Blockchain 101: Getting Started


Welcome to Atomic Wallet! If you're just starting out, here's a tutorial to guide you through blockchain basics and how to use Atomic Wallet for your crypto.

What is blockchain?

A blockchain is a public decentralized ledger, somewhat similar to a large database. It's composed of blocks, which are in turn composed of transactions.

To understand the blockchain better, let's imagine a pair of friends named Bob and Alice. One day Alice approaches Bob and asks him to lend her $500. Bob agrees and makes a note about it on his whiteboard:

July 19, 2021: I gave Alice $500.

The next night, Alice sneaks into Bob's cabinet while he's asleep and adds a new record to his data.

July 19, 2021: I gave Alice $500.
July 20, 2021: Alice gave me $100 back.

Bob isn't exactly happy with it, so he tries to come up with a way to prevent this from ever happening again. He decides to encrypt all his notes using the SHA-256 algorithm (the same one Bitcoin uses, by the way), making them into intricate hashes. Now his whiteboard should be safe from Alice!

It doesn't work as intended, though — Alice knows of that algorithm, too. She gets into his cabinet again and makes yet another note, reducing her debt even further.

Bob gives this more thought and finally devises a way to protect his whiteboard from Alice's stratagems. From now on, each note's hash will also include the hash of the preceding note, as well as an encrypted solution to a complex equation. For Alice to add any other notes to the whiteboard, she'd have to make all the calculations for all the notes, which would take her much, much longer than just one night.

Bob's whiteboard is a blockchain, albeit a pretty basic one. It's a database designed to store transactions, and it employs encryption to protect its contents from any malicious modifications. The real-world blockchain is additionally protected by having countless computers confirm no invalid transactions are present in the network — that's what "decentralization" means in the crypto world.

Blockchain: the brief glossary

Public key (public address)

The address of your wallet, similar to your credit card number. You can use it to receive crypto, check your balance, and view your transaction history. To get your address, choose a coin in the Wallet tab and select the Receive button.

Private key

The key to your wallet for some particular asset, for example, BTC or ETH. Your 12-word backup phrase is your skeleton private key, which means anyone who knows it will be able to manage your entire account—it's like giving someone your credit card number, CVV code, and expiration date. To view your private keys, go to Settings > Private keys.

Warning: Our support team will never ask for your 12-word backup phrase. You should never reveal it to anyone or enter it on any websites. We have no web wallets, and there's no way to "restore" or "validate" your wallet via any websites. Beware of scammers trying to steal your money!


The base unit of the blockchain. A block is composed of transactions.


A record of some operation that was made on the blockchain: for example, a crypto transfer from one address to another.


A "confirmed" transaction is a transaction that's been verified by the network and completed, that is, added to the blockchain. Blockchain transactions get confirmed by miners.


The process of adding a transaction to the blockchain for it to be accepted by nodes. Depending on which consensus mechanism is used on a particular blockchain, mining usually requires either significant computing power or large coin holdings.


A computer employed in the blockchain network to verify transactions. 

Consensus mechanism

A kind of policy governing how a particular blockchain operates. The two most common consensus mechanism are Proof of Stake and Proof of Work. The former requires transaction validators to have large coin holdings, and the latter revolves around utilizing significant computing power for complex calculations. Proof of Work vs. Proof of Stake: Explained

How does Bitcoin work?

If the blockchain still looks like a mysterious high-tech black box to you, here's a quick real-life example of how it all comes together to get a transaction processed:

  • Bob wants to send Alice 0.1 BTC.
  • He logs in to his Atomic Wallet app, selects BTC, inputs Alice's public address as the receiving one, and sends the transaction out.
  • Carol is a miner. Unless Bob pays her a fee to cover her electrical power expenses and give her some profit, she won't be interested in processing his transaction. In the current market, Carol will charge 0.001 BTC to process this transaction. Bob's Atomic Wallet will pay the fee automatically.
  • Thanks to Carol, blockchain nodes have now accepted the transaction as valid and added it to the blockchain.
  • Alice receives her 0.1 BTC.

Which wallet should I use for my crypto?

There are two kinds of wallets in the crypto world — the custodial and the non-custodial ones, such as Atomic.

Internet connection
Not required
Private key ownership
The wallet
Centralization Centralized Decentralized

With custodial wallets, such as exchanges, you have to trust the platform with taking good care of your private keys. With non-custodial wallets, you're the only person you are to trust.

Let's say Bob needs a safe to keep his money in it. He buys a safe, puts his cash into it, sets the combination, and closes the door. To make sure he doesn't forget the combination, he writes it down on a piece of paper. At that point, he can either keep the combination himself or hire a guard to do that for him. The former option is a non-custodial wallet, and the latter is a custodial one.

The question is, how does Bob make sure the guard doesn't just vanish into thin air one day purloining both his safe and his combination note? How can he be sure the guard will never share the combination with someone else for a decent enough price? Well, he has to take the guard's word for it.

If Bob chooses to keep the combination by himself instead, he'll have to take full responsibility for his money and learn a thing or two about best security practices. In case Bob's fine with investing some time into it, then a non-custodial wallet is the best choice for him.

Custodial and Non-custodial Wallets Comparison

Is Atomic Wallet secure?

The short answer is absolutely, if you're cautious enough. Your wallet is offline, and no one but you has any access to your private keys and your crypto. 

That's why your wallet's security depends on how secure your device is an how careful you are with your private data. You should always safeguard your device from any malware, as well as be extra cautious with your 12-word backup phrase — remember that anyone with this data can manage your wallet just as you do.

Again, let's imagine Bob buying a safe to keep his hard-earned cash in it. Once he writes down the combination on a piece of paper, he gets approached by Alice. Alice tells him she's a renowned safe expert and can make his safe more secure, but she'll need to know the combination to do so. 

Bob hesitates for a few moments but stull gives her the combination. Alice opens the safe, grabs the money, and runs away. Poor Bob! However, nothing was wrong with that safe. Bob just shouldn't have trusted Alice with the combination.

Crypto scammers won't be as straightforward as Alice when trying to con you out of your crypto, as they're usually much more ingenious in their schemes. Still, it's crucial to remember they'll never get any access to your account unless, for example, you enter your 12-word backup phrase on some scam website masquerading as an official Atomic Wallet tool. 

How do I keep my wallet safe?.

Where are my funds stored?

Your crypto is stored on your blockchain address. By becoming an Atomic Wallet user, you aren't delegating your crypto to us — you're still the only master of your money.

If custodial wallets are the guards you have to trust with protecting your money, how would Atomic Wallet be described in similar terms?

Imagine every time you put more money into your safe (or take any out), you jot that down in your personal notebook. The next time you need to know how much cash you have stored in that safe, you can just take your notes out and look at the last one. That's what Atomic Wallet does for your crypto, except that instead of you manually writing everything down each time, your computer or phone does that for you.

In other words, Atomic Wallet is an intermediary between you and the blockchain, similar in some ways to a bank teller at your bank. You can conveniently send, swap, and stake crypto with the wallet's help, but — unlike a bank teller — it has no direct access to your funds and private data.

Where are my funds stored?

Can the Atomic Wallet team see my transactions?

Yes and no. Blockchain is pseudonymous by nature, not anonymous, so anyone who knows your public address can view your transaction history on the block explorer. They won't have any way to understand who you are unless you willingly reveal your identity to them, though.

At the same time, there's no way for our team to access your entire account. If you encounter any issues with ETH and share your public address with the support team, we'll be able to see your transaction history via the block explorer — just as anyone else. There'll be no way for us to find out what your BTC or DOT address is, though, or learn who you are. Naturally, we also cannot make any transactions for you.

Can Atomic Wallet Team have access to my transactions, keys, or backup phrase?

Good question! Here's a brief list of guides we recommend you read next:

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