February 25, 2021 · 4 min read
Proof of Stake Wallets
This article will focus on what makes a proof of stake wallet, how they are different from other crypto wallets, and what the Divi Project is doing to make it easier for everyone. We’ve covered proof of stake consensus comprehensively in some of our other blogs, but in case you need a quick reminder. 👇
The mechanism by which stakers (validators) keep a blockchain secure. Stakers are required to allocate collateral to this process. They can only validate directly proportional to their stake in the entire network.
There are many different types of wallets in the crypto space. They all have differing levels of complexity and security and serve varying functions. Most staking wallets exist primarily on desktop computers due to their power usage and connectivity requirements. There are wallets for Bitcoin and different wallets for PoS coins. It can be tough to know what to use and what the other requirements mean!
‘Trusted third parties’ offer these wallets. You can think of these as banks for your crypto. You do not have access to your private keys; therefore, you rely on the custodian to keep your assets safe. If they lose them, you lose them. It’s as simple as that.
These wallets are owned and operated by the user. They have complete control of their private keys, therefore total control over their assets. There is no need to trust a central entity.
Functional wallets are also non-custodial but serve a purpose beyond merely transacting the currencies of choice. Functional wallets allow the user to participate in the security of a proof of stake network through staking. This process varies in complexity from wallet to wallet.
These wallets allow you to interact with the blockchain but do not provide any function concerning blockchain security.
For example, staking on Coinbase would be considered a custodial functional wallet. You’re not in control of the coins, but you’re helping to secure the network. Understanding these various aspects of wallets can be helpful when deciding what route you want to take!
Precisely. Many people do not have the benefit of a stable internet connection either. Cryptocurrency is complex. These people who may otherwise be interested in staking, or blockchain, are left out.
The Divi Wallet is all about making crypto easy. At its very core, it is about the user. After all, blockchain is an incredible (and complex) technology. Still, if people cannot harness it quickly, we will struggle to see blockchain adoption in the mainstream.
The Divi Project is creating a humanized blockchain ecosystem.
At the most fundamental level, we have built Divi’s ecosystem with people in mind. Divi realized that what people want is what they already have. Usernames. These usernames allow people to transact currencies instantly, with confidence, without the need for large strings of numbers. Also, with terms such as bitcoin, pos, mining, staking being thrown around, many people can be left confused about where they fit in. Divi changes this by creating a welcoming user experience, regardless of how well you understand blockchain.
Masternodes help secure the network. They act in a collaborative way to organize stakers. This ecosystem keeps Divi working. Traditionally, to be able to run a node, you’d need a degree in computer science, with a minor in Blockchain technology (not really, but you get the picture. It’s tough). With Divi’s mobile nodes, users can contribute in just a few clicks. Why make it technical when it doesn’t have to be?
The Divi Wallet created staking vaults (cloud-based staking) and a dual key solution. Users can delegate their stake to another user willing to maintain the connection. Using their staking key, or the ‘permission to stake,’ that person keeps control of their spending key, maintaining control of their funds. People without a stable internet connection can participate in the network thanks to our dual key solution.
Make no mistake. Cryptocurrency is a financial revolution. The ability for individuals to act as their bank is incredible. The power of the users of the network to contribute to its health is groundbreaking. On top of that, those users are the ones rewarded, not some central entity.
And that’s the most crucial part. Divi is creating inclusive technology. We’re building a technology that is easy enough for those who stand to benefit the most. There is no point in developing an ecosystem that those in the know can only use. Cryptocurrencies are unique as they offer the individual a chance to contribute and take power back. If we aren’t striving to build solutions that honor that potential, we’re not doing the technology justice.
To continue your learning, check out our ultimate guide to proof of stake.
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February 25, 2021 · 4 min read