Bitcoin is a digital currency, and when we discuss technically, these coins are made up of 1s and 0s. These coins are stored in virtual wallets known as a bitcoin wallet. A wallet is a storage space that collects and stores the cryptocurrency amount and has unique addresses that are used to complete the transactions. You can visit Weed Profit software to learn more about bitcoins’ trading and investing techniques.
When we talk about a cryptocurrency wallet, the wallet stores and helps in transacting the cryptocurrencies. These wallets don’t technically store the currency as bank accounts do but store the currency on the cloud. The wallet contains two different keys: public and private keys, and these are used to send and receive money. There is a wide array of bitcoin wallets that are used to save bitcoins, which are the same as a physical wallet. These keys are used to protect the wallet and funds from fraud or attacks.
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Public and Private Keys
The public key is a unique address that is a cryptographic code. This code is created by using encryption algorithms. This key is used to receive money from other users. The private key is used to send money to wallet users. Users must understand the private key must be kept private always as if the private key is once lost; you can never recover your bitcoins again.
It is crucial never to reveal or lose your private key and to secure it, and you must use different techniques. Unlike the physical wallets that are tangible, the bitcoin wallets are intangible, and therefore it reduces the risk of bitcoins being theft. There are mainly two techniques for storing cryptocurrency like bitcoin, which are hot and cold storage.
The wallet can be easily opened as the users only need to download the wallet from the internet. There are various types of wallets as some deal in bitcoin only while some stores manifold cryptocurrencies. In simple words, a wallet is a website, device, software, or app that protects your coins with private keys.
Different Types of Bitcoin Wallets
Let us explore the various types of bitcoin wallets and learn about their features:
Mobile and web wallets
Mobile and web wallets are software applications that are compatible with desktops, mobile devices, and laptops. People who use bitcoin on a regular basis must opt for the mobile wallets as it provides high convenience, and it is readily available. The mobile wallet is basically an application that can be downloaded and installed on a computer that stores the private keys. It allows easy and fast payment of bitcoin.
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A paper wallet can be understood from its name, i.e., paper. It is a piece of paper that stores the bitcoin address, public and private key. On the paper wallets, both the keys are printed in QR code form. These wallets are considered the most secure wallets because no one can hack or steal the printed keys. There are many different services available from which the private wallet can be produced and printed out.
The hardware wallets are fundamentally the electronic device that is used to protect bitcoins. This wallet is required to connect to the internet to a smartphone or computer before using the bitcoin for transactions. The most popular types of hardware wallets are TREZOR, KeepKey, Ledger, and more.
People who want to store huge amounts of bitcoins use hardware wallets because these are reliable, convenient, and secure. These wallets don’t store the private keys on devices that are connected to the internet but store the keys in an offline environment.
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Hot wallets are the wallets that are required to be connected to the internet and can be operated on devices like tablets, mobile phones, and computers. Because these wallets run on devices that are connected to the internet, it isn’t sure that these are completely protected.
Unlike hardware wallets, these wallets store a small number of bitcoins and can’t store the life savings of wallet users. There are some wallets that are completely free, while there are some that are paid wallets that charge for extra services.