First, you need a place to store it before you buy Bitcoin. That place is called a ‘wallet’ in the world of cryptocurrencies and comes in a variety of types. Different types of wallets provide various protection, storage, and access options for Bitcoin owners.
However, it’s important to note that your Bitcoins are not stored in your wallet. Instead, it holds private keys which are important for accessing a Bitcoin address and spending the funds. These digital keys are used to sign a contract, and if the user loses them, they lose access to their Bitcoins in essence.
The BTC wallet’s five key categories are desktop, computer, web, hardware, and paper.
Types of wallets
On the user’s computer, a desktop wallet is installed which provides complete control of the funds and relative budget protection. There are thick desktop wallets that allow users to download network blocks and monitor their authenticity, as well as independently manage their funds for protection. Thin wallets, on the other hand, do not allow users to import files, and can easily be downloaded to a portable computer.
A mobile wallet has the key benefit that consumer funds are still on hand. It’s a very easy way to make products payable by scanning QR-codes. Users can in some cases take advantage of the near-field communication function of their smartphone, which enables them to simply tap their phone against a reader and not enter any information at all. One common feature of all mobile wallets is that they are not absolute Bitcoin clients. This is because a complete Bitcoin client needs to access the entire Blockchain, which is continuously increasing and includes multiple gigabytes of data.
If using a web-based wallet, users ‘ private keys are stored digitally, on a server managed by someone else and linked to the Internet. While it allows people to easily access their funds from any device anywhere in the world, there is always a chance of the server being compromised or even the company running the service taking control of your Bitcoins.
Hardware wallets are portable devices dedicated which can carry private keys and help facilitate payments. There are many different types of hardware wallets, but they all allow users to carry in their pockets effectively any amount of money.
Perhaps one of Bitcoin’s safest storage options, a paper wallet is essentially two QR-codes, generated using a designated service. One is a public key, an address that can be used to get BTCs. The other is a private key which can be used to spend Bitcoins stored at that address.