The Bitcoin Wallet
Since we know about what a Bitcoin Address is and what Private Keys are, it is essential to know about the Bitcoin Wallet. Bitcoin being a complete digital asset, has its own challenges in safely storing them.
A Bitcoin wallet is essentially a software program that is used to store Bitcoins securely. But technically, only the private keys of a Bitcoin address can be stored in these wallets. Hence a Bitcoin wallet is nothing but a collection of multiple Bitcoin addresses with their corresponding private keys.
Having multiple Bitcoin addresses will help you in organising your money. It is very convenient to use various Bitcoin addresses for the different needs you have, on a daily basis. For instance, owning different addresses for shopping online, for paying rent, for saving some Bitcoins to use them in the future, etc.
You might have two Bitcoins in your wallet that are distributed among the different Bitcoin addresses mentioned above. You can safely store all these addresses along with their respective private keys in the Bitcoin wallets. Apart from storing the Bitcoin Addresses and Private Keys securely, Bitcoin wallets also help in the conduction of transactions like sending and receiving BTC. They also help its users by providing updated information on current available balances for different Bitcoin addresses, prior transactions made, etc.
Types of Bitcoin Wallet
There are several types of Bitcoin wallets. Some are entirely digital, and others are physical. They also can be classified as online and offline wallets.
Online wallets include Desktop wallets, Mobile wallets, and Webservice wallets. Hardware Bitcoin wallets and Paper wallets come under offline wallets.
Any wallet that can be connected to the internet is known as Hot-Storage and wallet. Those who can never be connected to the internet are considered as Cold-Storage wallets. Let’s understand more about each of these wallets.
These wallets are installed on a computer, and they provide complete control to the user over their funds. These wallets allow their users to create Bitcoin addresses for transacting Bitcoins. They also allow users to store their private keys securely.
Top Desktop Wallets – Atomic, Exodus, Jaxx, Electrum, Armory, Copay & Bitcoin Core
In the era of smartphones, mobile wallets have become one of the most convenient alternatives for Desktop wallets. They work precisely like Desktop wallets but solve the most crucial problem of mobility.
You can transact Bitcoins on the go using these wallets, by scanning QR codes or NFC (Near Field Communication). Security is one of the most important concerns in this type of wallet, but this problem is being solved by many of the Mobile wallet providers by using modern encryption technology.
Most of the Mobile wallets are either designed for Android or IOS as they are the leading mobile operating systems. Users can choose their wallets according to their preferences.
Top Mobile Wallets – Mycelium, Bitcoin Wallet, Edge, Bither, & GreenBits
These Web wallets allow its users to handle them from anywhere. Users can access their wallets from computer browsers or mobiles. This is the least secure form of storing your Bitcoins as these Web wallets store your private keys online.
There are many instances where hackers stole a lot of Bitcoins from these hot storage Web wallets. A recent hack of around $40 million worth of Bitcoins from Binance exchange is the best example.
Reliable Web Wallets – Coinbase & Blockchain
This type of wallets is the most secure compared to any of the online wallets. The private keys of your multiple Bitcoin addresses are stored in an electronic device that looks like a Pen Drive and is generally plugged into the computer via USB port. Even these wallets are immune to virus attacks, and very few instances of Bitcoin theft have been reported from this wallet users.
These Hardware wallets are the only kind of wallets that aren’t free. They are encrypted using advanced technology for the ultimate protection of information. Hence, they are relatively expensive, although prices are dropping. Currently, crypto enthusiasts can find hi-tech of-line wallets for under $100
Top Hardware Wallets – Ledger Nano, Ledger Nano X, Trezor T, KeepKey, OpenDime, & Digital Bitbox
Paper Bitcoin Wallet
As the name suggests, it is just a paper where the Bitcoin addresses and the corresponding private keys are printed on, after generating them through Bitcoin address generators. Some consider this type of wallet as the most unsafe way of storing private keys. But this can be used as a good backup if stored safely in a secure environment.
It is essential to keep your wallets secure. Global exchanges themselves are suffering from the hacks despite extreme protection. So, we can say that no wallet is 100% protected. By far, cryptonisers consider Hardware wallet as one of the safest ways to store the private keys. They should be encrypted with a strong password.
Anyway, mobile wallets and web wallets are more convenient to transact Bitcoins on the go. So, using a combination of wallets should be a good idea. To store a large number of Bitcoins, use offline wallets, and small amounts can be stored in mobile or web wallets to make your transactions easier.