Bitcoin (BTC) represents a digital currency. Since Bitcoins do not exist in any physical form or shape, they can’t be stored anywhere, technically Rather, it’s the private keys — used to access your public Bitcoin address and transaction signatures— that must be stored securely. What makes a Bitcoin transaction possible is a combination of the recipient’s public key and your private key.
There are several different forms of Bitcoin wallets that meet different requirements and vary with security, usability, accessibility etc.
Types of wallets
A paper wallet is essentially a document containing a Bitcoin public address and a private key which allows you to spend or transfer Bitcoin stored in that address. Paper wallets are often printed as QR-codes, so you can scan them easily and add the keys to a digital wallet to make a transaction.Using services like BitAddress or Bitcoin paper wallet, a paper wallet can be created that allows users to create a random Bitcoin address with their own private key. You can then print the created keys, with some services providing a tamper-resistant design or even an option to order holographic labels.
A paper wallet’s main advantage is that the keys are stored offline, which makes it totally immune to hacker attacks, including malware that can log keystrokes on the user. Yet some precautions still need to be taken when creating a wallet. You need to make sure, before generating a paper wallet, that no one is watching you do it.
It is recommended to use a clean operating system, such as Ubuntu, running from a USB flash drive or DVD, to rule out the possibility of any spyware tracking your activities. In addition, the website code should be able to run offline once the paper wallet is set up, which helps you to withdraw from the internet before actually generating the keys.Finally, use a printer that is not connected to a network.
It’s also important to understand that you’re printing a piece of paper with precious, private information.
Digital Bitcoin is usually preloaded with a fixed amount of BTC, and the theory is that as long as the private key stays safe, its value can not be spent. Typically this is done with a tamper-evident lock.
The first of its kind, Bitbill, was shaped like a credit card, but most subsequent variants were shaped like a round pin. The first of the famous Casascius physical Bitcoins was developed by Mike Cadwell in 2011, a cryptocurrency enthusiast nicknamed “Casascius.”
Private keys were hidden beneath a peelable hologram, leaving a tamper-evident mark when it was removed. The Coin lost its digital value when it was redeemed. Many modern producers of coins have been around ever since.Physical Bitcoins are a convenient way to safely store your funds, and can be extremely helpful when trading offline. Additionally, they have recently become the object of a prized collector.
A mobile BTC wallet is an essential tool for those who actively use Bitcoin on a daily basis, pay for goods in the shops or trade them face-to-face. It runs like an app on your smartphone, storing your private keys and allowing you to pay directly from your phone for things.In addition, some apps allow users to use the near-field communication feature of their smartphones which means they can simply tap their phone against the terminal without providing any information at all.
Any full Bitcoin client requires access to the entire blockchain ledger which is growing steadily and requires several gigabytes of storage. Mobile wallets are taking advantage of simpler payment authentication technologies for these purposes.These only work with small blockchain subsets, depending on trustworthy nodes in the Bitcoin network to ensure the correct information is available.
Web wallets store your private keys on a server that is constantly online and third party-controlled. Various services offer various features, some of which can connect to mobile and desktop wallets and duplicate your addresses across devices you own. Just like mobile wallets, e-wallets allow their users to access their on – the-go funds from any internet-connected device. If not properly protected, your private keys may be obtained by the entities operating the website, thereby having total control of your funds.
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