Crypto Wallets — Past & Present

A quick history of crypto wallet options and how ZelCore simplifies asset custody for everyone

Definitions:

  • Cryptocurrency Wallet — a piece of software that stores or otherwise has access to private keys for a given number of public addresses, allows sending and receiving of assets to these addresses.
ZelCore Desktop Portfolio Screen

Brief History

When a new cryptocurrency project launches, the asset holders (miners, OTC buyers, traders, etc.) need a place to hold custody of their asset. Projects provide a wallet, full node and/or lightweight, which generates addresses to send and receive coins. Usually these wallets can only hold the single project’s assets, so if a person is involved with many projects, they could have many downloaded wallets and blockchains, requiring lots of storage space and bandwidth and continual syncing of these blockchains.

These single-asset wallets have usually been secured either by physically having a wallet.dat file, which holds all public addresses and private addresses in a single file, or through a 12–24 word mnemonic passphrase. Both the wallet.dat and passphrase would need to be backed up to keep custody of the asset safe in case of file corruption, lost wallet access, etc. The wallet.dat scheme historically meant there was no encryption to protect the file, and a passphrase had to be written down and referenced to import a wallet, since its difficult to memorize, making daily use cumbersome. Some wallets utilizing a mnemonic passphrase give access without typing in the passphrase, but this relies on the security of the device, like a phone’s lock screen, which is not always secure.

Multi-asset wallets have become popular because they provide two much-needed features:

  1. ability to hold many assets in a single wallet

Some multi wallets have created a new security concern by storing a part or all of the login credentials in a centralized database (for recovery, password reset) which can be convenient, but can be very off-putting for those needing strong security that they solely control.

ZelCore Login Screen w/ Zel ID | Easy Login Biometric Login | Easy Login Passphrase Login

ZelCore Multi-Asset Wallet + Zel ID

ZelCore solves these security concerns while providing the above multi-asset wallet features. By utilizing the password+username account scheme (Zel ID), a user has the convenience of choosing their own wallet credentials for everyday wallet use, and these credentials are never transmitted or stored remotely. All functions to access an account are performed locally on the user’s device. This means that the security for a user’s assets is placed 100% in the user’s hands, no data breach or 2FA hack will give a bad actor access to your account. Your username+password is hashed to generate your wallet master priv key and must be protected as you would a passphrase or plain-text priv key.

There is no wallet.dat or passphrase to use for backup. Your username+password is your wallet backup. Do not lose your login credentials as they are unrecoverable. Back them up on pen and paper and securely store.

Zel ID also provides additional security and wallet features to users via decentralized 2-Factor Authentication (d2FA), and Easy Login that uses a device’s biometric sensors for quick access to ZelCore, or a user-selected passphrase.

Please see more detailed explanations of these features at our Zel ID Medium post and Zel ID Website.

How to transfer an asset balance to a new wallet

There are many ways to transfer assets from one wallet/address to another. The quickest method for users with wallet.dat files or private keys is the web wallet for a project (if available). The web wallet can either import a wallet.dat file directly, or import a plain-text private key, and then load the balance from that address into a new lightweight address. The funds can now be transmitted to an address of your choosing.

Another method is to download the full node wallet for the asset, and download and sync the blockchain data. The user can either place the wallet.dat file in the appropriate folder, or use the import priv key feature. This way the assets still utilize the same address, but the process can take a very long time depending on blockchain size and bandwidth limitations.

The best practice is to see how other holders of a given asset are transferring funds, as not all wallet options are available for all projects. If a project has a Discord server, they typically list out which wallets are available and can provide instructions on transferring funds for a single asset.

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Written by Zel Technologies, GmbH — 14 October 2018 — Rev. 1

<https://zel.cash>
<https://zelcore.io>
<https://zelid.io>

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