Bitcoin Wallets – For Beginners

If you’re just getting started with Bitcoin, then you’ll want to learn about all of the different ways you can store your coins. The Bitcoin wallet is the file that stores your private keys. These keys are what are used to sign transactions for certain Bitcoin addresses, so the person who owns the private key is the one who owns the bitcoins. Let’s take a look at the different kinds of Bitcoin wallets that allow you to store and manage your private keys.

Desktop Wallets

The original Bitcoin wallet was a desktop client that allowed one to send and receive Bitcoin transactions from the comfort of their home computer. There are many different types of Bitcoin desktop clients available now, and the one you decide to use really depends on your specific needs. Power users who wish to have as many advanced security options as possible should stick with Armory, while individuals looking for a simple, light client may find that Electrum better suits their needs.

Online Wallets

Online wallets offer a bit more flexibility when it comes to using Bitcoin. These wallets are usually available on every platform, which makes them a bit more flexible when it comes to using Bitcoin for any type of payment during the day. Any website that stores your bitcoins for you in the cloud can be viewed as an online wallet. For example, every user of xapo is given an online Bitcoin wallet as soon as they sign-up for an account. Other popular online wallets include blockchain.info and Coinbase. It’s important to take extra security precautions when using this type of wallet, and turning on two-factor authentication is recommended by all online wallet providers.

  • Sign Up with Xapo to get your first Online Bitcoin Wallet and 5 mBTC for free.

Mobile Wallets

If you’d like to pay for goods and services with Bitcoin in physical store, then you’ll need to download some kind of mobile wallet. These wallets work in the same way as the desktop wallets, and the only difference is that they run on smartphones rather than desktops and laptops. The most popular standalone wallet is simply called “Bitcoin Wallet”, but there are also other offerings available. One of the newest options is called Hive Wallet, and the developers plan to integrate a variety of different cryptocurrencies into the software.


Multi-sig Wallets

A multi-signature wallet is a special kind of wallet that offers enhanced security options for users. With this type of wallet, there are actually multiple signatures required to send bitcoins to another user on the Bitcoin network. For example, with GreenAddress.it, every transaction must be signed by both the user and GreenAddress. The fact that both the user and the wallet provider have to sign each transaction means that GreenAddress has the ability to block transactions that seem suspicious. This means that a hacker would not be able to simply empty out an account after successfully getting around a variety of other safeguards. It should also be noted that these types of wallets can be used to bring more security to 0-confirmation transactions, as long as the merchant also trusts the wallet provider. In addition to GreenAddress, BitGo and Armory also have multi-signature features as integral parts of their wallets. It is expected that more wallets will add enhancements related to multi-signature addresses over time.

Hardware Wallets

Hardware wallets are often referred to as the “holy grail” of Bitcoin wallets due to their combination of security and convenience. One of the main issues with storing bitcoins is that anyone who puts bitcoins on a compromised computer will lose those bitcoins in a matter of seconds. The level of security found on most computers connected to the Internet today makes using Bitcoin almost impractical, which is why hardware devices have been developed solely for the purpose of signing Bitcoin transactions. When using a device such as the TREZOR Bitcoin wallet, the private keys attached to one’s Bitcoin addresses are stored in a separate device connected to the computer via USB. This attachment is not allowed access to the Internet, which means a user’s bitcoins can remain secure even on a computer infected with malware.

  • Ledger, the most secured Bitcoin Wallets

Paper Wallets

Paper wallets are a form of storage where the private key to a particular Bitcoin address is printed out on a piece of paper. This is another form of offline or “cold” storage where it is impossible for a hacker to steal the bitcoins through an Internet connection. Although these types of wallets are useful when it comes to enhancing the security of one’s Bitcoin wallet, it’s also rather inconvenient to use paper wallets for everyday spending. These wallets are usually reserved for long term storage because the private key from the piece of paper must be transferred to an online wallet before those funds can be used.

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