Why do I need Bitcoin wallet?
Bitcoin is significantly different from any financial tool we have ever used. For this reason, it is crucial to take the time to educate yourself about the special features and the dynamics of cryptographic environment. In order to start Bitcoin trading or mining, it is important to choose an appropriate wallet that would securely store your funds and fulfill all your requirements such as easiness of operation, anonymity, etc.
A bitcoin wallet helps you to store your bitcoins. From the technical point of view, it’s all about a private key, a special bitcoin address, that is saved in bitcoin wallet of the one who owns it. So the main purpose of the Bitcoin wallets lies in safely storing the private keys of your Bitcoin address and easily attaining it when signing transaction or spending the digital funds. All bitcoin wallets (bitcoin paper wallet, offline bitcoin wallet, bitcoin desktop wallet, bitcoin mobile wallet, bitcoin online wallet) helps to send and receive bitcoins and shows the bitcoin balance.
The question of “where to store bitcoins” is one of the most substantial decisions for a Bitcoin user. That’s why we have done this article with a thorough Bitcoin wallet review for all the Bitcoin wallets.
What are the main types of wallets?
Currently, Bitcoin enthusiasts can create Bitcoin wallets of the following kind: mobile Bitcoin wallet, desktop Bitcoin wallet, hardware Bitcoin wallet, Bitcoin paper wallet, offline Bitcoin wallet, and online Bitcoin wallet. This is how they work.
Bitcoin Desktop wallets
Bitcoiners, who have already installed the original Bitcoin client (Bitcoin-Qt), already have access to a wallet that relays transaction on the network. This software can also be used for creating a Bitcoin address for spending and receiving digital currency. Certain desktop wallets are known for the advanced levels of security — Armory is a good example. Hive (OS X based), MultiBit (Windows, OS X, and Linux), DarkWallet (anonymity-focused) are among the most popular desktop wallets.
Bitcoin Mobile wallets
Mobile wallets operate as apps on mobile phones and are considered to be more convenient than desktop wallets due to their advanced mobility. Owners of these wallets can pay for products with their smartphones. Some mobile wallets allow users to benefit from the near-field communication (NFC) feature that processes payment through tapping the phone against a reader without the necessity of entering any information. Most popular mobile wallets are Mycelium, Xapo, and Blockchain.
Bitcoin Paper wallets
One of the cheapest and most commonly used Bitcoin wallets is Bitcoin paper wallet, also known as offline Bitcoin wallet. These wallets do not allow the privet keys to having any contact with the digital world. A paper wallet implies an image with two QR codes — the first containing your Bitcoin address, the other one encrypting your private key. Bitcoin paper wallet as part of the offline Bitcoin wallet category is not subject to cyber hacking and are considered to be relatively secure. Several sites offer Bitcoin paper wallet services.
Bitcoin Online wallets
Internet-based wallets store your private keys online. These wallets are unusually controlled by a third party via the Internet. Some of these online wallets can be connected to mobile and desktop wallets, duplicating addresses on various devices. One of the greatest advantages of online wallets remains its accessibility — you can access your funds anywhere where there is access to the Internet. The greatest disadvantage of such wallets lies in the involvement of a third party — someone else controls your funds bringing the users back to centralisation. Most reputable online Bitcoin wallets are Coinbase, Circle, Blockchain, and Xapo.
Are bitcoin wallets safe?
Bitcoin wallet security is a top priority. Before using Bitcoin, be sure that you’ve read information about safe and secure storage of bitcoins. Remember that protecting your money is your responsibility.
So it totally depends on you and how you manage your wallet and private keys. The private keys are the only way to access your bitcoins. Warning! According to Blockchain, there is no password recovery.
Losing your private key, you will lose your bitcoins.
How to create a secure Bitcoin wallet
There are several ways to secure your bitcoin wallet:
1) Encrypt it
Always use a strong password. This makes it difficult to access your wallet, but not impossible.
2) Back it up
This will help to make a copy of your private keys. Remember to back up your entire wallet in several different places.
3) Use multisig
Multi-signature addresses allow to seed an address partially with a public key for many parties. This means that the signatures of all these parties is required to spend some of the bitcoins.
4) Cold storage
Print your public key and store it with all the precious things you have – money sage, banking cell or whatever you prefer.
Whatever Bitcoin wallet you choose, it is important to protect it from hacking. By encrypting your passwords, backing up your wallet, and possibly using multi-signature you can ensure safety and security of your Bitcoins.