With the rise of Bitcoin, Bitcoin wallets are becoming just as popular and necessary. A Bitcoin wallet can be compared to a bank account and the Bitcoin acts as “debit card” from this account. This allows the “wallet” to be used for storing, sending, and receiving bitcoins. Bitcoin wallets store both public and private keys. A private key is what gives the user access to the account (similar to a pin number). A Public Key is how you send or recieve money (like a debit card number). There are currently four different types of Bitcoin wallets available today. When using Bitcoin wallets it is important to understand how each of these wallets work. Below, you will find more information about Bitcoin wallets and their uses.
Software Wallets or “Hot Wallets” require that the user download software to create and get access to Bitcoin wallets. These software clients are available for both mobile and PC devices. Software clients are very easy to use on Smartphones. Users can easily download the wallet app right on to their iOS or Android phones. It is important to understand however, that wallets are only as secure as the mobile device or computer they are stored on. Stealing wallet information is hard, but not impossible. Make sure all your devices are secure as possible at all times to avoid possible theft.
Among the different types of “Hot Wallets”, web or online wallets are some of the easiest Bitcoin wallets to use. Creating an Online Wallet is simple. The user first needs to sign up for an account. Then these wallets can be accessed from any device that the user chooses that has an internet connection. Making transactions with bitcoins is safe and simple with Online Wallets. There are certain trade-offs when it comes to using online wallets. Private keys are stored safely on another server. This option allows Bitcoin users to keep their bitcoins safe from would be hackers. For users who have a large amount of Bitcoin, Online Wallets may not be the best option.
Paper Wallets are becoming more and more popular. A Paper Wallet is just a fancy term used for printing out the private and/or public keys on a piece of paper. One reason that this option is gaining popularity is because your keys are physically printed on a piece of paper, making them more secure than if they were stored online (since many Bitcoin transactions take place with companies and people you will never actually “meet”).
Most of the Software and Online Wallet services allow you to print existing wallet keys. To use wallets, you need to have the private/public key combination to your existing wallet service. To keep your Paper Wallet from getting damaged, keep it in a secure place like a fireproof lock box.
Another popular Bitcoin Wallet is the Hardware Wallet. The Hardware Wallet generates keys while making a transaction. These are USB like tools and devices that need to be plugged into a system in order to make a transaction. Hardware Wallets are secure from malware because they generate private keys offline, on the system itself. These wallets are simple and convenient to use and do not require an extensive knowledge of how the technology itself works. What’s even more interesting about Hardware Wallets, is that they provide secure backup options for users. The wallets can be secured with another password to combat theft. Overall, Hardware Wallets are probably the most secure option for a Bitcoin Wallet. If you are planning on regularly using Bitcoin, it is important to invest in Hardware Wallets to keep your hard earned money as safe as possible.