The bitcoin wallet is used to hold and store your valuable digital currency called “Bitcoin”. It is a safe virtual space to keep your Bitcoins in one place. There are various kinds of cryptocurrency wallets that you can choose to keep your Bitcoins safe. Let us look more about these types in detail.
This is an online place to store bitcoin. This wallet destination is also called as a “Bitcoin address”. It has a distinctive personal address to receive bitcoin. Any person who has the address (a code that resembles a long serial number) can easily send bitcoin to their wallet.
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What are Passphrases?
The bitcoin wallet is your place private and public keys are stored. For people who want to purchase, sell or transfer their bitcoin, will need a special passphrase. The interesting thing about this passphrase is that only the person who uses it has the ability to access it. Due to this reason, it is called a private key.
A Public Key looks like:
A Private Key looks like:
What are Bitcoin Clients?
For using a Bitcoin wallet, it is important to have a ‘bitcoin client’. You will get several types of companies that will provide options for safe, convenient, or regular storage, and use of a wallet. This client can be any application, device, or website, which enables a person to use the bitcoin.
4 Different Types of Wallets
All these four wallets differ from one another in a variety of ways. Where hot wallet is connected to the internet, cold wallets are offline. Let us see more about the features of these wallets in detail.
As cold wallets aren’t an online wallet, they are considered to be safer, than the hot wallets. Cold wallets offer high security, but lack usability. It isn’t easy to make a transfer between these wallets. Cold wallets are ideal to lock your Bitcoin for a longer term.
Hardware wallets need to be online for the transaction. Such wallets are specialized devices to securely store bitcoin. Popular examples of hardware wallets are the Trezor Model and the Ledger Nano.
It is an online Bitcoin wallet that is connected to the internet. It is provided by crypto exchanges. The primary benefit of this wallet is that it is easy to set up, and access. The wallet keys are linked only to the website providers. They are an ideal option if you want to transfer or spend money in small amounts.
These wallets are mostly managed by 3rd parties. They are easy to use and set up. Though these wallets cannot be physically stolen, they are not very secure. They are susceptible to a security breach at the provider level who hosts this type of wallet.
As Bitcoin is a digital currency, it is very important to pay attention to its security, and safety from hackers. All these different types of wallets come with their own set of features. An understanding of these wallets will help you decide the right Bitcoin wallet.