In this article, you will learn everything you need to know about the function of the wallet and the meaning of the pairs of bowls, private and public keys as well as the Mnemonic Seeds.
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The wallet is the Pirmare user interface, the digital wallet, it controls access to the user's money. Wallets do not contain coins, but key pairs Private & Public Keys or the Seed to check for entries in the blockchain. There are basically 3 different types of digital money markets, the Software Wallet, Cold Wallet & Hardwarewallet. The decisive factor is that you use one where you control the Private Key or Seed and are not dependent on third party providers!
Attention! If you lose your Private Key or Seed, your credit will be lost!
What are Private Key Public-Key & Mnemonic Seed?
A private key is an elliptic curve, each point on this mathematical function defines an address with x & y coordinates in hexadecimal. The private key consists of 2^256 possibilities of different numbers and letters, with a string of 52 characters. That's 1,1579*10^77 keys, which is almost the number of atoms in the visible universe! The private key is the proof of ownership for your Bitcoins. The public key is derived from the private key, e.g. public key = private key ^ n. The factor n cannot be determined and therefore it is not possible to derive the private key from the public key!
A sender signs transactions with her private key, which proves the ownership of the transaction outputs. The content of the transaction is encrypted by the recipient's public key. The recipient can now use her private key to decrypt the message containing an amount in BTC.
A Mnemonic Seed is a sequence of several words consisting of either 12 or 24 words. These words are limited to 2048 words introduced with the Bitcoin Improvement Protocol BIP32, where the 12th or 24th word is a checksum, so the seed should be generated by software. Mathematically there are 12!*2048 or 24!*2048 possibilities. The software calculates for the generation of a high randomness with the entropy, which is generated e.g. by the user. Seeds and private keys can be encrypted with an additional password. Software & Hardware Wallets can derive or calculate several private keys from the seed. The Private-Key or Seed should be exported and written down with a corresponding Software Wallet or Hardware Wallet, or secured in a Cold Wallet! The public key is automatically derived in a software from the private key, so it does not have to be backed up.
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So let's start by creating a wallet, using a modern address format like Pay-to-Scrypt-Hash (P2SH) or Native SegWit address. These can be selected in the Software Wallet. The newer address formats allow the users to set the fees for a transaction themselves, the sender can now determine how fast the transaction should be processed. The higher the fees, the faster the transaction will be in the next block.
If the fee is set too low, the transaction may not be validated and discarded after about 2 days. The exact amount of the fee is determined by the load on the network, the so-called Mempool, which stores all UTXO unspent transactions until they can be validated by the next block found. The mempool is located in the working memory of the nodes.
Now that you have successfully set up a software wallet, you can copy the address or display it as a QR code. When copying, check the first and last approx. 3 characters to make sure that it is your address and that they are not victims of a malware that exchanges its address when copying.
In the Block Explorer you can view all "Onchain" transactions & public blockchaindata and statistics.