Updated: May 30, 2021
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This is Part 2 of our wallet explanation. I you haven’t read Part 1, we suggest to do so, as we keep building on top of the previous article.
Are you ready for more? Here are more details about wallets:
What happens if I lose my wallet? Basically, you lose your unique key to access your coins, so you lose your money. But… there is hope! Each wallet generates a set of key words (24 words if the wallet holds a higher security standard), which you should always write down and keep in a safe place. These key words are your “recovery password”. When typed correctly and in the correct order, they generate a “copy” of your wallet, where you can access all your crypto.
Continuing with this scenario, another question arises:What if you have a wallet brand A, which you lost, and then you buy a wallet brand B. Can you use the key words from wallet A to setup your wallet B, to recover the crypto from wallet A? Yes, it is possible.You could recover the lost access to the coins using two different brands of wallet, if the two wallets use the same protocol to generate the keys.Now, the protocol above mentioned lead us to something a bit more technical. There is a set of 2042 words, which is an industry standardised list known as BIP 39 protocol. The 24 key words named earlier are part of this list.
But how safe can it be, if just 24 words can generate a copy of my wallet? They are quite safe.Let’s do the math: if you have 24 key words -taken from a set of 2042 words-, there are 3.9*10^55 combination of words within the BIP 39 protocol. This is taken from the combinatorics formula: n!/(k!(n-k)!), n being the total set, whilst k is the number of elements of the subset.To put it in perspective, the total population of Earth are about 7*10^9 people. This means, each person could have 5.4*10^45 different unique combinations, without overlap with anyone else. So yes, the 24 key words are very safe (just don’t share them with anyone)
How many kinds of cryptos can a wallet hold? This depends on the type of crypto you have and the capacity of your wallet. Each of your crypto uses a program which is stored inside your wallet, that connects it into their blockchain. Depending on how many of these programs the wallet can store, is the amount of cryptos you could simultaneously hold. We don’t mean then amount of Bitcoin (0.03 or 10 por example), we are talking about the amount of different types of crypto (like having Bitcoin, Chainlink, Polkadot, Terra and Helium) The program uses space inside the wallet, thus, the wallet needs a certain capacity.
As an example, the Ledger S can hold between 3 to 20 different types of coins, whereas the Ledger X can hold more than 1000. If you plan to hold, let’s say, 8 different types of crypto (regardless of the number of actual coins within each group), you better select the Ledger X.