What do we use when we go anywhere to buy anything? Cash or any other form of currency. But where do we store this cash or currency? in a wallet. Everyone knows what a wallet is, right?
Similarly, in the world of cryptocurrencies, we also need a wallet to hold cryptocurrencies.
Bitcoin is one of the most popular and one of the cryptocurrencies used everywhere and to keep it on hold we also need a wallet. Unlike physical wallets, bitcoin wallets are of many types.
For the understanding of bitcoin wallets, let’s look at something similar – email accounts. Understanding bitcoin wallets with an example
According to whichever service you use, you have an email address such as emailaddress@service.com.
This is a public address. (That is, everyone can see it and you can share it with anyone to receive emails). And you have a software service such as Gmail and Hotmail that lets you send and receive emails.
This is a public address. (That is, everyone can see it and you can share it with anyone to receive emails). And you have a software service such as Gmail and Hotmail that lets you send and receive emails.
If you have to send an email to others with your email id, then you have a password for that. But your password is confidential and is for your private use. The second person also has the password of his id, which you have to send an email to.
And whatever software or service you use, they understand your public address and your passwords too, only then do they allow you to log in and send, store or receive your emails.
Similarly, in order to send/receive and store bitcoins, we must have a wallet on the Bitcoin network, which is nothing but a place where our public address (a place where you can receive bitcoins) is located. can be stored, and you have a private address (so you can send or spend your bitcoins).
So if, I say in short, where you both have bitcoin addresses and private keys so that you can receive, send and spend bitcoins, it is called a bitcoin wallet. In another simplified way, a wallet is a digital file that stores your bitcoins.
- Bitcoin Address + Private Key = Bitcoin Wallet
So what kind of bitcoin wallets are there in the market. Let us see.
Different types of bitcoin wallets
There are many bitcoin wallets available in the world of bitcoin. To make it easier for you to understand, I have differentiated them according to some criteria, such as online connectivity, custodianship, and device availability.
So what kind of bitcoin wallets are there in the market.
Mobile Bitcoin Wallets
Bitcoin wallet applications that can be installed on your mobile phones are called mobile wallets. Compatible wallets are available for every mobile operating system, such as iOS, Android, Windows, and Blackberry.
Below are the different Bitcoin mobile wallets, with OS compatibilities. The one I prefer to use on my Android mobile is MyCelium Wallet. They have integrated many security measures and are also safe. Also, there are many other mobile wallets that you can choose from as part of your Smartphone’s OS.
Android Wallets:
- MyCelium
- Jaxx
- Copay.io
iOS Wallets:
- Breadwallet
- CoPay
- AirBitz
Desktop Bitcoin Wallets
Desktop wallets are those Bitcoin wallets that can be installed on different types of desktops and are compatible with Windows, Mac, and Linux.
Different wallets compatible with different operating systems are given below.
Hardware Bitcoin Wallets (aka Cold Storage)
This is the most secure and safest way to save your bitcoins in an offline environment.
As of the time of writing this post, there are no incident reports of loss of bitcoins with a hardware wallet. The private keys and digital signatures that are needed to spend bitcoins generate these wallets.
Hardware Wallets:
- Ledger Nano S
- Trezor
- KeepKey
Web Bitcoin Wallets (aka Hot/Online/Hosted Wallets)
These are wallets that are basically web services and you can access them from web browsers such as Google Chrome.
Your private keys are kept online through these wallets. You can access them by opening their website.
These are also called “hosted wallets” because you store your bitcoins on the servers of the agency that you have chosen as your online wallet.
Web Wallets:
- CoinBase
- Xapo
Paper Bitcoin Wallets (aka Cold Storage Wallet)
Paper Wallets are pieces of paper on which public addresses and private addresses are printed.
You can use these public addresses to send any amount. Then you can manage your paper piece because it also has your private key which you can use to spend and transfer bitcoins.
So as your keys are printed offline on a single page, there is no risk of any kind of electronic damage in this case.
Bitcoin wallets based on Connectivity
Hot Bitcoin Wallets (Online)
Such wallets in which bitcoins are stored online and which are connected to the internet 24/7 are called hot wallets. Such bitcoin platforms that can receive and withdraw bitcoins from their users are called hot wallets. They are like wallets in your pocket.
When you keep your Bitcoin wallets online they are always under threat.
Cold Bitcoin Wallets (Offline)
So as you must have guessed, the wallets in which you store your bitcoins offline, away from the internet, are called cold bitcoin wallets.
Bitcoin wallets based on Custodianship of Keys
Custodial Wallets (3rd Party Services)
When you ask an agency or exchange to hold your bitcoins instead of you, it means that you are trusting them, your bitcoins are on their servers, so in this way, you give them custody of your bitcoins. give.
Non-Custodial Wallets
When you do not trust anyone for your bitcoins and use such a wallet to store your bitcoins, whose full responsibility belongs to you, then such wallets are called Non-Custodial Wallets.