Bitcoin Wallet 101

Bitcoin Wallet Guide for Beginners

 

bitcoin wallet 101Looking for a bitcoin wallet online but not sure where to start? Confused about your options?

If you want to buy bitcoin you’ll need a bitcoin wallet. But how do you find the right one for you? And how do you make sure it’s safe?

This area can seem confusing enough so in this article, we’ll try to break it down and make it simple for you. You’ll also find some recommendations on the best wallets to use right now.

 

 

What is a Bitcoin Wallet?

 

So what is a bitcoin wallet? In order to buy or sell (send or receive) bitcoins, you’ll need a virtual wallet. This stores the information necessarbitcoin wallet 101y (your public key and your private key) in order for you to receive or send bitcoin.

A wallet will give you a public address where people can send you BTC (or from which you can send them BTC).

The public address (string of numbers) is a bit like a bank account except that it isn’t linked to any identifying information about you.

The private key is kept safe in your wallet and is not divulged to anyone. Remember that the private key is the most important part of your wallet. If anyone gets that private key, they can get to your coins.

A good wallet will also give you a seed phrase (also called a backup phrase) just in case you ever lose your wallet. It’s VERY IMPORTANT to write this seed phrase down. This phrase is a string of unrelated words like:

 

cat  tank  partner  mouse gear  respectable  table  brown  jump  pepper  shoe  sky  paper  movie

 

Keep the seed phrase safe and separate from your wallet. If you ever lose your wallet, you’ll be able to recover your bitcoins with the seed phrase.

 

bitcoin wallet

 

 

Types of Bitcoin Wallets

This is where people get confused as there are a few different options – each with their own benefits and drawbacks. Here’s a simple breakdown:

 

Desktop Wallets

bitcoin walletThese are wallets that you download to your computer or PC. These are only accessible from that specific computer where you downloaded the wallet.

These kinds of wallets are easy to download and use – so they’re a great option for newbies. And a lot of people feel they are fairly safe.

On the downside, since you can only use the wallet from one specific computer, you can’t take it with you and use it on the go (like you can with a mobile wallet).

Also, if that particular computer gets a virus that hacks your wallet, this can be a big problem.

Popular examples of desktop wallets include Armory, Bitcoin Core and Multibit.

 

 

Online Wallets

These are wallets that run on the cloud and are accessible anywhere you go from any device. This makes it a lot easier and more convenient to use.

 

bitcon wallet online

 

However they also store your private keys online as well – which opens them up to a lot more security risk.

Coinbase – which is an exchange but also offers you a BTC wallet as well – is an example of an online wallet. You can access it online with your email and your password – but at the end of the day they control your private key.

A lot of people like the Coinbase wallet. However because of the higher risk, it’s not recommended that you store more than a few hundred dollars on an online wallet at any given time.

Think of it this way – when your private keys are online, somebody else can control them. The safest solution when it comes to BTC wallets is where YOU control your private key.

 

Mobile Wallets

bitcoin mobile walletThis is the solution most people use to buy and transact in bitcoins day to day. These are apps that you download to your phone.

These are usually a lot simpler and smaller than a desktop wallet.

They usually include an option to add a PIN code which can help make them a bit more secure. Popular mobile wallets include Blockchain, Breadwallet and Jaxx.

 

 

Hardware Wallets

These are also called “cold storage” wallets. These are physical electronic devices that store your private keys offline.

hardware walletsEven if you’re connected to a computer that has a virus, the hardware wallet will keep your coins safe.

Creating and storing your private key offline using a cold storage wallet means that hackers have no way to get to your bitcoins.

Hardware wallets are considered the gold standard as far as security.  However they do run from about $70 and up. But for most people the extra security is worth it.

If you’re storing a large amount of bitcoins (the number really depends on you – but most experts recommend anything over $1000 or more), you really should use a hardware wallet to keep your coins safe.

Popular hardware wallets include the Ledger Nano S, Trezor and the Keepkey.

 

 

bitcoin wallet

 

 

Don’t Re-use Addresses

Because the transactions you make are public on the Blockchain (and show your public address), you should always use a new address for each new transaction you make.

Most bitcoin wallets these days will do they for you. They will generate a new public key for each new transaction you make. So it’s not something you really have to do for yourself. However it’s just something to be aware of when looking at different wallets.

 

How Do You Get One?

Getting a desktop, mobile or online bitcoin wallet is pretty easy these days – depending on what type of wallet you’re getting. All you really need is an email address. You’ll be sent a verification link and then you’re set. Or in the case of mobile, you just need to find the relevant app on your phone and download it.

Once you have your wallet you can buy bitcoins and send them to your wallet. Provided you have BTC in your wallet you can also use the wallet to buy items with your coins.

 

 

bitcoin wallet

 

 

Tips for Keeping Your BTC Wallet Safe

 

  • buy bitcoin 101 - walletNever give out your private keys – to anyone
  • Always keep your backup seed phrase written down and tucked away in a safe spot that only you know about. Never keep it with your wallet (i.e. with your phone or near your desktop computer).
  • Don’t use the same address – always get a new public address for each transaction (most wallets will do this for you automatically
  • If you’re using a mobile wallet, never keep it open and make sure you use a PIN or thumbprint access to open your phone at all times
  • Never store more than several hundred dollars of BTC on a mobile wallet
  • For large amounts of BTC, move them to a cold storage or hardware wallet

 

 

bitcoin wallet

 

 

References:

http://www.techlicious.com/tip/bitcoin-101-understanding-the-basics/

https://www.weusecoins.com/en/find-the-best-bitcoin-wallet/