DEFINITION of Blockchain Wallet
A blockchain wallet is a digital wallet that allows users to manage bitcoin and ether. Blockchain Wallet is provided by Blockchain, a software company founded by Peter Smith and Nicolas Cary.
BREAKING DOWN Blockchain Wallet
Creating an e-wallet with Blockchain Wallet is free, and the account setup process is done online. Individuals must provide an email address and password that will be used to manage the account, and the system will send an automated email requesting that the account be verified.
Once the wallet is created, the user is provided with a Wallet ID, which is a unique identifier similar to a bank account number. Wallet holders can access their e-wallet by logging into the Blockchain website, or by downloading and accessing a mobile application.
The Blockchain Wallet interface shows the current wallet balance for both bitcoin and ether tokens, and displays the user’s most recent transactions. Users can send a request to another party for a specific amount of bitcoin or ether, and the system generates a unique address that can be sent to a third party or converted into a QR code.
A unique address is generated each time the user makes a request. Users can also send bitcoin or ether when someone provides them with a unique address. The send/receive process is similar to sending or receiving funds through PayPal, but uses cryptocurrency instead.
Users can exchange bitcoin for ethers (or visa-versa) as well. Users are shown a quote indicating how much they will receive based on the current exchange rate, with the rate changing depending on how long the user takes to complete the transaction. Exchanges do not appear instantaneously in the wallet because it takes some time for transactions to be added to each currency’s blockchain.
Users can also buy or sell bitcoin through the interface, with this service powered by an exchange partner such as Coinify or SFOX. Exchange rates are guaranteed for a limited period of time. In order to make a purchase, a user must either transfer funds from a bank or can use a credit or debit card.
Bank transfers will incur a small payment fee (e.g. 0.25%), and it may take several days before bitcoins are received. Using a credit or debit card provides instantaneous access to bitcoin, but incurs a larger convenience fee (e.g. 3%). Buy and sell services are not available in all locations.
Wallet security is an important consideration for users, as having one’s account illegally accessed may result in the user losing bitcoin and ether. Blockchain Wallet has three levels of security:
Level 1 Security is designed to prevent users from losing account access. It allows users to verify their email address, create a 12-word backup recovery phrase that can be used if a password is forgotten, and set up a password hint (Blockchain does not store the password).
Level 2 Security is designed to prevent others from gaining unauthorized access to the wallet, and includes linking a phone number to the account to receive a one-time password when the account is logged into, and creating two-step authorization.
Level 3 Security allows users to block Tor requests.