In this article, you will learn all about bitcoin wallets. You have heard of it but you have a reason to be on this page. Whether you are looking for the full overview of a Bitcoin wallet or how to own or run a secured bitcoin wallet. This is the page that explains the full information about this.
Let’s delve into this broad category which has been written and customized to very simple, straightforward and detailed pieces. In short, anyone can read this and understand.
Perhaps, this might be lengthy but it takes just a single read to understand everything about bitcoin wallets.
Table Of Contents
What is a Bitcoin Wallet?
A wallet is a physical tiny leather purse used for saving money, issued IDs and things as such. Many are aware of this and it seems to go into bitcoin wallers as well.
However, looking at a bitcoin wallet, we would see something more of digital innovation, application or software used for storing Bitcoins and managing digital coins.
That’s on a layman investor level. Technically, Bitcoins aren’t stored directly in bitcoin wallets. Instead, the Bitcoin wallet is primarily used for managing the transaction validation on the blockchain network.
For this to happen, users will need to access the public and private keys to confirm each of the bitcoin transactions to that wallet. – (Public keys and Private Keys) -.
Public keys are also known as a bitcoin address. They are the strings of letters which are used for receiving bitcoins.
Just like your account number, you send your bitcoin address or public keys to friends and families and they send bitcoins to it. So, we can say it is the chain of transactions.
The private keys are not used for receiving bitcoins. It serves as the main password or private “bank verification pin”. It is private and should not be shared with anyone.
If you have to share your bank verification pin with anyone then you will lose your money to fraudsters. Hence, you don’t share your private keys as you don’t for your bank verification pin.
You can only share public keys for transaction purposes. Once another person has your private keys, they get full access to your accounts.
Functions of a Bitcoin Wallet
As you can see, you can get these benefits from bitcoin wallets
- Managing transactions of bitcoins
- Managing, securing and displaying the balance of your bitcoin wallets.
- Also, it helps to store the public and private keys in a “wallet.dat” file on your device.
Types of Bitcoin Wallet
There are mainly two types of Bitcoin wallets although there are subcategories as well
- Full node wallets
- Light wallets
This allows a computer or device to be in charge of its full blockchain transaction. However, this is almost impossible.
With the number of users making use of the blockchain network now and then, there is so much information stored on it. The bandwidth or required space is so huge that any device can not hold a full blockchain network.
Light wallets are also known as Simple Payment Verification(SPV) wallets. They make use of partial spaces from a single blockchain network. Hence, they don’t take a lot of storage space or bandwidth to manage.
SPV wallets are divided into two:
- Hot wallets
- Cold wallets
Virtually every digital innovation now makes use of a strong internet connection (whether cellular or wifi).
It is the same for hot wallets. Got wallets are bitcoin wallets that are connected to the internet. They need the internet to work.
Meanwhile, they are safe enough for the number of bitcoins stored in them. If you have a lot of bitcoins to be stored, you had better read more.
Hot walls look very very easy to use but are also very vulnerable to attacks. There are 3 types which are:
- Web wallet
- Mobile wallets
- Desktop wallets
Web Wallets are wallets that are run from a browser. They are created by companies that help to monitor your coins for you. It’s just like keeping your Bitcoins with another person.
What if the site web wallets crash? What if it comes under attack? Then the users might just have to part with their bitcoins.
Most of the well-known web wallets are known for their Bitcoin services like crypto trading and exchange sites, betting sites, Staking and loaning of coins. Examples are Binace, Luno, Renitano, Quidex, Naira EX and so on.
It is safe to use web walkers but users have to be careful. Web walkers are the most vulnerable to attacks.
Mobile wallets are applications used for managing or validating bitcoin transactions on a mobile phone.
Unlike web wallets, mobile wallets give users access to their private and public keys. The keys are stored on your mobile smartphones. Some of our best mobile wallets are Trust wallets, Coinnomi, Abra, Exodus and so on.
Desktop wallets are used on the computer. Just like mobile wallet users, using desktop wallets gives access to both your public and private keys. These keys are stored in your computer systems.
Some of the most popular are Mother wallets, Electrum and Mycelium wallets.
These is wallets that are used offline. Your private keys are stored offline and depend on your ability to store them appropriately. Users should not keep their cold walkers lying anywhere.
They are very safe. Even safer than hit walkers but how you handle cold wallets determines the survival of your bitcoins.
- Paper wallets
- Hardware Wallets
- Brain Wallets
Paper wallets are papers where you find the public keys, private keys and the QR code of particular bitcoin wallets.
Just like how easy it can be to handle papers, if you have a single copy and it gets drained in water then, you might lose your bitcoins.
Experts say make photocopies of your paper wallets and store them in different areas where you can easily refer to them.
This is by far the most secure wallet for securing bitcoins. Hardware wallets are offline devices used for storing large amounts of bitcoins.
They are made for people who wants to store large amount of Bitcoins. The massive investors make use of this. Although it requires a small price when it comes to the safety of a large number of bitcoins then the price is nothing.
Hardware wallets come with a seed phrase that makes it easy to recover lost hardware wallets containing bitcoins.
Some of the most popular are: Keep key, Trezor T, Ellipal Titan, Trezor One, Ledger Nano X and so on.
Human beings are the most intelligent beings. This proves we can memorise things and keep them in our brains for a very long time.
Users create passphrases for their bitcoin wallets and store them in their brains. This would be the general pin for both the private and the public keys.
How to Secure Your Bitcoin Wallet
Bitcoin wallets are used for storing Bitcoins. Bitcoins are the results of hard-earned money from us. Most people aren’t saving money in banks, instead they keep their bitcoin as themselves.
The security of these bitcoin wallets is very important. If they are too vulnerable and perhaps attacked, well, just pathetic.
There are ways to secure your bitcoin wallets:
- Passwords: Secure your wallets with a pin or password that can never be guessed by any other user.
- Seed Phrase or Recovery Phrase: This is about 12 or 24 phrases that users find when opening mobile wallets or hardware wallets. They should be kept safe as they might be needed to reopen their wallets if need be.
- 2 Factor Authentication: Here anyone that wants to have access to your bitcoin wallets needs to walk around with more than a single passcode to get in. If they don’t have your recovery phone number or email then no one can access your bitcoin wallets.
How to Choose the Best Wallet
Now we have listed as many types and subcategories of wallets and you still don’t know what you will go for, then ask yourself this questions:
- What is the amount of Bitcoin I want to store in my wallet?
- Would I need to make use of exchange and a wallet all together?
- What are the other purposes this wallet can serve?
Most importantly go for what suits your convenience and security. You should be able to trust at least one for any purpose you need it for.
Cold wallets are very secure but are not that convenient. Meanwhile, hot wallets are less when security is considered but their convenience is key.
Bitcoin wallets are unavoidable for investors. You have to keep your bitcoins somewhere and the only reliable spaces are the wallets.
We hope this has opened you up about bitcoin wallets. If you think so, you can share with friends to keep them in this massive crypto world.