If you refer to the desktop or online application you use to see and send your blockchain funds as a wallet, then the answer is nothing…. well, maybe nothing. Some of these apps do store some data like your private key, addresses and balances, but those elements aren’t actually “the money in your wallet.” The address is on the blockchain and is a representation of your private key. If it were any other way, we would not be having the technical revolution that is the blockchain. Your “wallet” may hold this information and store it, but, the cryptocurrency in your EGEM address is on the blockchain and accessible by using a one directional cryptographic equation based solely on your private key. When you put your private key in: you get your address out. And the only person who can get to the funds on the blockchain, and move them, is the one who can prove that equation to the blockchain; thus, the holder of the private key. Summary: your “wallet” is just a browser that allows you to prove to the blockchain that you hold the private key.
I am writing this article for the newcomer to cryptocurrencies and EGEM, or ethereum based, addressing in general. We will explain how EGEM and ethereum addresses are the same thing. I’m not going to go into the technical details of this wallet and addressing scheme, i.e. the mathematical equations. You can research that online if you want more information. The purpose of this article is to let you understand one thing and understand it well. Your private key is your address and is probably what most people refer to as a “wallet,” because this is what holds your funds. I had some bitcoin forum admin tell me “don’t you mean address and not wallet” when speaking of a singular address with funds inside my “wallet” and so he was probably right in stating that a “wallet” can really mean a holder of your addresses. However, the public relates to a wallet as the device in your pocket that holds your money. So, whether one address or a multitude of addresses, each address has a private key and your funds are in that wallet and address. In bitcoin it is a little more complex because they can’t make “change” until after the transaction, and sometimes that “change” is sent to a new address that is auto generated in your “wallet” application. Remember, we are talking about Ethereum wallets here in this article. So, as complex as this all is, in Ethereum land, your wallet is your private key and that represents ONE address on the blockchain. You should ALWAYS find a way to have your private key held somewhere – even if the software wants to do this for you – you need to be able to export a copy. If you do not hold your private key (physically) you do not really own those funds. If you have an exchange “wallet” with no access to the private key – the exchange really owns those funds and allows you to access them on their exchange. It is an important distinction.
Well, that’s easy enough. So why don’t I just start randomly guessing private keys until I find one with a balance and take the funds? Obviously, you are welcome to try, but conventional wisdom tells us you will not have a lot of success… One of my colleagues asked me if there was a wallet that did not take a master’s degree to compile. This got me thinking about how difficult it is for the average person to work with cryptocurrency. And, then it is a simple concept too. So, how to explain this to the public? The answer I came up with is that your private key is just like a password. When you log on to any of the sites you use online, for instance your Gmail account, they make you enter a password. The thing is the site owner (if they are a quality one) does not know what your password is either. What they do when you enter your password for the first time is this: that site owner runs a “hashing algorithm” on your password and stores the result in the database. The only person who can get the same result as what is in their database is the person with the password that hashes to that result (this is you). Notice how when you need to reset your password, in most cases people don’t send you your old password anymore on email (if they do then you may want to consider that site is storing passwords in plain text and is not secure). That is because they really don’t have it stored. They only store what your password hashes to in their database and they need you to put your password into the algorithm to get to what they have stored in the database. They can compare what you enter using the same algorithm to what is in the database all day long. If you enter the wrong password the hash won’t match the hash they have stored. However, they cannot just decrypt your hashed password and get back what you originally entered as your password.
Then, what is a hashing algorithm? If you ever watched an old spy movie where they take a word in a sentence and switch the letters for their “cypher” you would understand that it is really just this. A=J, B=Z, C=F, D=O, E=X and so on… using something like that the word BED would be ZXO and only someone who had the decoder could “decrypt” your message input, which is “bed,” from looking at the message “output,” which is “zxo.” But, here is the thing with cypher and cryptographic hashes – they are a LOT more advanced and random now. They are built in such a way that there is no “cypher” to “decrypt” what is put in as the input. So, imagine if the only way to get to the result ZXO is to be the person who places BED into the message. Now the word “bed” becomes a key so to speak – and the result ZXO is the unlocked result. The only person who has that “key” is the person who first entered it into the encryption. Now to relate this to cryptocurrency… your private KEY is the only way to get your ADDRESS by using the hash. You can give someone the address all day long, but they do not have the cypher to unlock the private key. So, if they say here is the hash and I’m going to look the other way – enter in your private key and then the result is the address – then you are the owner of that account.
Like I said, it really isn’t that hard. Coming up with the math for the hashing algorithm is hard, but that work has been done and we are ignoring that math for this article. You are just the user now. So, next question: I know both EGEM and Pirl are built using the Ethereum technologies as a base (they were copied from ETH) and I have an Ethereum address that I use. How can I get one on the EGEM chain? What about with Pirl? Many of you have figured out that the SAME ETH address will work on every one of those chains. Why? All those coins use the same hashing algorithm in their address. It is the same reason a BTC address will work on LTC and DOGE. Now, an Ethereum based address will only work on an ETH blockchain(network), and a Bitcoin based address will only work on a bitcoin blockchain(network) because those two blockchains, or networks, are different hashes. Why can’t you see your ETH funds in your EGEM wallet if they are the same? Well, you can, but you have to have funds on both blockchains at that address to see them on both, and you have to pull up your address on either one chain or the other, but you won’t be pulling up both with the same address call. I say this because a smart software developer can call both chains and make you “see” them together, but behind the scenes that software had to call each chain independently.
Each blockchain is like its own little internet. Imagine if there were two internets. And you had a site called www.mysite.com. On the regular internet you go to www.mysite.com and see your site. But there is www2.mysite.com also. That one is owned and managed by someone else. You still type mysite.com into the browser but your normal browser will always be pointed at the “www” internet (the regular one) and a special browser for the copied internet will point you to “www2” addresses. Someone else could come along and say – hey I am going to make a copy of the internet too and mine is going to be called “www3” because it’s the third internet. That person will make a “www3” internet browser. If you type the site “mysite.com” into that “www3” browser, you go to “www3.mysite.com” and now you understand. Each blockchain is like its own internet with its own browser, and the “address” is available on that blockchain which is usually by the “browser” or wallet going to that “internet” or blockchain.
To recap, the private key is really your wallet and you should have a hard copy guard it carefully. That private key hashes to an ethereum based address that works on Ethereum, EGEM, and several other ethereum based blockchains. Your Ethereum based address will not work on a bitcoin-based chain and most likely will not work on other types of blockchains. But, you can use your EGEM address on all the ETH blockchains you like, even keeping funds on each blockchain at the address your special private key hashes to.