fork Hardware Wallet’ – but not always get the full meaning. Here is the answer to the main questions. What’s good in hardware wallets? How do they differ from the others? What are the advantages of a hardware wallet? 

What Wallets Do We Choose From

In simple words, a cryptocurrency wallet is a tool that you can use to interact with the blockchain network. Crypto wallets can be divided into three groups: software, hardware, and paper. Depending on the mechanism of operation, they can also be called hot or cold

Most companies that provide wallets for storing cryptocurrencies are software-based, which makes their use more convenient compared to their hardware counterparts. Hardware wallets, in turn, are the most secure, just like paper wallets, which consist of data printed on a piece of paper. Still, their use is currently considered obsolete and unreliable.

Hot Or Cold?

As mentioned earlier, wallets for storing cryptocurrencies may vary depending on how they work on ‘hot’ and ‘cold’ ones.

A hot wallet is any wallet that connects to the Internet. This type of wallet is quite easy to set up, and also provides quick access to your balance, which makes them convenient for traders and other regular users. Our platform NOWNodes is at your disposal in case you will need to create this type of wallet.

In turn, cold wallets do not have an Internet connection. Instead, they use physical media to store keys offline, which makes them more resistant to cracking. Thus, this type of wallet is a safer alternative for storing your coins. This method is also known as cold storage and is especially suitable for long-term investors or “holders”.

A hardware wallet is a physical electronic device that uses random number generation (RNG) to create public and private keys. Then these keys are stored on the device itself, which has no connection to the Internet. Operations cryptocurrency committed to the online mode, but working with the private key is performed at the hardware purse. Even if such a wallet is connected to an infected computer, the data will be protected. Thus, hardware storage is a kind of cold wallet and is considered one of the safest. 

Although these wallets provide a higher level of protection against various attacks, the weak point of such devices is multiple types of firmware failures. Besides, hardware wallets are less convenient due to more difficult access to funds compared to hot ones.  

You should consider using a hardware wallet if you plan on storing cryptocurrency for a long time, as well as for significant capital. Currently, most of these wallets allow you to set your PIN code, as well as a recovery phrase, which can is necessary in case your device is lost.  

If a purse is lost or stolen, it can not bother s taking care of the safety of their funds, no one can access them. But having data for a reboot on a removable device, the wallet can be restored entirely. For owners of large amounts of cryptocurrency, such a wallet will be the most optimal solution. By the way, many hardware wallets can store not only Bitcoin private keys but also several Altcoin wallets.

Main Conclusions For NOW

The advantages and disadvantages of hardware wallets for storing cryptocurrencies are as simple to summarize as using this device, similar to a USB flash drive. Trezor, Ledger or other brands – it is for you to choose!

The device itself does not have Internet access but can be connected to computers, laptops and other equipment, with access to the network. If a transactional request exists, the device will sign it; the private key itself will not receive any of the applications. To cut the long story short, the data of hardware wallets are not given up anywhere. This is the most crucial advantage. The main drawback is the threat of internal software failure. 
You can find the reliable hardware wallet reviews and recommendations on the blog of NOWnodes!