Friday, July 3, 2020
Bitcoin, unlike most traditional currencies, is a digital currency. Thus, the approach to this kind of currency is completely different, particularly when it comes to acquiring and storing it. As Bitcoins don’t exist in any physical shape or form, they can’t technically be stored anywhere. Instead, it’s the private keys used to access your public Bitcoin address and sign for transactions that need to be securely stored. A combination of the recipient’s public key and your private key is what makes a Bitcoin transaction possible.

What do we use most often when we go to a shop to buy something? We use cash or currency in some form…

But where do we store that currency/cash? A “wallet”.

Everyone knows what a wallet is, right?
It is an object where we keep currency/cash.

Similarly, in the world of cryptocurrencies, we need wallets to hold our cryptocurrencies.

Bitcoin is one of the most popular and widely used cryptocurrencies, and it too requires a wallet to hold it. Unlike physical wallets, Bitcoin wallet comes in many types.

There are several different forms of Bitcoin wallet, catering for different requirements and varying in terms of safety and security, convenience, accessibility and so on.

Bitcoin-Wallet

For understanding Bitcoin wallets, let’s take a look at something similar- email accounts.

Understand what are Bitcoin Wallets with an example:

You have your email address based on which service you are using like emailaddress@service.com
This is a public address (i.e. everyone can see it, and you can share it with anyone for receiving emails). And you have a software/service like Gmail or Hotmail through which you send and receive your mail.

And you have a password to log in to your email service to send mail on others’ email IDs (others’ public addresses). But your password is confidential and private for your own use and theirs is confidential and for their own use.

And the software/service understands both the public address (emailaddress@service.com) and your password (private address) to successfully log you in and send/receive/store emails.

Similarly, for sending/receiving/storing bitcoins, we require a wallet on the Bitcoin network, which is nothing but a place which stores our public address (a place to receive bitcoins) and a private address (to send/spend bitcoins).

Jaxx-Settings

So in short, the place where you have both your bitcoin address to receive bitcoins and the private key to send/spend bitcoins is called a Bitcoin wallet. In an even more simplified way, a wallet is a digital file which stores your bitcoins.

  • Bitcoin Address + Private Key = Bitcoin Wallet

So what kinds of Bitcoin wallets exist on the market?

Different Types of Bitcoin Wallets:

There are a lot of Bitcoin wallets available out there in the Bitcoin world. To make it easier for you to understand, I have classified them based on certain criteria such as online connectivity, custodianship, and device availability.

Wallets-based-on-Device-of-use

This is the most secure and safest way to store your bitcoins because they are stored in an offline environment.

At the time of this writing, there has been no reported theft or loss of bitcoins from a hardware wallet. The private keys and digital signature needed to spend bitcoins are generated via these wallets.

I will explain about Bitcoin private keys in upcoming articles…

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Bitcoin Hardware Wallets

Hardware Wallets:

Mobile Bitcoin Wallets

Bitcoin wallet applications which are installable on mobile phones are called mobile wallets. For each mobile operating system, such as iOS, Android, Windows, and Blackberry, compatible wallets are available. India’s Bitcoin space has  Unocoin, as the leading platforms.

Below are the various Bitcoin mobile wallets and each mobile OS compatibilities. The one that I prefer using is MyCelium on Android. They have integrated a lot of security measures & are quite safe. At the same time, there are many more mobile wallets that you can pick based on your smartphone’s OS.

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Bitcoin Android Wallets

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Bitcoin Windows Phone Wallets
Bitcoin-Blackberry-Wallet

Bitcoin Blackberry Wallet

Desktop Bitcoin Wallets

Desktop wallets are Bitcoin wallets which are installable on different desktops, and as per the user’s needs, are compatible with Windows, Mac, and Linux.

Below are various Bitcoin desktop wallets compatible with all operating systems.

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Bitcoin Desktop Wallets

  • Exodus
  • Jaxx
  • Electrum
  • Armory
  • Copay
  • Bitcoin Core
Web Bitcoin Wallets (aka Hot/Online/Hosted Wallets)

Wallets which are basically web services and are accessible through web/internet-based browsers such as Google Chrome, Firefox, and IE are called web-based Bitcoin wallets.

The private keys are held online in these kinds of wallets. They are accessible via an internet address such as https://xyz.com.

They are also called “hosted wallets” because you store your bitcoins on the servers of the agency which you have chosen as your online wallet. 

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Bitcoin Web Wallets

Web Wallets:

Paper Bitcoin Wallets (aka Cold Storage Wallet)

Paper wallets are a piece of paper with a public address and the private address printed on them.

You can use the public address to send any amount of bitcoins. You can then save the piece of paper as it also contains the private key which can be used to transfer/spend bitcoins or sweep the Bitcoin paper wallet completely to another wallet.

Since the keys are offline, printed and secured by the owner, there is no threat of any electronic damage to bitcoins unless the printed keys are lost.

Bitcoin-Paper-Wallet

In upcoming posts, I will show you how to create a cold storage wallet…

Wallet-Priorities

Which wallets do you prefer to use? Have you used any on this list? Let us know in the comments below!

Like this guide to Bitcoin wallets? Share it with your friends!

Reference: https://coinsutra.com