Bitcoin Wallet

So, you’re here to learn about Bitcoin wallets. We all know what a wallet is right – a wallet is a place where you store your money/currency. A Bitcoin wallet is not that different (technically) , and it simply enables a user to store Bitcoins.

Without a Bitcoin wallet, you cannot send or receive Bitcoins.

In other words, a Bitcoin wallet stores your private keys. A private key here is similar to a password, or a key, with which anyone can access your wallet and hence your funds. I cannot stress enough on how important it is to keep your private keys safe. Never share your private keys with anyone.

 

Understanding Bitcoin wallets with an example

Consider your Bitcoin wallet as an email account. We will take this comparison, as i believe emails and Bitcoin transactions work in a similar way.

So, in a very blunt way, an email account comprises of two most important things :

  1. The email address (example, [email protected])
  2. The password

When you need to send an email to someone, you just need the receiver’s email address. But when you login to your email account, you will require your email address, and the password.

Similarly, when sending Bitcoins, all you need if the receiver’s Bitcoin wallet address (also known as the public key). And, when you want to access Bitcoin wallet, you will require your wallet’s private key.

In short,

  • Email address ≈ Bitcoin wallet address (could be publicly shared)
  • Email password ≈ Bitcoin wallet private key (should never share)

Types of Bitcoin wallets

Following are the types of Bitcoin wallets :

Hardware Wallets:

Perhaps the most secure and usable way to store Bitcoins is : Hardware wallets. In addition to their ease of use, no hardware wallet has ever been hacked yet. Your private keys are stored in the device, and even if you lose your device, you can recover your funds with the help of your seed words (very important to keep them safe).

Below are the popular hardware wallets :

  • Trezor
  • Ledger Nano
  • Ledger Nano S
  • KeepKey

Mobile wallets :

A Bitcoin mobile wallet is an installable mobile application, which you can download from the Google Play Store for Android devices, or the Apple Store for Apple smartphones.

Following are some popular mobile wallets :

  • Mycelium (Android)
  • Copay (Android and iOS)
  • Jaxx (Android and iOS)
  • Coinomi (Android)
  • Bread (Android and iOS)

The above mentioned wallets are quite secure, and i use some of them personally. My advice here is not to keep a huge amount of Bitcoins on a mobile wallet, since it is considered a Hot Storage. For frequent transactions, mobile wallets are easy to use and portable.

Desktop Wallets :

Much as Mobile wallets, Desktop wallets is a software applications that is installed on your computer or laptops. Their level of security is similar to Mobile wallets, and they work in a very similar way… making them a Hot Storage wallet too. They are available for Windows, Mac and Linux. Below are some popular ones :

  • Bitcoin Core
  • Electrum
  • Jaxx
  • Exodus
  • Armory

You can easily download them from their official websites, and start using them.

Web Wallets :

A web wallet means these cannot be downloaded or installed on your devices – they are just a website. It’s especially relevant mentioning one drawback i personally feel is that they don’t usually give control of your private keys. Some examples of web wallets are :

  • Xapo
  • BitGo
  • Coinbase
  • Binance

As you can see, the wallets for exchanges like Binance and Coinbase fall in this category. In addition to what i said, Xapo and BitGo take some extra measures of security and are considered one of the most secure web wallets.

Bitcoin Paper Wallets

One of my favorite places to store Bitcoins, the paper wallet is a Cold Storage. Possibly one of the most secure places to store your Bitcoins, and since it is not connected to the internet – you get an extra edge with security.

There are several places where you can get a paper wallet, like :

  • Bitaddress.org
  • walletgenerator.org
  • Bitcoinpaperwallet.org

A paper wallet is perhaps the easiest to understand. Your Bitcoin address, and private key is printed on a piece of paper – that’s it. You can now share the address with someone who wants to send you Bitcoins. If you want to send Bitcoins however, you cannot send it directly; instead you will “swipe” your paper wallet into a Hot wallet like a mobile wallet… from where you can send your Bitcoins.

As you can see, the paper wallet is useful to store Bitcoins rather than for active use.

Which wallet should you use?

That’s a tough question for me to answer. If you are a frequent trader, and often make transactions, consider using a mobile wallet.

If your motive is just to store and HODL Bitcoins for long term, paper wallets are great.

And hardware wallets are pretty much an all-in-one package, but it comes with a price.

Finally,  it’s up to you to decide which one fits your needs, and if you have questions please leave a comment below.

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