What is a Bitcoin Wallet?
A Bitcoin wallet is the first step to using Bitcoin. Why?
Without a wallet, you can’t receive, store, or spend bitcoins.
You can think of a wallet as your personal interface to the Bitcoin network, similar to how your online bank account is an interface to the regular monetary system.
Bitcoin wallets contain private keys; secret codes that allow you to spend your bitcoins.
In reality, it’s not bitcoins that need to be stored and secured, but the private keys that give you access to them.
A Bitcoin wallet is simply an app, website, or device that manages Bitcoin private keys for you.
What types of wallets are there?
- Web-wallet. Accessed via web-browser. Access to money gained through username or password.
- Access gained via physical access to a computer.
- Access gained via physical access to the phone.
- Hardware (Cold Storage)
- Paper, Brain, Hardware
- Hardware wallets delimit access to your funds to the hardware device alone. The coins are stored in a microcontroller and are to be transferred only when authorized.
- The act of storing of your wallet’s private keys in a way that is completely detached from a network.
- Paper, Brain, Hardware
Types of Bitcoin Wallets
Let’s discuss the types of bitcoin wallets and why you might want to use one kind over another.
A hardware wallet is a physical electronic device, built for the sole purpose of securing bitcoins.
The core innovation is that the hardware wallet must be connected to your computer, phone, or tablet before bitcoins may be spent.
The three most popular and best Bitcoin hardware wallets are:
Hardware wallets are a good choice if you’re serious about security and convenient, reliable Bitcoin storage.
Bitcoin hardware wallets keep private keys separate from vulnerable, internet-connected devices.
Your all-important private keys are maintained in a secure offline environment on the hardware wallet, fully protected even should the device be plugged into a malware-infected computer.
As bitcoins are digital, cyber-criminals could, potentially, target your computer’s “software wallet” and steal them by accessing your private key.
Generating and storing private keys offline using a hardware wallet ensures that hackers have no way to reach your bitcoins.
Hackers would have to steal the hardware wallet itself, but even then, it can be protected with a PIN code.
Don’t worry about your hardware wallet getting stolen, lost or damaged either; so long as you create a secret backup code, you can always retrieve your bitcoins.
Think of a hardware wallet like your own underground steel vault. If you own a significant amount of bitcoins, you should strongly consider getting one!
Hot wallets are Bitcoin wallets that run on internet connected devices like a computer, mobile phone, or tablet.
Private keys are secret codes. Because hot wallets generate your private keys on an internet connected device, these private keys can’t be considered 100% secure.
The most popular Hot wallets in India are
Think of a hot wallet like your wallet today: you use it to store some cash, but not your life savings. Hot wallets are great if you make frequent payments, but not a good choice for the secure storage of bitcoins.
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