Let’s Brush up on Bitcoin Wallet again.
What is a Bitcoin Wallet?
A “Bitcoin Wallet” is basically the Bitcoin equivalent of a bank account. It allows you to receive bitcoins, store them, and then send them to others. Just like you need an email program like Outlook or Gmail to manage your emails, you need a Bitcoin wallet to manage your Bitcoins.
Wallets monitor Bitcoin addresses on the blockchain and update their own balance with each transaction.
Now here’s one of the most important things to remember about a wallet: What defines a wallet is where its private key is stored.
What is a bitcoin private key?
Bitcoin private key is a secret number generated to allow individuals to spend their bitcoins. When users are issued with a bitcoin address, they are also issued with a bitcoin private key. It is usually a 256 bit number and since it is the golden ticket that allows an individual to spend his or her bitcoins, it needs to be kept safe and securely. An example of a bitcoin private key is 16qT2iLQ7d5MiEkKWYau6mfRNHUFZ3NzHz. This is our bitcoin private key, by the way. A private key can be used to accept, sell and donate bitcoin. Many charities now accept bitcoins.
What does a transaction look like?
If Alice sends some bitcoins to Bob, that transaction will have three pieces of information:
This is a record of which bitcoin address was used to send the bitcoins to Alice in the first place (she received them from her friend, Eve).
This is the amount of bitcoins that Alice is sending to Bob.
This is Bob’s bitcoin address.
- There are no bitcoins, only records of bitcoin transactions
- Without a Bitcoin wallet, you can’t send or receive Bitcoin payments. So before you get bitcoins, you’ll need to buy, download, or create a bitcoin wallet.
- In the very last article, we read about the types of wallet available and now, in the following article we will help you decide, which wallet is best according to your needs.
On the go
If you are making payments in person and not online then a mobile wallet like Copay (iOS & Android), breadwallet (iOS) or Mycelium (Android) is a must.
Frequency of payments
If you will need to make frequent payments then it will be best to keep your funds in wallet that is easy to use and accessible. Mobile wallets and desktop wallets are good options.
If you are dealing with large amounts of bitcoins you will need a secure wallet. Hardware wallets and secure offline wallets like Armory are good options.
Use a mobile wallet as your checking account, and a hardware or secure offline wallet as your savings account. Mix and match to find a combination that provides both security and accessibility.
Bitcoin Core is the first and original wallet. Using this option means having control over both your public and private keys, which ensures safe storage. However, Bitcoin Core also requires a lot of space as the software comes with data on every bitcoin transaction ever performed.
There are four basic categories of Wallets available which are:
Online bitcoin wallets
Wallets that can be accessed on the web from any internet connected device.
Best Wallet : Green Address is a multi-sign web wallet, with apps available for Chrome, iOS, and Android.
- Bitcoin hardware wallets are Physical devices designed to secure bitcoins.
The Ledger Nano is a smart-card based hardware wallet. Private keys are generated and signed offline in the smart-card’s secure environment. The Nano is setup using the Ledger Chrome Application. A random 24-word seed is generated upon setup and backed offline by writing it down on a piece of paper. In case of theft, damage or loss, the entire wallet can be recreated with the seed. A user selected PIN code is also assigned to the device to protect against physical theft or hacking.
Wallet applications downloaded to your phone, computer or tablet.
Bread wallet started out as the most popular wallet for iPhone, and now it is also available for Adroid devices running Android 6.0 or higher. The simplicity and easy-to-use security makes it a great place to start for users who are new to bitcoin.
Bitcoin private keys printed from an offline computer.
Paper wallets were the standard method of cold storage before hardware wallets were built. Paper wallets are private keys printed out on a piece of paper. If generated and printed with a secure, offline computer, paper wallets are secure cold storage.
Now that you have a wallet, let us move onto the other aspects of the bitcoin and its association with the other world.