Before you own a cryptocurrency, you need a place to store it. This place is called wallet. Its always to keep your bitcoin safe in a place where your private keys are safe too. You can use a wallet software if it is made really well, it makes your bitcoin easy to use, intuitive and convenient.
A Wallet usually holds several private keys, and many crypto investors have several wallets.
Wallets can either stay on a computer, on a phone, online, even on a piece of paper. Let’s take a look at different types of wallets.
Electronic wallets can be a downloaded software, or hosted on cloud. This software facilitates the transaction from your machine and lives on your computer or any other device. If you are going for the hosted service, you’ll find it easy to use, but you’ll be trusting a third party.
Installing a wallet directly on your computer gives you the security that you control your keys. Most of these softwares have relatively easy configuration, very easy to use and most of them are free. The disadvantage you get here is that, you require more maintenance in the form of backups. If your machine gets stolen, you lose your private keys along with the bitcoin or any other coin you hold. Exodus is a very good option if you wanna download the wallet, it tracks multiple assets together. Electrum is also a very well known SPV and has been known as “Cold Storage”.
Online wallet or cloud based wallet offer a wide range of convenience, you can access your wallet through any device wherever you are and whenever you want. All you need is the right passwords. All are easy to setup, comes with desktop and mobile apps which makes it easy to spend and receive bitcoin and most are free.
The disadvantage is the low security. The private keys are stored on the cloud and you have to trust the host’s security measures, and that it wont disappear when the security is compromised. Coinbase and Xapo are very good examples of these wallets.
Mobile wallets are available apps on your phone, it is especially useful when you have to pay in bitcoin or any other cryptocurrency. you should have a wallet that offers the tracking and storage of multiple digital assets. All the wallets mentioned above has a mobile versions and other mobile wallets include Abra, Airbitz and Bread – were created with the consideration of mobile use.
Hardware wallets are small devices, these devices occasionally connect to the internet to enact a bitcoin transactions. They are extremely secure, and these are generally offline which means they are technically un-hackable. But these can get stolen along with the private keys or lost. Some investors keep their hardware wallets in a bank vaults. Trezor, keepkey and ledger are some of the examples.
These are the simplest wallets , pieces of paper on which public or private keys of bitcoin address are printed. Ideal for long term storage of bitcoin but can be lost or stolen. These wallets are always offline therefore un-hackable. WalletGenerator and BitcoinPaperWallet are some of the platforms where you can print a paper wallet.
Are Bitcoin wallets safe?
That depends on the version and format of the wallet you use. All these wallets come with their own limitation, which can be the smallest of the limitations. But It also depends on the frequency of use of these wallets. For example if you want to store bitcoin for long, you can always go for a paper wallet or a hardware wallet. If you want liquidity of your assets, you can go for either of the above mentioned wallets but do an extensive research before choosing the wallet.
Now You know how to store your bitcoin and other digital asset.