Austin Diamond

What's a Wallet?

TL;DR

Your crypto wallet stores your password (called a private key) to accessing your funds, ensuring you are the only one able to access, sell and move them.

Let's dive into the deep end

Your crypto wallet is your password to accessing your funds. It stores your private keys, which unlock your funds to be moved away from the wallet, and ensure you are the only one granted access. Wallets come in many formats:

  • Hardware wallets (like Ledger and Trezor)
  • Online wallets (like Metamask)
  • Paper wallets (storing the password on a piece of paper)
  • Mobile apps like Alongside


How do they work?

Your wallet is your digital bank account on the blockchain. The main difference between this one and your bank’s, is that this one cannot be accessed by a third party: you are your own bank. Regardless of the format they come in (hardware, online, or on a piece of paper), wallets all perform the same functionality. The password they contain (private key) manages the control to your funds by being proof that you are the rightful owner (through a digital signature). If you lose your private keys, you lose access to the funds in the wallet.


What’s the difference between the types of wallets?

  1. Hardware wallets: They resemble USB drives, and store your keys in a physical format that needs to be stored in a safe place. Hardware wallets still have an extra layer of protection with an additional password you set when first using them. These make accessing your funds harder, both for you and bad actors.
  2. Online wallets: The keys are stored in the software. These make using your funds easier as they typically integrate with exchanges and apps across the ecosystem. 
  3. Paper wallets: Keys are directly written on a physical piece of paper and stored in a safe place. This makes moving your funds the hardest, but also impossible to recover if you lose the paper.
  4. On Alongside: The keys to your wallet are secured directly by your mobile device. Neither a third party or the Alongside team can access your funds without your physical device.


What about when people send me funds? 

Each wallet comes with two keys: 

  1. A private key: the password that is only revealed to you.
  2. A public key / address: this address can be freely given to others when receiving funds, such as with a QR code. Anyone with the address can see the funds stored on the wallet, but cannot access them. It is safe to share your public key. 


How do I backup my wallet?

Wallets come with a seed phrase that allows them to be recovered in case they are lost. Seed phrases are strings of randomized words (i.e. world shape apple mug…) that when combined unlock access to the wallet. The seed phrase should be stored in a safe place, and preferably not digitally (as this can be susceptible to hacks).


How do wallets work on Alongside? 

When you create an account with Alongside, a wallet is automatically created for you. Only you and your mobile device hold the keys (i.e. password) to accessing the funds on the wallet. When depositing USD to the app, you are depositing the funds directly into your personal wallet. Similarly, when purchasing the index, the index funds are stored inside your wallet as well. Alongside cannot access your funds on your behalf and at no point hold custody of them.


How do I protect my wallet on Alongside?

Your wallet on Alongside is protected through your email login, and we recommend that you turn on face recognition or passwords on the app to further protect your funds from being access by someone who would take control of your phone.