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  • Franciscoby Francisco
  • 2 years ago

What you need to know about Bitcoin wallets

There is no one size fits all when it comes to Bitcoin wallets. It all depends with the type of security and the level of convenience you are looking for. After all, a wallet is pretty important and can only be compared to your own bank account, so how much security, and convenience would you want?

What are Bitcoin Wallets?

I you are new to Bitcoin, you can think of a wallet as a tool that acts as your interface to the Bitcoin network where you get to see how much Bitcoins you own.  A wallet stores your coins and provides a mechanism for you to send and receive Bitcoin.

For protection, your wallet will come with a private key as well as a public key. The private key is simply a code that acts as a username or a password for your wallet. You should keep it private to prevent unauthorized access into your wallet. The public key on the other hand indentifies you to your wallet but does not give access to your wallet. You use your public key to receive Bitcoins to your wallet.

In reality however, the private keys make up the content that is stored in your wallet. You can think of a Bitcoin wallet simply as an app or device that safely stores your private keys.

Types of Bitcoin wallets

Bitcoins wallets come in different forms shapes and sizes.  From free mobile wallets to paper and hardware wallets, Bitcoin wallets provide accessibility security and convenience in different ways. Let’s take a look.

Paper wallets

As mentioned earlier, a Bitcoin wallet is essentially an application that stores your private keys. For those seeking a hacker proof wallet a paper wallet is a great pick. It is simply a document that contains your private keys that allow you to connect to the Bitcoin network so as to send or receive Bitcoins on that specific address. The private keys are usually printed like a QR-code to allow you more convenient quick access with a simple scan. If you want to generate a paper wallet, there are a couple of services such as Bitcoin paper wallet or BitAddress.

Since the private keys of a paper wallet are stored completely offline, they present a super secure way of storing your Bitcoins. However, since you will have to protect it from water or other sources of wear and tear.

Mobile app wallet

If you plan to be using your Bitcoin actively on a daily basis, a mobile app wallet is probably the best option. It is built as an app on your Smartphone that stores your private keys allowing you to receive and send Bitcoins. However as much as they are a convenient solution for making Bitcoin transaction, they are prone to hackers since anyone who can hack your Smartphone will have access to your wallet. There are tools such as 2FA that can help you beef up your wallets security.

Hardware wallets

Hardware wallets provide a unique set of advantages for storing Bitcoin. First, since they store the private keys offline, thus provide a safe and secure storage for your Bitcoins. Furthermore, they come with different set of features with some hardware wallets featuring a screen that lets you know how much Bitcoins you have left in your wallet. To get your hands on a hardware wallet you will have to part with some money ranging from $17 to $100.

How to fund you wallet

To get some Bitcoins into your wallet you can head over into an exchange in your country or a peer to peer platform for Bitcoin enthusiasts and buy your first Bitcoin. To receive the Bitcoins from the vendor, you will have to send your wallet address to the vendor. The vendor will then send the Bitcoin to your wallet using the address you have given.

Common mistakes while operating your wallet

It is important to beware of small mistakes that might occur while operating your wallet. If you plan to send your Bitcoins to someone else, be sure to double check the address as Bitcoin transactions cannot be reversed.

Also if you are using other coins apart from Bitcoin, make sure you don’t mix up your private keys or end up sending Bitcoins to the wrong  wallet as your Bitcoins will be lost forever. With a mobile online wallet, be sure to use two factor authentications to add an extra layer of protection to your wallet. Also as much as hardware wallets provide a way for your to recover your private keys in case you lose your device, make sure you order your hard wallets directly from the hardware seller. This is because there are instance where cyber criminals program a hardware wallet to have a backdoor that later gives them access to your Bitcoins.