Bitcoin Wallet: Everything You Wanted To Know!

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What Is a Bitcoin Wallet?

Bitcoin wallet

Cryptocurrency is a completely virtual currency that does not have a physical form, so when you buy a cryptocurrency, you need to store it in a bitcoin wallet. Nowadays, there is a wide range of bitcoin wallets and it is quite difficult to make the right choice. Let’s see what a bitcoin wallet is, how to use it and which one to choose?

Definition of Bitcoin Wallet

Crypto wallet

A bitcoin wallet is a program that is necessary to work with cryptocurrencies and store coins in them through the blockchain. When dealing with it, you do not depend on the banking systems, can quickly transfer funds around the world at any time, and remain anonymous.

Despite the name, a bitcoin wallet is designed to store and operate a variety of cryptocurrencies, not just bitcoin (BTC).

Each wallet has a public key and a private key.

The first is the wallet address, a set of characters that is visible to everyone who sends funds to it, whether it be replenishment or transfers.

The private key is generated from random numbers, is closed from outsiders, and is used to sign transactions.

The seed phrase will help you recover your private key if it is lost. It is the same random sequence of words.

What Are the Types of Bitcoin Wallets?

How to store cryptocurrency

There are several types of wallets that can be roughly divided into two groups:

  • Hot wallet – This group includes wallets that work on devices connected to the Internet. They can store coins but in small quantities. They allow you to quickly and conveniently send and receive cryptocurrency.
  • Cold wallet – These kinds of wallets work offline. Due to this, they are characterized by a high level of security but are less convenient in everyday use.

Types of Cold Wallets

Crypto wallet

Hardware Wallets

Hardware wallets are considered one of the safest types of bitcoin wallets as it doesn’t require an internet connection. Therefore, a hardware wallet is reliably secured against hacker attacks. Anyway, the owners of hardware wallets should store their devices in a safe place to avoid device theft by intruders.

Desktop Wallets

Such bitcoin wallets are installed on a computer, which allows their users to completely control their funds and private keys. Desktop wallets function as an address via which users have the opportunity to send or receive digital coins.

Paper Wallets

A paper wallet is a piece of paper with a private key and a public address printed on it. Among all types of cold wallets, paper crypto wallets are considered the most insecure. You can get the paper wet, accidentally throw it away or drop it on the street, and then you will lose access to your funds. However, it must be admitted that malware does not threaten such a cold wallet.

Your private keys are printed on paper, so they are protected from viruses and hackers, but you should take care to store them in a safe place. If you lose your paper wallet and someone finds it, then most likely you will lose your funds.

Types of Hot Wallets

How to store cryptocurrency

Hot wallets are considered the most popular among other bitcoin wallets. These wallets are used via the internet and can be accessed online or from a mobile device. Their popularity is because they can be acquired relatively inexpensively or even for free.

Mobile Wallets

These bitcoin wallets are installed on a smartphone and suit those who use cryptocurrency for peer-to-peer transactions, online shopping, bill payments, money transfers, etc.

However, since hot wallets are used online, they can be hacked, so users should be very careful when choosing such a wallet. It is recommended to choose highly secure bitcoin wallets that use two-factor authentication (2FA) and multi-signature technology.

When selecting such a type of wallet, it is necessary to pay attention to its level of protection and its provider’s reputation.

Web Wallets

Hot wallets also include browser-based solutions. Their big advantage is wide accessibility. You can use it through a web browser or a mobile phone. The disadvantage is the presence of a “third party”, an operator that controls the platform. Theoretically, he could have access to your key. Therefore, browser wallets should be selected with extreme caution.

Best Bitcoin Wallets

  • Binance
  • EXMO
  • MetaMask
  • MathWallet
  • Coinbase
  • Trust Wallet
  • Binance Chain Wallet
  • Bitcoin Wallet
  • Samourai Wallet
  • Mycelium
  • BitPay
  • Trezor
  • Exodus
  • Trustee Wallet
  • Electrum

Conclusion

Both cold and hot wallets have their advantages and disadvantages. All of them are intended to store your digital coins, and the choice of a particular wallet depends on your requirements and needs.

Users should decide for themselves how much they are ready to pay for a bitcoin wallet and what protection level and accessibility they need.

If you are looking for a low-cost or free wallet with instant access for paying bills, money transfers, online shopping,  and other similar operations, then hot wallets with an Internet connection will be suitable for you.

If you wish to store private keys and digital coins in a safe place, you can use cold wallets.

To sum it up, it is worth saying that every user has to select the bitcoin wallet that best suits their needs. However, regardless of your choice, you should always be careful when giving information to wallet providers and protect your wallet with backups and strong passwords, as well as make sure no one else has access to your bitcoin wallet. Thus, you can protect yourself from risks and store your funds in a safe place.

READ MORE: Staking: what is it and how does it work?

 

Ranas Shakirov

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