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Taking full responsibility for your finances and figuring out how to make transactions on the blockchain is not easy. It takes self-education and the learning curve may take longer than expected. Moreover, knowing things in theory doesn’t automatically protect you from making mistakes. When theory blends with practice anything may happen. Our post is here to provide you with helpful information concerning blockchain fees, their origin, and what types of fees exist so you are equipped with the required knowledge to make the right financial decisions on web3.
What are Cryptocurrency Fees?
Everything that is connected with paying for extra services you didn’t know about causes a lot of stumbling. Blockchain transactions require various fees when users want to sell, buy, send, or swap cryptocurrencies. Let’s discuss why you should pay these fees.
Network Fees
If we compare web3 with the traditional banking system, blockchain reality seems more complicated. Banks introduce fees for bank customers if they want to exchange currencies, send or receive money. However, there is no analog in the traditional financial system to cryptocurrency network fees. This is a unique concept that exists only in the world of web3. To discuss blockchain fees we have to say a word or two about how blockchains function.
For blockchains to stay decentralized they require nodes run by validators (miners) who verify blockchain transactions and write them into the blockchain.
If you want to send a transaction to the blockchain, you are required to pay network fees to validators. Based on these fees, miners (validators) include the transaction into the block on the blockchain.
Why Can Network Fees Change?
It’s important to keep in mind that each blockchain has different properties. For example, the Bitcoin blockchain has each new block added every 10 minutes, while the Dogecoin blockchain adds every new block once a minute. Blocks on various blockchains differ in size, which means that only a certain amount of transactions can be written there. This means that blockchain fees differ from chain to chain.
To understand how network fees are applied, we can bring an example of a hotel service. A waiter is bringing breakfasts to hotel rooms. Several clients are waiting in different rooms, and the number of plates a waiter can take is limited but you can tip a waiter and speed up the service. It means that the people who can tip a waiter with a bigger sum than the rest will get their breakfast faster. Those who pay less money, get food later.
Something similar is happening in web3. Cryptocurrency transaction fees are a function of demand and supply. The more transactions required to be written in a block, the higher the fees are.
Platform Fees
Platform and trading fees can be compared to banking fees charged for sending, receiving, or exchanging funds. Usually, these fees are applied to users of custodial crypto wallets which are provided by centralized crypto exchanges. When users don’t owe their wallets they cannot control what the fees are. Sometimes, centralized exchanges don’t even show a transparent view of what the fee breakdown is.
Types of Platform Fees
- Processing fees are applied when you buy crypto with the help of a credit card. Before finalizing the transaction, a summary is shown with the full fee breakdown.
- Off-ramp/on-ramp fees are applied when you keep sending funds between the bank account and the crypto wallet. Exchanges provide you with ways to get money on and off the crypto ecosystem and charge extra fees for that.
- Withdrawal fees are applied when you would like to withdraw digital assets from the platform and send them to the crypto wallet. This is a tricky part because exchanges can charge the highest fees in this case. It’s a good idea to double-check the withdrawal fees before finalizing the transaction.
- Trading fees are applied when you swap cryptocurrencies. Depending on the exchange, the fees might differ. Usually, they could be less than 1 percent. The bigger the sum for a transaction, the higher the fees are.
Summary
Blockchain transactions could be stumbling for unprepared users in terms of various fees applied. It’s important to understand the nature of cryptocurrency fees and find better options to cut them. One of the ways is MPC-powered wallets because they minimize the amount of interaction between the wallet and the blockchain protocol. MPC cryptography takes place off-chain and thus, helps you to save on blockchain transactions.
Get the Spatium Wallet App and enjoy how user-friendly and convenient it is. Protect your crypto assets with MPC cryptography and save on fees while sending transactions to blockchains. Moreover, soon Spatium will enable peer-to-peer crypto swaps when you don’t need to go to centralized exchanges to swap cryptocurrencies. Stay tuned!
Spatium Bitcoin MPC wallet is easy to use and free to download. It’s available on Android and iOS devices.
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay a network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
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Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
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For the last decade, blockchain technology has kept changing our view about finances, banks, financial institutions, and our role in it. Blockchain transformed the concept of owning money when banks or other financial institutions are not involved and financial operations are taking place only between users. Web3 users can get access to their online wallets by applying mathematics and cryptography, as well as send and receive assets anonymously. Right now over 1000 blockchains are building the world of web3. Let’s discuss what is a blockchain protocol and what are the principles blockchain protocols operate on.
What is a Protocol?
Protocols are not something new in the modern world of technology. Each computer operates multiple protocols to be able to exchange data safely. Protocols came into existence more than 30 years ago. The well-known hypertext transfer protocol defines how to structure online packets and what type of data can be placed there. Other examples of protocols could be HTTP, SSH, FTP, etc.
What is a Blockchain Protocol?
The blockchain protocol is the essence and the heart of the web3 ecosystem. Similar to standard computing protocols, blockchain protocols provide algorithms, rules, and guidelines defining and controlling how the blockchain network is functioning. They enable blockchain nodes (computers building the network) to exchange data that can be read and understood across all web3. One more very important function of blockchain protocols is to safeguard participants of web3 interaction from malicious players, who can cause damage.
4 Principles Blockchain Protocols Address
1. Decentralization
Blockchain technology, or distributed ledger was created having no central authority in mind. It doesn’t have a Single Point of Failure (SPOF) because it does not have centralized server management. People host blockchain nodes on their computers and if at least one computer node is working, the blockchain can be accessed from anywhere around the world. At the same time, having no central authority means that protocols should authorize the network transactions on their own.
2. Security
As we have mentioned before there is no central authority that’s why blockchain protocols are the ones that safeguard the security of the web3 crypto world. Keeping in mind the fact that web3 involves cryptocurrency transfers, blockchain protocols provide the rules for data structure and secure data transfer.
3. Scalability
Blockchain protocols are supposed to be scalable, which means that they should allow an increase in transactions. First blockchains have some transaction limitations: set number of transactions in a defined time period. Nowadays, modern blockchains are more flexible. There are various ways to increase the scalability of blockchain protocols: add new nodes, increase the size of the block, etc.
4. Consistency
Based on the fact that there is no central authority regulating the consistency and automated update of cryptocurrency networks, blockchain protocols are the ones in charge of it. The creation of every new block should be written into the database and synchronized with all computers that host the nodes of a blockchain.
Summing Up
The importance of blockchain protocols cannot be undermined. They build the structure of the web3 ecosystem and allow safe and protected cryptocurrency transfers. To be able to start your journey in web3, make sure you have a secure and easy-to-use crypto wallet to protect your digital assets.
Stay protected in web3 with Spatium Feeless Bitcoin Wallet. It’s easy to operate and securely to use. Spatium Feeless Bitcoin wallet is free to download. It’s available on Android and iOS devices. Visit our website to learn more about the wallet. Get it on your phone, test it, and enjoy your financial freedom!
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay a network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
Follow us on social platforms: X, LinkedIn, Discord, and Telegram.
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Crypto wallet backup brings an additional layer of protection to users’ digital assets. Wallet backup is important if the device with the crypto wallet is stolen or lost. Also, there could be technical issues or computer failure and in case there is no backup, the access to the crypto wallet account is lost forever. Another growing problem is that non-custodial crypto wallet holders have a tendency to forget passwords to retrieve their private keys. Nowadays, it’s believed that around $120 billion in crypto is in stranded or lost wallets.
Backup helps to import the wallet, install the account on another device and restore the password to it.
Usually, wallet backup doesn’t take much time, it’s secure and simple. In addition, in the case of the Spatium wallet, crypto wallet backup takes the burden of managing and storing private keys.
Types of crypto wallet backup
Recovery phrase
The recovery phrase is generated at the moment when the user sets up a wallet. It could be 12 words either with or without spaces. Users should be attentive to copy the recovery phrase correctly and not show this set of words to anyone.
Biometric recovery
Biometric backup is an anonymous scanning of a user’s face when mathematical data received from facial biometrics is used to authenticate the wallet owner. The biometric scanning is performed privately and locally. There is no need to store a recovery password, biometric facial scanning guarantees that the same person is accessing the wallet as well as trying to restore the access if required.
Cloud recovery
Cloud backup applies to self-custodial wallets, when there is a third party, helping users communicate with blockchain ecosystems. This is a wallet service provider. As soon as you enable cloud backup in your wallet account, you increase the level of your digital asset protection tenfold. Wallet cloud backup helps you to retrieve the crypto in case of emergency.
Spatium Feeless Bitcoin Wallet cloud backup options
Spatium provides three main options for a cloud backup. These are iCloud backup, Google backup, and QR-code disaster recovery. To get to know more about how to set up Spatium wallet cloud backup, please, read our post.
Conclusion
Though each type of wallet recovery has its advantages and disadvantages, the most important point is that it gives wallet owners a piece of mind providing better wallet account protection.
Spatium Feeless Bitcoin Wallet provides users with cloud backup recovery in addition to MPC cryptography which protects digital assets and makes the wallet as user-friendly as it can be.
Stay protected in web3 with Spatium Feeless Bitcoin Wallet. It’s easy to operate and securely to use. Spatium Bitcoin MPC wallet is easy to use and free to download. It’s available on Android and iOS devices.
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
Follow us on social platforms: X, LinkedIn, Discord, and Telegram.
Both multi-signature (multisig) and multi-party computation (MPC) wallets provide an additional security layer to your wallet account. If you have a multisig or an MPC wallet, the responsibility for storing and keeping your wallet’s private keys is shared with some other party. In the case of MPC wallets, it’s a wallet service provider. In the case of multisig wallets, it’s other wallet holders. Let’s discuss what is a multisig wallet and what are the differences between MPC and multisig wallets.
What is multisig?
A multisig wallet is crypto software used to store digital assets and provide shared access to funds. This type of wallet is more secure than traditional wallets because it involves several people/entities applying their private keys and signing a transaction. All wallet owners, which could be as many as required, agree on the financial operation and approve the transaction. If someone doesn’t provide their private key to sign a transaction, the operation won’t be fulfilled. Such a way to store digital assets helps to share control over them and at the same time, protect the wallet account from hacking.
What is MPC?
MPC technology is used to facilitate crypto wallet-user interaction and at the same time secure the assets. MPC takes the crypto wallet private key application off the picture and substitutes it with shards. These could be 2 or more shards, based on the wallet settings. A transaction is only signed when both shards are activated at the same time.
Differences between MPC and multisig wallets
Taking into consideration that both MPC and multisig wallets provide shared control over private key management, we can go deeper into the features each type of wallet has. The most important point is to stress that multisig wallets are mostly used by companies and enterprises, they are not very convenient for ordinary users.
On-chain/off-chain transactions
Transaction signing in multisig wallets takes place on-chain, and every signature (blockchain address) is seen by everyone. MPC wallet provides signing operations (activation of shards) off-chain and only then sends a transaction to the blockchain.
Key recover
MPC wallets offer private key recovery mechanisms, while multisig wallets provide no private key recovery.
Transaction speed
MPC wallets provide near-instant transactions because the user-server communication takes place off-chain. Multisig wallets have to send the data about each private key activation to the blockchain. Also, the waiting time is longer because you have to wait for all entities to sign a transaction.
Gas fees
Finally, MPC wallet transactions contain no or very small gas fees, while multisig wallets charge gas fees for each private key activation transaction.
Conclusion
The two types of wallets discussed in the post have one goal: to provide more protection to wallet accounts and help you not to be easy targets for hackers and scammers. The difference is in the technologies behind it. While multisig wallets prefer to go with multiple signatures (private key applications) to sign a transaction, MPC wallet splits the private key into two or more shards thus, the private key is never revealed.
Stay protected in web3 with Spatium Feeless Bitcoin Wallet. It’s easy to operate and securely to use. Spatium Bitcoin MPC wallet is easy to use and free to download. It’s available on Android and iOS devices.
In addition to convenience and safety, it brings a competitive edge by offering feeless transactions.
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
Follow us on social platforms: X, LinkedIn, Discord, and Telegram.
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There are three main types of crypto wallets based on how users store their private keys. One type is a custodial wallet. Such wallets are easy to set up, simple, and convenient to use. They are usually offered by crypto exchanges to users for their convenience. Also, at the same time, while operating such wallets, you give up your financial freedom, because the private key is not in your hands. Wallet providers store private keys on their servers.
Another type of crypto wallet is a non-custodial wallet. On the one hand, they provide you with ultimate financial freedom. You may store assets, sell, and trade, etc. There are no restrictions or limitations set from the wallet provider’s side. On the other hand, the web3 environment is toxic and your crypto assets are the target for hackers and scammers. Also, the private key can be lost or misplaced, which will also disable access to the funds.
MPC technology is the gold standard in securing private keys
There is one more type of crypto wallet, a self-custodial. It provides you with full control over your digital assets and at the same time offers an unmatched level of security. Multi-party Computation (MPC) is the encryption technology that empowers you with convenient yet safe means to interact with web3.
What is MPC?
MPC is a technology that enables the data exchange between parties in a trustless manner and helps to build privacy-preserving software. The MPC technology protects your private key by splitting it into two (or more) shards.
Spatium stores one shard on your device (mobile phone) and the other one on the Spatium server.
When you want to sign a transaction and complete one of the actions: send crypto, buy crypto, exchange crypto, etc. a phantom key is generated. The wallet’s private key is eliminated, that’s why such wallets don’t have a single point of failure.
It’s worth mentioning that MPC is not easy to master. The technology represents multi-round distributed protocols with high-level cryptography. Inexperienced crypto development teams and lack of testing may cause MPC technology to be misused and prone to bugs. Moreover, in addition to signing crypto wallet transactions, MPC technology helps restore access to the wallet in case the device with the wallet installed is lost or stolen.
Spatium crypto wallet MPC implementation
Spatium Wallet has been applying MPC since 2017, which makes the Spatium team one of the most experienced in the world of MPC wallets. Also, as part of MPC technology, Spatium applies Threshold signatures (TSS) and Zero-knowledge proofs (Zk-proofs).
These technologies make consumer-focused Spatium wallets bulletproof secure and protect users’ on-chain asset management systems.
Only you, as a user, can initiate wallet operations. Spatium has no access to your wallet account. Also, Spatium cannot set any limitations on your wallet activity. To send crypto, you start a process when the wallet secret and the server secret communicate. Applied together, they sign a transaction without revealing the secrets to each other.
Summing up
Spatium Wallet is one of the first crypto wallets to use MPC. This technology is ideal for providing a balance between on-chain private key management, the ability to recover the wallet app and wallet security. Our team is advocating for a safe web3 experience available to everyone. Spatium Bitcoin MPC wallet is easy to use and free to download. It’s available on Android and iOS devices.
In addition to convenience, it brings a competitive edge by offering feeless transactions.
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
Follow us on social platforms: X, LinkedIn, Discord, and Telegram.
One of the characteristics of web3 is transparency. Blockchain operations are viewed by all web3 members. While dealing with sensitive financial data one requires to be anonymous. But how can one perform transactions on the blockchain and stay anonymous at the same time?
The answer is quite simple - every single action on the blockchain is encrypted. Cryptography or encryption is the process of applying secret codes to encrypt financial operations and confirm the authenticity of crypto wallet owners.
Just to understand how important it is, check the latest report on scams and fraud in web3. There is no doubt that the figures will rise significantly if there is no encryption. And the participants of blockchain operations can be easily targeted.
Of course, not many of us can apply extremely difficult mathematical equations to make encryption work, we have it done for us. Anyway, understanding how crypto wallet’s public and private keys work is vital.
How are public and private keys generated?
In a combination: ‘private-public keys’ the heart of the pair is the private key. The public key is generated based on the private key, while both these keys are generated only once when you set up your crypto wallets for the first time.
Crypto wallet blockchain address (public address) looks like a long combination of random numbers and letters.
1Lbcfr7sAHTD9CgdQo3HTMTkV8LK4ZnX71Bitcoin0x1ABC7154748D1CE5144478CDEB574AE244B939B5Ethereum
Examples of public address for Bitcoin and Ethereum
It’s the first thing you see when you open your crypto wallet. Also, for convenience, these lines of randomly generated figures are displayed as QR codes. By scanning one of them, you are redirected to the crypto wallet.
In very simple terms public and private keys could be compared to emails and passwords. While you freely give your email address to anyone, you never share the password, right? Absolutely the same applies to crypto wallets: imagine that the email address is your public key and the password to your email is your private key.
While a public key is called a blockchain address of your crypto wallet and can be easily shared across the blockchain, your private key MUST be kept secret!
The private key is used to verify your transaction by signing it. Because the public key is generated based on the private key with the help of encryption, the blockchain has to verify that the pair is genuine. If the transaction passes verification, it’s confirmed and is written into the blockchain.
Keeping your private key safe
One more important thing you should know about the crypto wallet keys is that there is no reset button. Once the keys are generated they cannot be re-generated again in case they are lost or stolen. The seed phrase, aka your private key secret string of words, is unique and can be generated only once! This is why you have to be super careful and keep it safe.
Custodial Services
If you lose your private key, you have no access to your funds. That’s why there are multiple services online: crypto wallets and crypto exchanges. They store users’ private keys on their side and apply them if required. Such services are called custodial.
Pluses and Minuses of Custodial Services
On the one hand, private key custody is convenient, because you don’t have to wreck your head and stress out while operating a crypto wallet or trading at crypto exchanges. The interface of custodial wallets is straightforward, similar to a banking app or a digital wallet. You only have to press the button to send funds, buy, or sell. No extra manipulations are required.
On the other hand, no matter how secure your private keys are with the service they are still prone to hacker attacks or any other technical malfunctions. Once a custodial gets hacked and users’ private keys are stolen, you lose access to your assets forever. ‘Not your key, not your crypto’ they say and that’s exactly the case. Just to understand the scale of the problem, read about the largest cryptocurrency hacks.
Also, one more thing about centralized custodial crypto services is that knowing that they owe your private keys, they can introduce various regulations, in a similar way banks do. These could be account restrictions, increased withdrawal fees, etc.
Self-custody, where security meets convenience
Luckily there is another way to operate your crypto wallets - self-custody. Self-custody is a middle way that takes the best practices from custodial and non-custodial worlds and provides users with safe wallets, full ownership of their private key, and convenience of operation. Keep tuned to our news and we will discuss more of what self-custody is and what’s the role of Secured Multi-Party Computation (MPC) in it.
Spatium crypto wallet which is self-custodial is free for everyone. We make sure that your digital assets are securely protected and that there is no friction while using our wallet app. Download, try it, and enjoy making financial decisions independently, irrespective of banks and other financial institutions.
Self-Custodial & Feeless Wallet from Spatium
Spatium Wallet is a multi-currency wallet that works with Bitcoin blockchain as well. Our wallet is making crypto swaps available to everyone through lowering commissions due to the feeless feature, and minimizing the number of intermediaries. Check out wallet website for more information and stay tuned!
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
