Stacks wallet overview
The Stacks Wallet is the application used to manage your Stacks (STX) token holdings. You can use it to view your token balance, send and receive tokens. This overview will introduce some basic concepts and terminology. If you have a good understanding of cryptocurrencies, you can skip to the installation page.
Cryptocurrency wallets are software that enables the sending and receiving of cryptocurrency. Unlike the wallets you carry physical money in, a cryptocurrency wallet doesn't contain your tokens.
Every wallet has one or more cryptocurrency addresses. An address is similar to an account number, it is public and will be used by others to send tokens to you. Each address has a corresponding private key, which is used to sign outgoing transactions from your account. The wallet software securely manages this private key for you. When setting up a new wallet (and not using a hardware wallet), you will be asked to write down a seed phrase. This seed phrase is the equivalent of your private key. You should keep it safe and never reveal it to anyone.
A Stacks address is a string of letters and numbers starting with an
SM3KJBA4RZ7Z20KD2HBXNSXVPCR1D3CRAV6Q05MKT. You can and should share the address when you want someone to send STX tokens to you.
Your seed phrase, 24 words in an ordered sequence, is the private key for your addresses and wallet. never share your seed phrase with anyone.
When you send a transaction from the wallet, you are digitally signing a token transfer from your account and broadcasting this to the Blockchain network. After the network has received and validated your transaction, tokens will be moved from your account to the specified destination account. The transaction will be permanently recorded on the Blockchain and is irreversible.
Just as you don’t keep all the money you have in your bank in a physical wallet, you shouldn’t keep large numbers of tokens in your cryptocurrency wallet. Instead, if you have a large number of crypto assets, you should store them with a custodial service. Custodial services protect your token holdings using high-security systems.
Custodial services have different techniques for storing crypto assets. The techniques vary according to factors such as the liquidity level you want to maintain or the security you would like. If you own large numbers of token assets as an investment, you should choose a custodial service as if you were selecting any investment service. Consider your needs, the firm’s reputation, fees, and so forth.
The Stacks Wallet is not recommended for institutional holdings.
Blockstack suggests a firm such as Coinbase Custody for institutional holders. Coinbase Custody charges its clients a management fee based on assets. Of course, like any responsible asset holder, you should do your own research and select a service that meets your needs. The Investopedia's article What Are Cryptocurrency Custody Solutions? is one place to start.
You can choose among different types of cryptocurrency wallets. There are mainly two types of wallets, software and hardware.
Software wallets run as programs on a computer desktop/tablet, online (web), or mobile phone. Desktop software wallets are downloaded to one computer. Because they are on one system, they are vulnerable to theft either of the computer itself or through computer hacking. Computer viruses can also impact desktop wallets.
Similarly, mobile, online wallets do not require a desktop, but they also tend to be smaller and simpler. Online wallets run over the web and are accessible from any networked device, computer or phone. However, online wallets are vulnerable to hacking as well and also rely on third-party service providers who themselves may also be vulnerable.
Hardware wallets store your seed and addresses on a separate and secure device. To use these wallets, you connect them to a networked computer, enter a pin, and communicate to send and receive tokens across the web.
Unlike a pure software wallet, hardware wallets can be disconnected and placed offline in a secure physical location like a bank deposit box. For this reason, hardware offers another level of security that software wallets don’t have. Blockstack suggests that you use a hardware wallet such as Trezor or Ledger.