Bitcoin Wallets

The use of cryptocurrency for online transactions has become such a global phenomenon, as billions of Bitcoins are traded every single day. Bitcoin Wallets are programs or apps that function as digital wallets to monitor your Bitcoin balance and trading. They also hold your public and private keys required to access Bitcoin addresses and execute online transactions.

Safeguarding your bitcoins comes with many challenges since you don’t have physical coins to store everything is purely digital. Thus, relying on a Bitcoin wallet’s capabilities is essential for you to manage and utilize your Bitcoins properly. Below is a list of important Bitcoin wallet benefits to consider:

Freedom Over Your Money

Online bitcoin wallets give you full control over your bitcoins. No one can freeze, gain access, and manage your funds except you. This also means that you are entirely responsible for securing your Bitcoin wallet.

Identity Protection

If you’re a Bitcoiner, maintaining your privacy and freedom of choice is crucial. Therefore, the best online Bitcoin wallets offer their services without directly linking Bitcoin components, such as transactions and Bitcoin addresses to your real identity.

Ease of Use

With bitcoin wallets, sending and receiving bitcoins are simple. All you need to know is the recipient’s Bitcoin address to start transacting. There’s no need for identity verification, software compatibility issues, or other pesky measures. Transactions can be done anywhere, anytime.

Secures Private Key

The safest bitcoin wallets will give utmost importance in securing your private key. Why? Because your private key is the only way to prove your ownership of a specific Bitcoin address. Anyone that gets a hold of your private key can spend your funds easily.

Create and Verify Proof of Ownership

Sharing your private key to others to prove your ownership is a big no-no. Fortunately, the best bitcoin wallets allow you to create your signature for any message. Additionally, you can also verify a signed statement using your bitcoin wallet. Many wallets that support bitcoin cash have these two functions. Signing a message shows your ownership without revealing any confidential information.

Seamless Payment Experience

Modern bitcoin wallets are best known for fast transaction approvals. Some mobile wallet apps can process bitcoin cash payments in seconds, surpassing traditional payment methods. You can also send international payments without the hassle of long waiting times (3-5 days), bank fees, and amount limitations.

Since Bitcoin wallets store relevant information about your Bitcoin account, it’s essential to find one that answers all your needs. To help you choose, here’s a list of Bitcoin wallet features that you should look for:

Robust Security Features

Protecting your keys from unauthorized access should be a top priority. Having multiple security options like 2-factor authentication, multiple signatures, or password protection is essential in preventing security breaches and other online attacks.

Multi-Currency Support

This feature enables you to accept any cryptocurrency and store them in one wallet. A multi-currency wallet provides a versatile platform for exploring and conducting business with other people using other cryptocurrencies. It also eliminates the hassle of using individual wallets for keeping different cryptocurrencies.

Automatic Public Key Generation

With this feature, you avoid the risk of others following your trail and determining how much bitcoin you have in your account. Automatically generating new public keys for every trade you execute makes it harder for people to trace transactions back to you.

Built-in Cryptocurrency Exchange

An exchange integrated into a wallet provides a one-stop solution for swapping bitcoins to another cryptocurrency of your choice. This integration allows you to perform the exchange within the app, so you don’t have to exit your wallet and complete the trade to another cryptocurrency exchange.

Modifiable Transaction Fees

A fee adjustment option allows you to customize your fees, depending on the nature of your transaction. Generally, prices are higher for faster processing time.

Real-Time Payment Tracking

This feature enables you to monitor your payment transactions in real-time mode.

24/7 Helpdesk

Around-the-clock online customer support must always be available to answer your questions quickly and avoid any transaction delays.

Anonymity

Top bitcoin wallets should not force you to divulge personal information, such as your name, contact number, or e-mail address, to use its services. As much as possible, no account registration or login should be required.

High-Quality and User-Friendly Interface

A user interface that’s easy to navigate is a must. It should be informative but not complicated so that beginners can still understand the basics of using it.

Quick Response (QR) Code Scanning

Facilitating payments are more straight forward and secure with a smart QR code scanner. Instead of manually entering a particular bitcoin address, sending and receiving addresses can be done with a quick scan of their QR codes. It also reduces the opportunity for error and confusion on your end.

Customization

An open-source bitcoin wallet allows more room for upgrades and user-specific requirements, such as additional security for more advanced users. It’s also open for public review; thus, bugs, errors, and other issues don’t go undiscovered.

Works Across Multiple Devices

Some applications allow you to set up your wallet on multiple devices and have them linked together. If you’re actively engaged in Bitcoin transactions, this feature provides flexibility to securely access your bitcoin account with any compatible device you have on hand.

There are two kinds of Bitcoin wallets, hot and cold wallets. These Bitcoin purses are determined based on their security and connection to the internet. Hot signifying how close it is to the net and cold portraying the opposite. Read below to find out more about them:

Hot wallets

A hot wallet refers to any type of Bitcoin wallet that is somehow connected to the internet. This could be a wallet installed in a computer with access to internet service, or a web-based wallet service.

Cold Wallets

Cold storage or cold wallets refer to any type of platform that is completely offline, i.e., not connected to the internet in any way. As opposed to protecting your private keys on a computer, cold wallets offer physical protection against malicious programs or online hackers. Therefore, this is the safest form of storage if you don’t need regular access to your Bitcoins.

Bitcoin Enthusiasts

Whether you’re new to Bitcoin or an expert in the field, a Bitcoin wallet is an essential tool to start your Bitcoin journey because it’s your only way to manage and use Bitcoins. Wallets are used to secure your keys, keep track of your Bitcoin addresses, and, most importantly, as a medium for sending and receiving Bitcoin payments.

Merchants

Brick-and-mortar companies like law firms, restaurants, and hotels are just some examples of businesses that are slowly accepting Bitcoin as a form of currency. Again, since Bitcoins only exist virtually, businesses that support cryptocurrency payments must have their own Bitcoin wallets to complete transactions. Furthermore, it widens their reach to other clients who want to maintain their privacy by paying with Bitcoins.

Bitcoin Miners

Bitcoin miners work behind-the-scenes to process and validate Bitcoin transactions by solving mathematical computations. Successful miners are rewarded with newly-created Bitcoins and transaction fees. Bitcoins that you earn from mining goes straight to your wallet. Therefore, you can’t mine Bitcoins without having a wallet.

Long-Term Investors

In the crypto community, HODL is a shortened term for Hold On for Dear Life. Thus, long-term cryptocurrency investors who buy and hold onto their Bitcoins instead of selling are called HODLers. Cold wallets are crucial investments for these people since they need to secure a growing amount of Bitcoin for a long time. Furthermore, since Bitcoins can’t be stored in banks or any physical vault, a Bitcoin wallet with the richest security features is a HODLer’s best friend.

Step 1: Buy your Bitcoin wallet directly from a legitimate source

Securing your Bitcoin wallet is the key to protecting your Bitcoin assets. You can start this by obtaining a wallet from a trusted service provider. It minimizes the risk of getting your Bitcoins stolen by using a tampered product. Additionally, avoid keeping large amounts of Bitcoins on online wallets and exchanges, since security breaches are prevalent.

Step 2: Never accept a hardware wallet that has been used before

No matter how well you know the person giving you the used wallet, storing your funds in it is highly unsafe. First of all, the chances of device tampering, intentional or not, is high. Phishing malwares can also be installed and the wallet’s keys could have been extracted for the sole purpose of stealing others’ funds.

Step 3: Create a strong password

Since passwords are commonly used for anything that stores relevant information, you should already know that creating a strong password is essential. Use a mix of capital letters, numbers, and special characters if possible. Avoid using your birthday, name, and other information that anyone acquainted with you knows about.

Step 4: Encrypt your wallet with multiple security measures

Choose a Bitcoin wallet that offers several security options such as 2FA (two-factor authentication process), multi-signatures, and more to avoid unauthorized transactions. Having layers of security measures ensures that potential robbers will have a hard time gaining access to your funds. For example, if you make Bitcoin transactions across devices and your phone got stolen, the thief can’t authorize transactions independently if you’re using multi-signature. At least one of your devices linked as a cosigner should authorize it as well.

Step 5: Backup your Bitcoin wallet regularly

Keeping a backup of your entire wallet in a secure location is the best solution to avoid losing your Bitcoins forever, most especially when the device storing your wallet gets lost, damaged, or stolen.

Step 6: Store your wallet backup and seed phrase in secure locations

Securing relevant information, particularly the private key and seed phrase for your Bitcoin wallet, is crucial. They are your only access to your Bitcoins. You can use multiple secure locations, but be sure that only you can access these locations.

Step 7: Use small amounts for everyday transactions

If you’re a frequent user of Bitcoins, owning several types of Bitcoin wallet is not a bad idea at all. For instance, funds linked in a hot wallet are more readily available; thus, they’re more convenient for trading and transactional purposes.

Step 8: Opt for cold storage to protect your Bitcoins

Offline wallets are great tools to safeguard Bitcoins for long periods. Since they’re not connected to the internet, the risk of getting hacked is minimized. Furthermore, some Bitcoin wallets offer offline transaction signing. It involves two computers sharing parts of the same wallet. Although this method is tedious, it’s highly secure.

Step 9: Be wary of websites when you're online

Phishing scams are rampant through emails and even online ads. Moreover, scammers are getting more creative and convincing with their online schemes. If your wallet is stored on a device that you use for internet browsing activities, avoid clicking suspicious websites and opening emails with incorrect domain names

Step 10: Update your software regularly

Always use the latest version of your Bitcoin wallet software. Additionally, check for software updates regularly. Software updates contain current bug fixes, and other improvements that developers consider vital for your wallet to work at its full capacity. Using the latest software also safeguards your wallet from phishers and other unwanted online attacks.

Step 11: Check your device prior to servicing

It’s common for electronic devices to require routine servicing from time to time. Therefore, if your wallet is linked to a device that needs to be repaired, make sure to move your funds ahead of time before having the service done.

Step 12: Never connect your device to a shared network

Be cautious when using WiFI connections. If your wallet is stored on your smartphone, avoid connecting it to public networks. Most public WiFI networks are unsafe and put your wallet at risk.

Bitcoin is a cryptocurrency created in 2009 by an unknown person using the alias Satoshi Nakamoto. It’s a digital currency that gets distributed electronically from a decentralized peer-to-peer network. Bitcoin functions independently from governments, banks, and corporations. No central authority controls it.

Although there are many types of Bitcoin wallets, the general process of sending and receiving payments is the same.

To send Bitcoins:

Step 1

Know the recipient’s wallet address or QR code and the exact amount you’re sending.

Step 2

Look for the ‘Send’ tab in your wallet app.

Step 3

Scan or copy the recipient’s address.

Step 4

Enter the amount of Bitcoins you wish to send.

Step 5

Click ‘Send Funds’ to initiate the transaction.

To receive Bitcoins:

Step 1

Look for the ‘Receive’ tab within your wallet to generate your Bitcoin address. As a security measure, most wallets create a different address for every transaction.

Step 2

Share this address with the person who wants to send you Bitcoins.

Yes. Using your wallet to send and receive Bitcoins involves paying for specific transaction fees. Transaction fees cover your payment for the mining network that validates your transaction on the blockchain. Higher costs usually mean faster completion. Luckily, some of the biggest Bitcoin wallets offer fee adjustments. Using a built-in fee estimator, you can customize your transaction fee based on your level of urgency (e.g., priority, standard, or economy).

Desktop wallet

A desktop wallet is a software that you download and install on your laptop or a local desktop computer. It stores your private keys and transaction details on your hard drive. Using your computer, you can send and receive Bitcoins from other users.

Mobile wallet

A mobile wallet is an application that you can download on a smartphone to get instant access to your Bitcoins. It allows you to manage your Bitcoins on the move. Additionally, mobile wallets also enable you to make physical store payments through tap-to-pay and QR code scanning.

Web wallet

Another type of hot wallet that allows quick access to your Bitcoin account is a web wallet. Web wallets store your private keys in an online server, usually controlled by a third-party. Some service providers manage the private keys for you while others let you handle your private keys. This type of hot wallet can be used on any browser or smartphone with access to the internet.

Paper wallet

Paper wallets use traditional paper for storing vital Bitcoin information. It could be in the form of a handwritten or printed note containing your private key or seed, and your Bitcoin address. You can also choose to print out your private key and Bitcoin address in the form of a QR code. Some paper wallet providers offer a downloadable code so you can create new addresses and keys offline.

Hardware wallet

Hardware Bitcoin wallets are electronic devices, usually a custom flash drive, for storing your keys. Public and private keys are generated through a random number generator (RNG). Furthermore, your private keys will never leave the device. To manage your Bitcoins, you need to connect your wallet to a computer and access your funds through a software. Additionally, some wallets can be connected directly to the trading platform.

Yes. Most Bitcoin wallets use a seed phrase to back up a private key associated with a specific wallet. The seed phrase is a list of random words representing your private key for recovery purposes should you need to import your wallet to a new device. This is usually displayed when you open a wallet app for the first time. The number of words may vary depending on your provider (e.g., 12-word, 24-word, 39-word). Backing up your wallet, writing down your seed phrase, and storing it in a secure location is extremely important. Without your seed phrase, there’s no way to recover your lost wallet or the funds in it.

Anyone who uses Bitcoins for simple to major transactions needs a Bitcoin wallet not just for storing keys but, most importantly, to carry out Bitcoin transactions such as sending and receiving Bitcoins. Some exchanges also require you to have a digital wallet first before they allow you to buy Bitcoins. Remember, Bitcoins are digital — there’s no way to access them without using a BItcoin wallet.

You can get Bitcoins by buying on an exchange and as payment for goods and services. In the U.S., you can buy Bitcoins legally through government-sanctioned Bitcoin platforms. To register for a digital wallet, you’re required to submit personal documents to verify your identity. You can also mine your own Bitcoins, although this is not practical since mining involves the use of expensive hardware.

Yes. Many Bitcoin wallets support a feature called multi-signature, which allows two or more persons to share a particular wallet. With multi-signature, all cosigners have access to and control over the same wallet. However, transactions can only be executed after the required number of co-signers is reached.

Bitcoins can be used for online and offline purchases as long as the merchant accepts Bitcoin payments. Examples of online purchases that you can pay with Bitcoins are gift cards, video games, bets in online casinos, household goods, and more. Tipping and donations can also be made using Bitcoins. Aside from commercial establishments, many online marketplaces offer a diverse selection of products and services that accept Bitcoin payments.

Bitcoin Gold wallets are used for a specific type of Bitcoin currency known as Bitcoin Gold. Although there are many wallets that support Bitcoin Gold, the digital currency has its official full-node wallet that’s capable of storing, sending, receiving, and mining Bitcoin Gold.