This is one of the crucial moments of storing digital assets. Choosing a bitcoin wallet. What is it and how it works? We will get to this place in the article below.
For bitcoin users or investors, especially for starters, the dilemma of where to store your assets is pretty understandable and simply necessary. It’s like with hard currency. You need someplace where you can keep your financial goods. No matter traditional or modern ones. If you’re into decentralized digital currencies but you’re also still at the beginning of your road, then you should take a look at the next part of our bitcoin guide series.
What is a bitcoin wallet?
The Bitcoin wallet is an app, a program, or a physical device where you can send and receive your bitcoins. The operation is possible thanks to a publicly available ledger called blockchain, a growing list of records linked by cryptography.
Bitcoin wallets are available for mobile phones, desktops, or even hardware devices.
To be precise, bitcoins aren't literally stored in any particular place. They are digital assets, so they are kept in a private key for every bitcoin address saved in owners’ bitcoin wallet. The coins themselves are not in the physical wallet. Crypto wallets can be used not to only receive or spend cryptocurrencies but to track the ownership as well.
Is bitcoin wallet safe?
The most important thing in choosing the best wallet for your needs is research. You can choose the option that’s the best match for your wallet needs. What’s obvious with bitcoin wallets and kind of identical to real, traditional wallets is that you have to take care of its safety.
Without your wallet keys (a series of characters) and/or password you will lose access to your bitcoins stored in the wallet. While creating your password or passphrase be creative and do not reuse your old passwords from different places. By doing this you make sure that your funds are safe. So summarizing, your bitcoin wallet is as safe as your bitcoin best practices. Period.
Types of bitcoin wallet
They vary in the matter of expediency, usage, security, coin support, anonymity, fees, built-in services, or other characteristics. The most popular differential is whether they are cold or hot. Cold wallets can be stored offline, while hot wallets require an online connection most of the time.
Are you into mobile devices? Maybe you spend a lot of time in front of the computer? Or perhaps you like to store your data on a specific device? With bitcoin wallets, everyone will find something for themselves.
There are FIVE main types of wallets available for crypto users:
- Mobile wallets
Application for your mobile phone or tablet computer; designed for quick face-to-face transactions with QR codes. They are significantly small and kind of simple-in-use. Pretty convenient but on the downside, the loss or damage of your mobile device could lead to loss of the funds. Examples of mobile wallets: Jaxx, Breadwallet, Exodus, Electrum, SamouraiWallet.
- Desktop wallets
Applications installed on your personal computer. If the device has an incessant internet connection, then a desktop wallet can be classified as a hot wallet. Users have a comprehensive and very precise look into their funds; on the other hand, it’s hard to make use of QR codes, the wallet is as safe as your computer, therefore you need to protect yourself from malware software and viruses. Electrum, Jaxx, Exodus, or Wasabi Wallet belong to desktop wallets.
- Web wallets.
Part of an exchange platform or an independent provider. It’s undoubtedly a convenient option, all you need is a web browser on any device but if there are some problems with a web platform, there could be some problems with access to funds. Browser plugins, website wallets, or exchange wallets count as web wallets. Popular web wallets include Coinbase, Guarda, or Binance. OneHash Wallet is also a web wallet that we highly recommend.
- Hardware wallets
For example hardware devices. The safest way to store your bitcoins, especially large amounts of them; not designed for mobile devices and frequent transactions. You can store your private keys on devices in the type of USB flashes. They are very secure but they are expensive as well. But after all - better safe than sorry, right? Among hardware wallets we can distinguish: Ledger, Trezor, or KeepKey.
- Paper wallets
They belong to cold wallets. The term “paper” refers to a physical copy or paper print of your virtual public and private wallet keys. If you decide on a paper wallet, you’d get your wallet in a physical form. That provides solid security. But in this case, solidness doesn’t relate to all its aspects. Paper wallets may be not durable enough, especially for a long time.
With the bitcoin wallet, the deal is kind of similar to a traditional, physical wallet. You have to take care of security firstly - your money, important documents, or credit card cannot stick out of your pocket. And the same goes for a bitcoin wallet, forgetting about any possible precaution is unacceptable if you want to be assured of your account’s protection. That’s why you’re not allowed to choose a bitcoin wallet from some shady “one of a kind” platform. With these suspicious sites, your assets can vanish as quickly as they appear at your bitcoin wallet. You wouldn’t like for your physical wallet to have a big hole inside of it, would you?
The style and personal preference are the main factors as well. Some people prefer bigger, more spacious, sometimes more functional wallets, while others follow the minimalist and practical way. Isn’t it like with bitcoin wallets? If you favor tons of options and big screens, you would go for a desktop wallet. Though if you’re info handful devices, then mobile wallets may fit you better. Some people like to keep a lot of money in their wallets, others go for credit cards, sometimes a couple of them. The parallel in the bitcoin world is perfect again. The more secure owner would go for a hard wallet, while the one with a weakness for symbols may favor paper wallets.
The possibilities here are endless. But, again, just like with physical wallets themselves, the attentiveness of your financial goods’ safety is the key. No matter a digital or a physical one.