Now that you’ve acquired some bitcoins, it’s time to think about how you will keep them safe and secure. With the advancements of bitcoin wallets, security has become easier than ever.
Bitcoin works similarly to regular cash, where it is stored in a digital wallet as opposed to a leather one. What is stored uses various levels of digital keys and encryption to keep your wallet safe. With the exception of the anonymity of public ledgers that are available, the entire process cannot be seen to anyone but the parties involved, and your wallet is your own.
There are a few types of wallets that one can have, ranging from military-grade security, to a wallet that the normal person would need.
The first kind is called a desktop wallet. This is the original storage method for bitcoins and is used under the bitcoin client called Bitcoin Core. The software enable the user to anonymously send and receive bitcoins as well as keep them safe with a private key.
The next kind is known as a mobile wallet. These work similarly to desktop wallets, but as titled, are mobile. These are useful when you are making a transaction on the go, where you would need the private keys accessible via your smartphone. A mobile wallet allows you to use (NFC) as well to pay for various physical items where it is accepted.
Some examples of mobile wallets include: Bitcoin wallet, Mycelium, Xapo and Blockchain
The next type of wallet is known as an online wallet. These use a sort of cloud-based software that links through a computer controlled by an anonymous person. This can help with anonymity as there is an extra layer of safety and unknown which helps leave transactions untraceable.
One of the main benefits of an online wallet is the fact that they are accessible from anywhere, and on any device. Because they are based online, they can be accessed by any device with internet capabilities. One of the downsides however is that because you are not in full control, you can be at the mercy of whomever is in charge of the service that you are using. Coinbase, Circle, and Blockchain are all examples of sites that allow online wallets and are quite reputable.
Another kind of wallet is a hardware wallet. These are extremely limited as they are very specific, dedicated physical devices similar to a USB that help to facilitate electronic payments.
One of the main types is known as the Trezor Hardware Wallet. This is a useful device for those who wish to keep a large amount of bitcoins, but do not wish to have third-party storage, or keep it on a desktop/mobile device. A hardware wallet is known to be more secure than the other options mentioned.
One of the most wide-spread methods of keeping bitcoins is known as a per wallet. Many websites have offers for paper wallets and are often quite reputable. The paper wallet simply creates an address and with that comes up with two QR codes. One of the codes is used to receive bitcoins while the other is the private storage code that can be used to spend your bitcoins.
One of the main benefits to bitcoin is that it is completely anonymous. With this anonymity comes the fact that all transactions are public. This helps to keep data secure, but also guard the safety of bitcoin as a whole.
With safety comes several ways to help secure your wallet. Those methods include encrypting (using a strong password), backing it up, and lastly using a multi-signature when conducting transactions. Multi-sig essentially mans that the transaction goes through several addresses before arriving at the receiver. This helps to ensure the non-traceability of bitcoin. As a last resort, one can choose to take their bitcoins offline. This is called a cold-wallet. Many choose to keep a small amount of their spendable bitcoins in a digital wallet, while they keep the majority of their bitcoins in an offline wallet.