The Ultimate Guide to Bitcoin Wallets

cioreviewindia Team | Tuesday, 01 December 2020, 10:39 IST

The Ultimate Guide to Bitcoin WalletsBitcoin wallets are essential to every Bitcoin trader. Regardless if you’re a beginner or you have some experience, you’ll need storage for your Bitcoin. The wallet works like any other wallet you might have. Besides that, it comes with a pair of keys.

The first one is the private key. As the name says, it’s exclusive to you. That’s because you use this key to access your wallet. It’s also a tool for verifying your transactions. This is the one key that you don’t want to give to anyone. If you do so you give them access to your assets.

The second key is the public one. This is the key you can share with other Bitcoin traders and online shops. In other words, you can trade your assets or buy products and services online with businesses that accept Bitcoin as a payment method. Sharing a public key is vital to making a transaction of any kind. So, how does this process work?

Bitcoin Transactions Explained

For a Bitcoin transaction to happen 2 parties are needed, at least. Naturally, they need to share their public keys so they can send each other the values. Once this is done each party needs to verify the transaction. That’s where the private keys come in. After this is done the transaction can happen.

Depending on the wallet there might be some extra security measures. For example, some Bitcoin wallets come with a multi-signature feature. This means that 3, 4, or more parties need to confirm the transaction before it happens. As you know, there are different types of wallets. But in general, there are two types: hot and cold.

The Difference Between Hot and Cold Wallets

To put it simply, the hot wallets share a connection with the Internet while the cold ones don’t. They also store the private keys online. That’s what makes using them risky. Security is a big issue with hot wallets as they are prone to hacker attacks and malware.

The cold wallets are a safe way of storing Bitcoin. They don’t store the private keys online but rather on an external device. There’s a limit to the storage but they guarantee the safety of your assets. This is vital when trading Bitcoin.

Another vital thing is gaining the upper hand. One way you could do this is by using a trading bot. Luckily, there are several of them offering that service. You can choose to trade with Bitcoin Circuit and find out why so many people have opted for the platform. Once you visit their website you need to create an account. What follows is a small deposit that you’ll need to make. Additionally, you’ll need to go over the tutorials so you can better understand the bot. Then you can set it to trade for you.

The Bitcoin Wallet Variants

As mentioned before, there are loads of wallets available online. In other words, the hot and cold wallets come with several subtypes that you’ll run into. Naturally, different companies will have different offers so they will differ substantially. In that regard, here are some of the most common Bitcoin wallets you’ll come across:

Mobile Wallets

These wallets take the shape of an app that you can install on your smartphone. That shows you just how convenient these hot wallets are. Whenever you want to buy something and Bitcoin is a supported payment method then you just get your phone out. Since security is a big issue, these wallets come with various security measures.

Hardware Wallets

This type of wallet is one of the more secure ways to store Bitcoin. That’s because the private keys are stored on an external device like a USB or a CD. By doing so, the owner of the wallet is immune to any hacker attacks. Naturally, the private key allows the user access to an online wallet that the user can trade or buy things with. There’s a large selection of these wallets available online.

Web Wallets

The web wallet is another common hot Bitcoin wallet. That’s because you can access your assets via any device that can connect to the Internet. It’s easy to access and easy to use. Since there are various companies making these wallets you can rely on them for various interesting offers.

Paper Wallets

The paper wallet is probably the safest Bitcoin storage. That’s because your private key is printed on a piece of paper. No hacker will ever get hold of your private key. However, should you lose the piece of paper and have no backup then you’ll lose your assets.

Conclusion

You’ll come across physical coins as well as desktop wallets in your search for a wallet. Regardless of that, you’ll need to make the right choice.

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