If you want to start trading or investing in bitcoins, you’ll need a wallet, which is a highly important tool. The virtual currency is similar to the wallet you use regularly. Consider this: if you go shopping and want to buy something from the store, you will have to pay for it unless the item is free, in which case you will have to pay the shopkeeper with money from your wallet.
Let’s start by talking about what bitcoin wallets are and what they’re used for.
What are bitcoin wallets?
Bitcoin wallets, as previously said, are similar to the wallets you use on a normal basis. A Bitcoin wallet is a device or software that stores all of the bitcoins you can send, receive, trade, or invest in. Your bitcoin wallet is linked to the blockchain, which records all of your transactions done through your wallet.
Each bitcoin wallet has its password and secret key. This key allows the user to perform transactions. If your wallet’s secret key is released or compromised, the attacker can transmit all of your bitcoins to whatever account he wants.
There are different types of wallet options. The most common ones that you are going to come across are:
- Desktop wallets
- Hardware wallets
- Mobile wallets
- Online wallets
You can use any of the wallets to do the transactions on the blockchain, and if you want to trade bitcoin, you can do it on or any other crypto exchange platform.
Desktop wallets are those wallets that are installed on the user’s desktop or laptop and give the user full authority to do the transactions. For the desktop wallet, you must have a desktop or laptop. Then only you can get access.
Well, desktop wallets are considered a bit insecure wallet as desktops can be easily hacked, and your secret can be leaked anytime. Bitcoin Core and Electrum are examples.
Mobile wallets provide the same functions as desktop wallets but with many additional capabilities. You can, for example, complete purchases by scanning another user’s QR code.
On any iOS or Android smartphone, mobile wallets are simple to set up. Bitcoin wallets include Bitcoin Wallet and Hive Android. It is suggested that you must do some research before you do any transactions on any of the wallets.
A web wallet is a wallet that can keep your bitcoins, but it works on the online platform. It’s really convenient because it may be used from anywhere in the globe and do transactions. The flaw it has is that it is quite risky; it can be hacked anytime, so you have to be careful.
Due to access from anywhere in the world, web wallets are mostly used. Sooner web wallets will take place over any other wallets.
Examples of web wallets are Coinbase and Gemini.
In comparison to other wallets, hardware wallets are extremely secure. Your private key will not be disclosed since hardware wallets require a USB flash drive that may be plugged in a while doing transactions.
Hardware wallets are almost virus-free, and successful thefts are exceedingly uncommon. These devices usually cost between $100 and $200.
Yes, hardware wallets are quite expensive, but they give you more security than the rest of the wallets. A hardware wallet is one of the best types of bitcoin wallet.
Securing your wallet is very necessary as anyone can steal your money. You must be very protective regarding your wallets because we are seeing many cases of stealing or hacking. New wallets are using mnemonic seeds, which can be further used to restore accounts. You must keep those words somewhere safe as they cannot be promised. Before trading, do the proper research and keep checking the wallet addresses.
Setting up a mobile wallet is simple but keeping it secure is more complicated. You may make as many wallets as you like. You may also trade using any wallet. Although hardware wallets are secure and safe, they are also expensive, and some individuals prefer to take chances.
You must manage your wallets accurately. These wallets keep your secret key safe as well as your bitcoins too. They help you to do the trading.