Wait, what’s the deal with this key-based wallet business? And what’s smart about new-style wallets? If you want to get your head around one wallet versus another, we’ve got a breakdown to get you ahead.
Whether you are investing using hard cash or virtual cash (cryptocurrency), let’s face it, you need a wallet to store it in..
In the blockchain era, where banks are history, wallets are the new bank account – they safely store your claim to asset ownership, and allow you to move those assets around (in simple language, that is, to transact on the blockchain). Put simply, the right kind of wallet determines whether you are in control of not.
Between one class of wallet and another, though, there are varying degrees of control …and security, which is super-important in the hackopocene*. And obviously you want the maximum of both control and security. Read on for a comparison.
Old school : key-based wallet
When you buy crypto, on a CEX (centralised exchange) or DEX (decentralised exchange), you buy this digital currency on a trading platform, or exchange, and you have the choice to leave your tokens ‘on exchange’ or move them to your own wallet, where you control the keys.
We recommend that you use the fiat on-ramping and swapping features available in non-custodial wallets like Pillar Wallet as this reduces your exposure to risks that are present when using CEX’s.
Keys can be public or private and they allow you to either have control of the account or receive transactions in the same account.
A public key is similar to an email address, in that you can share it with others, and they can send you information (or, digital currency). But they cannot extract that information or send it under your name because they have no access.
A private key is similar to an email account password. Whoever has it, can send an email as you. A private key in a key-based wallet lets whoever has it move the ownership of digital currency.
As in real life, you can lose keys. If you lose the keys to your key-based wallet, you can’t prove you own the digital assets it relates to. Lose your key(s), and you lose access to your crypto. Full stop. And that’s what had to change.
New cool : smart contract wallet
You might have heard of smart contracts. These are blockchain programs or digital agreements that execute transactions between parties once a predetermined condition is met. They improve speed, accuracy, trust and transparency in transactions and performance.
Financial services like investment, trade, and credit lines can all use smart contracts. Industries like real estate, gaming, and healthcare, as well. Entire corporate structures, too.
Example of a smart contract implementation: Pharma Portal is a blockchain-based platform powered by IBM Blockchain Transparent Supply. It tracks temperature-controlled pharmaceuticals through the supply chain to provide trusted, reliable and accurate data across multiple parties. This lessens transportation issues for
lifesaving medications. Trust is life, after all!
Smart, but what about the wallet?
If a crypto wallet interacts with a smart contract, it’s called a smart contract wallet. Smart contract transactions include buying and selling tokens, token exchange, dApp interaction, trading, borrowing or lending, and more.
When it comes to crypto, you can use smart contracts for:
- borrowing and lending assets
- accessing different money protocols,
- selling tokens,
- buying, exchanging or trading, and
- interacting with different dApps.
Many centralised crypto exchanges don’t support smart contract transactions. DeFi does.
I want to be smart(er)
For dexterity with digital currency we recommend Pillar V2. It’s a multichain smart contract wallet, supporting 4 different sidechains as well as Avalanche, that was voted on by our DAO.
Like a yogi, it’s flexible. Like a VC, it’s a pioneer. It can handle any legacy, key-based or smart contract. The key? It’s smart, like you. So give yourself a little room to make those profitable moves.
* hackopocene, /hakəpəˌsiːn/ noun.
Like its real-life root, “anthropocene”, this is an era in which collective human impact changes the landscape. In this case, it’s the digital landscape, where code is power.
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