Bitcoins are one of the most popular asset which people are preferring nowadays. I have written a small article which has given some basics of bitcoin. What Is A Bitcoin , All About Buy & Selling
How to Invest in Bitcoin 2018 (Updated) – Can I make Money with Bitcoin?
As you are reading this, I am sure that you have decided that you are ready to invest in Bitcoin. Here we are going to tell you some of the tips that will help you to choose a Bitcoin wallet. As you know that there is so many variety of Bitcoin wallets , that confuses a person to choose one from them.
But if you will keep the following points in your mind while choosing , then you will be in profit as always.
Note :- The information is based on the basics of Bitcoin wallets , but the principles are useful in other crypto currency as well.
What is a Bitcoin Wallet ? – Types of Crypto Wallets
Bitcoin wallet is a program that helps the person to exchange bitcoins in a easy & simple way. For example , we use E-mail service to manage our sent & received e-mails.
As we now knew about Bitcoin Wallet, now we should be heading to the concept of private key. A Private key is a long string contains text & numbers which becomes the password to the bitcoins.
How to Use Bitcoin Private Key ?
This private key is the key of your Treasure of Bitcoin wallet. This helps you to access your bitcoins in a secure manner. The private key must not be shared with anyone , as they can steal your bitcoins by the private key.
Nowadays wallets uses a seed phrase other than long cumbersome private key. This changes the private key into a 12 to 24 random words which acts as a private key. This simplifies the process in a very efficient way, but this also gives more chance to steal the private key. Always remember that the Private key must not be known to other person.
After reading the above para, you now know that the private key or seed phrase is the most important part of a bitcoin wallet. The private key can be used to restore your bitcoin wallet in case your wallet is stolen or destroyed.
Let’s learn to choose a Wallet.
How to Choose a Bitcoin Wallet
Bitcoin Cold Storage
If you are storing a large number of bitcoins, then Cold storage wallet must be used. Cold Storage wallet are not connected to Internet. Nobody will be able to hack your wallet remotely & steal your bitcoins.
There are some of the examples of cold storage wallets.
Paper Wallets :– Here you can store your private key on a sheet of paper. The key is only stored in the paper & to steal the key someone needs to see that paper. The only problem is that life of paper is not so much & it gets corrupted easily or can be lost.
The other limitation of a paper wallet is that you can only receive Bitcoins & no way to send them. If you want to send the bitcoins to somewhere, then you need to connect to the paper wallet to digital wallet by importing the private key. This will allow you to process your transactions.
Bitcoin USB Wallets / Hardware Bitcoin Wallets
￼￼Hardware wallets :- The hardware wallets are the most common paper wallets. The physical device hold the private key for the user. During the transaction, this device need to connected to your computer & complete your transaction with the desired amount.
The hardware wallet will verify the transaction digitally & broadcast it to the network. The hardware wallet is a secure device that creates a safe handle while user completes the transaction. Th technical details of the security is not written here but the basic can be known.
The hardware wallet is the best alternative for Bitcoin wallet security which provides security as well as ease of use. The most popular companies which produces hardware wallets are TREZOR and Ledger.
The cost of hardware wallet is very high as compared to other alternatives. This is suitable to those who have a good amount of bitcoin. You can easily afford the hardware wallet as it gives the best way to secure your wallet.
Hot Wallets or Software Wallet
The next option is a less secure but is more faster than the first one i.e. Hot wallets. A hot wallet is a wallet which is connected to the Internet in some way. This wallet is installed in a mobile phone , laptop or hosted in a website.
Hot wallets can be hacked in general. There must be less amount that should be kept in these wallets. The value must be less. The number depends on your financial status. The amount should be less that you can afford to get stolen. For someone , this amount can be $100 & for someone it could be 1000.
Types of Hot Wallets
Hot wallets are classified into two types. Let’s check both of them.
- Web wallets :- These wallets holds the coins for you. You can’t get the access for the private key & you are totally dependant on the wallet issuer. The examples of such wallets are exchanges, gambling sites or anyone who don’t provide you any access to the private key.
- Self-hosted wallets :- Here you download the program in your personal device i.e. Desktop , tablet or mobile. The private key is stored in the device. You will get the full control on your bitcoins but the risk of losing is also equal. If your device is stolen or broken, then your access to the bitcoins will be gone. To avoid such situation , you should create a wallet backup.
Backup & Restore the Private Key of a Bitcoin Wallet
The most important security measure for having a bitcoin wallet is to create a backup for the same. In other words , you should create a copy of your private key /seed phrase.
The backup of your Private key must be kept in a piece of paper or in a digital storage. But the backup should be kept secret & offline. The unauthorised access to the private key can result in losing of the bitcoins.
We hope , that this information must be quite helpful for all the readers who are trying to get the required awareness before they start investing in the same. This is completed for now.
We will be back with some more information about Crypto currencies. You can share this with your friends to let them know more about this. Thank You.