A few centuries before our era, when a person just learned how to mint round coins and use them as a means of payment, he immediately thought about how to store his savings. At that time, these were special bags, only vaguely reminiscent of modern wallets.
Nevertheless, since then, the concepts of “money” and “wallet” are inextricably linked. And when we talk about one thing, we automatically mean the other. And it doesn’t matter if we mean virtual cryptocurrency or traditional bills: our money should be in one safe place. And, if paper money is stored in a wallet, where are bitcoins stored? That’s right – in your bitcoin wallet!
What is a Bitcoin Wallet?
Just as the Bitcoin cryptocurrency is the digital equivalent of cash, the Bitcoin Wallet is a virtual alternative to the small, flat object for carrying money, which we used to call a wallet.
Of course, digital money has significant differences from paper money: it exists exclusively in electronic form and is closely related to each other.
That is, each separately taken bitcoin depends on the entire mass of the Bitcoin cryptocurrency in circulation. However, the mined crypto coins also need a cash “deposit”, a kind of online safe that allows you to receive bitcoins, ensures their safe storage and allows you to send them to other users if necessary. For these purposes, a bitcoin wallet was created.
A Bitcoin wallet is an online resource that stores all the secret information about access to your digital assets and their current balance, allowing you to conduct any monetary transactions in bitcoins and control your funds.
You need to understand that a bitcoin wallet does not store money itself, but their digital equivalents. And bitcoin itself is nothing more than a digital code, an entry in the Blockchain distributed database. Therefore, the bitcoin wallet stores information about various transactions (crediting / debiting funds from the account), as well as private keys that provide access to funds. And it is the secret keys, and not the bitcoins themselves, that need to be securely stored and protected from theft.
Moreover, experienced users are advised to use several bitcoin wallets for work at once. One is for simpler tasks, when you need to quickly complete a particular operation with bitcoins: quickly replenish your account, convert to another currency, or withdraw funds. And the second, with a more advanced interface – for complex and serious operations with coins ( mining or trading on exchanges).
Types of Bitcoin Wallets
All bitcoin wallets are divided into 4 types: for a computer, for a smartphone, online wallets, hardware wallets . Let’s take a closer look at all types and tell you which programs and applications are best used for each of them.
1. Desktop or Bitcoin Wallet for PC
It is considered the most reliable, since all information about the keys is stored on the hard disk of the computer, excluding the possibility of its leakage into the network. Moreover, the user himself is responsible for the safety of his savings, controlling the security settings and adjusting them to suit his needs. Such bitcoin wallets are also called software wallets: to work with them, you need to download a particular program and install it on your PC.
Programs are “thick” and “thin”.
From the name it is clear that “thin” is a more simplified version of “thick”, when installed, it is required to download the entire blockchain . Such programs provide greater reliability and security, since each block is checked for authenticity before loading. However, they are very heavy and slow enough.
“Thin” download only those blocks that you need at the moment, using data from third-party resources, which are responsible for the authenticity of the information. Therefore, such bitcoin wallets are less reliable, but work more quickly.
The official Bitcoin website recommends the following PC applications: Bitcoin Knots, Bitcoin Core, GreenAddress, ArcBit, BitGo, Copay, mSIGNA, Armory, Bither, and Electrum.
Bitcoin wallets for PC are quite good and have a number of undoubted advantages. However, how to use such a wallet when you are away from home, on the street or in a store, and, of course, you don’t have a computer with you? Moreover, to work with desktop wallets, you need to have powerful enough equipment. To solve these problems, mobile wallets were created that are more affordable and easier to use.
2. Bitcoin Wallet for Mobile Devices
When you leave home, you always take your smartphone with you. And with it – a mobile bitcoin wallet. Being away from your computer, you cannot pay for a particular purchase using the wallet installed on your PC. And with a mobile bitcoin wallet, you can pay directly from your phone. In addition, you can further simplify the use of such a wallet with the help of contactless communication technology and when paying, simply put your smartphone to the reader.
However, mobile wallets are still not fully functional tools for working with cryptocurrencies.
They are not so powerful and do not have enough memory to store the entire blockchain, which weighs several gigabytes and grows almost daily. Therefore, such bitcoin wallets are developed with a simplified payment verification system (SVP or simplified payment verification). They download exactly the blocks that you need, and do not check the blocks themselves for authenticity, but rely on data taken from third-party resources.
3. Web Wallet
Digital keys can also be stored on the network, without being tied to one specific device, and can be accessed on any computer, phone or tablet connected to the Internet. Such web wallets are undoubtedly convenient as the user can easily access their private keys from any device.
At the same time, this availability can play against him: the crypto companies that provide these services for storing bitcoins online, in fact, also have access to all of their customers’ savings. Therefore, if the contents of your bitcoin wallet represent a solid and very attractive amount for fraudsters, we advise you to be more careful about online services, since in theory your savings can become an easy target for theft.
4. Hardware Wallets
A bitcoin wallet can also be created on a small specialized device that you connect to a computer via USB, write your private keys on it and store it in a safe place inaccessible to other users.
The advantages of such an external drive:
- You can store a large amount of cryptocurrency.
- No need to use third-party or third-party services.
The most common hardware wallets are:
The most popular is Trezor: OLED display, PIN code for protection, remote wipe data if the device is lost.
The well-known Ledger Nano runs on the bank smartcard platform.
In Keep Key, every operation is accompanied by the touch of a button on the display.
Which Bitcoin Wallet Should You Choose?
Depending on the mindset, goals, currency volume, level of reliability, personal preferences and other private factors, the user chooses the bitcoin wallet with which he will be most comfortable working.
When dealing with cryptocurrency, one of the most important factors is to ensure its reliable and secure storage, as well as to get quick and easy access to your virtual wallet.
The wisest and most expedient, in our opinion, is the “combo” of a desktop and mobile wallet.
The first will provide you with the highest level of security, while the second will give you the opportunity to be more mobile and pay with bitcoins wherever you are. However, each user must decide for himself how, where, why and how often he will use his virtual wallet, and based on this, make the best choice for himself.
Salman Zafar is an acclaimed blogger, editor, publisher and digital marketer. He is the founder of Blogging Hub, a digital publishing portal with wide following across the world.