Coinbase Wallet Extension

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Cryptocurrency wallets are essential for buying, trading, and selling cryptocurrencies. Traders need them to store cryptocurrencies securely, as well as to protect and validate transaction information. Be it hardware or software, also known as hot and cold crypto storage, custom crypto wallets offer traders specialized solutions compared to those from exchange’s electronic currency translation.

Specifically, the following article will share with you about Coinbase Wallet and how it works.

What is Coinbase Wallet?

For those who are just getting started with cryptocurrency, Coinbase Wallet is fantastic. The user interface is clear and simple to use, with a straightforward three-tab layout and distinguishable features. The software links to the majority of major bank accounts.

One of the biggest wallets on the list, Coinbase Wallet supports more than 5,500 digital assets, including major coins like Bitcoin, Litecoin, Dogecoin, and Ripple as well as all ERC-20 tokens and tokens on EVM-compatible blockchains.

It is essential to distinguish between the Coinbase exchange and the Coinbase wallet. Coinbase exchange is one of the oldest and most famous cryptocurrency trading platforms in the United States.

Keeping your digital assets on an exchange’s web wallet makes trading easier but leaves your funds more vulnerable to dangerous cybersecurity threats.

Coinbase Wallet is a hot wallet that can be used without opening an account with the exchange, and it is non-custodial, meaning the private key is stored in your device – not in Coinbase’s servers. This means you don’t need to worry about your currency getting locked for any reason or getting hacked on the website.

How it works

Coinbase Wallet uses BIP39, the industry standard, to generate a 12-word recovery phrase. This recovery phrase is the key to your wallet. Anyone with the recovery phrase can recreate your purse and take control of your crypto assets, so you should store it carefully.

In the background, a 12-word phrase associated with a private key (a long string of letters and numbers) allows you to control your wallet assets on the blockchain.

The wallet also uses the public key to generate the wallet address. Coinbase Wallet supports multiple networks (on mobile) and multiple accounts so that you can have multiple addresses.

All your Coinbase Wallet assets share the exact 12-word recovery phrase.

Coinbase Wallet is a hot wallet, meaning that the keys of the wallet are generated and stored on a device connected to the internet. You can connect your Ledger hardware wallet (cold wallet that generates offline private keys) to your Coinbase Wallet to further secure your assets. However, it would be best to do this with the new Coinbase Wallet using the Chrome extension.

When you send cryptocurrency or connect to a decentralized application, your wallet will ask permission to “sign” the transaction with your private key. Put, your wallet acts as a validator.