What do we use when we go anywhere to buy anything? Any other form of cash or currency
But where do we store this cash or currency? In a wallet.
Everyone knows what a wallet is, right?
Similarly, in the world of cryptocurrency, we also need a wallet to keep cryptocurrencies.
Bitcoin is one of the most popular and one of the most commonly used cryptocurrencies and we also need a wallet to keep it in hold. Contrary to our physical wallets, bitcoin wallets are very similar.
For the understanding of bitcoin wallets, look at something similar – email accounts
To understand bitcoin wallets by example
Whatever service you use, you have an email address like [email protected]
This is a public address. (I.e. that everyone can see it and you can share it with anyone to get emails). And you have a software service such as Gmail and Hotmail that lets you send and receive email.
If you have to send an email to others from your email id, then you have a password for it. But your password is confidential and is for your private use. The second ferry also has the password for his id which you have to send an email.
And whatever software or service you use, you understand both the public address and your passwords, even if they allow you to login and can send, store or receive your emails.
Similarly, to send / receive bitcoins, we should have a wallet on Bitcoin’s network, which is nothing more, just a place on which our public address (a place where you receive bitcoins Can be stored), and you have a private address (so you can send or spend your bitcoins to anyone)
So if I say in short, where both of you have bitcoin addresses and private keys, so that you can receive, send and spend bitcoins, they are called bitcoin wallet. In another simplified manner, a wallet is a digital file that stores your bitcoins.
- Bitcoin Address + Private Key = Bitcoin Wallet
So what type of bitcoin wallets are there in the market.
Different types of bitcoin wallets
There are many Bitcoin wallets available in the world of Bitcoin. To understand which is for you, I have differentiate them according to some criteria, such as online connectivity, custodianship, and device availability.
Mobile Bitcoin Wallets
Bitcoin wallet applications that can be installed on your mobile phones are called mobile wallets. Compatible wallets are available for each and everytype of mobile operating system, such as Android, iOS, Windows and Blackberry.
Below are the different type bitcoin mobile wallets, with every type of OS compatibilities. They have integrated many security to measures and are also safe. Plus, there are many other best smartphone wallets that you can choose from under the part of your Smartphone OS.
Desktop Bitcoin Wallets
Computer wallets are Bitcoin wallets that can be easily installed on different types of desktops and thay are compatible with Windows, Mac and Linux.
There are Different wallets compatible with different operating systems such as given below.
Hardware Bitcoin Wallets (aka Cold Storage)
This is the very secure and safest way to keep your bitcoins saved in an offline wallet.
Until writing this post, there is no such report of any batch loss due to bitcoins with a hardware wallet. Private keys and digital signatures that are needed to spend bitcoins, they generate from wallets.
I will tell about Bitcoin’s private keys in my upcoming articles.
Web Bitcoin Wallets (aka Hot / Online / Hosted Wallets)
These are the which wallets that are basically online website services and you can access these wallets from web browsers such as firefox.
Your private keys are kept online by these web services. You can access your wallet by opening their website.
You can also call “hosted wallets” because we store our bitcoins on the servers of the company’s that you have chosen as your online web wallet.
Paper Bitcoin Wallets (aka Cold Storage Wallet)
Paper wallets are pieces of papers on which public and private addresses are printed on them.
You can use these public addresses to send any amounts of bitcoin. Then you can adjust your paper pieces because it also has your private keys which you can use to spend your bitcoins and spend it.
So, as your keys are printed on an offline papers, there is no tension danger of any electronic damage in this case.
Bitcoin wallets based on connectivity
Hot Bitcoin Wallets (Online)
Such wallets in which your bitcoins are stored online and which are connected to the internet 24/7, they are called hot or online wallets. Bitcoin platforms that can receive and withdraw bitcoins of their users are called hot Bitcoin wallets. They are just like your pocket wallet.
When you keep your Bitcoin wallets online, they are in danger always.
Cold Bitcoin Wallets (Offline)
So, as you might’ve thought, in the wallets, you store your bitcoins offline, disconnected from the internet, they are known as cold Bitcoin wallets.
Based on the Custodianship of Keys Bitcoin Wallets
Custodial Wallets ( 3rd Party Services)
When you ask someone to exchange your bitcoins in exchange for you, this means that you are relying on them, your bitcoins are on their servers, so in this way, you can Give custody to them for your bitcoins which is risky.
When you do not trust anyone for your cryptocurrency (Bitcoins) and use these type of wallet to store your bitcoins, whose full responsibility of security is yours, these wallets are called Non-Custodial Wallets.
Which Bitcoin wallet should you use?
This is a tricky question.
Which bitcoin wallet you should use, it totally depends on yours need and on the need of security which you want for your bitcoins.
It also depends on how much you use your funds and how much you want to store on a particular wallet. Along also, it also depends on the fact that the wallet is meant to store bitcoins or for daily transactions.
I personally prefer hardware bitcoin wallets like Ledger Nano S if I have to store bitcoins in a significant amount because its security features are too much. And to store some bitcoins, I use desktop/computer wallets. So whenever I needed bitcoins for any transaction, I can quickly transfer bitcoins to my desktop wallet then I spent the bitcoins.
However, if you want to keep your bitcoins completely safe then you can use paper wallets.
To store bitcoins in small amounts, I only use web wallets. It’s just like you keep some money in your pocket wallet for daily transactions.
Which wallet do you prefer to use? Have you ever used any of the wallets given in this list? Tell me through comments!
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