How To Store BitCoin Safely – Different Types of BitCoin Wallets
Bitcoin is a type of crypto-currency, which is made available in the form of digital/electronic currency. It is not a printed currency as Dollars and Euros. All the bitcoin transactions are based on peer – to – peer operations and the processing charge is also very low when compared with other crypto-currencies. In this post we are going to discuss, how to store bitcoin safely.
Strategies behind bitcoin transactions:
Bitcoin is an open-source payment processor that facilitates direct – user transactions and does not encourage any intermediates in transactions. Nobody is having the authority to control it. The network nodes monitor and verify each and every transaction corresponding to that particular network and hold the details of those verified transactions in Blockchains.
A Blockchain a distributed public ledger that accepts bitcoin as its account unit. Users can access bitcoins from anywhere in the world.
The method of storing bitcoins:
To store bitcoins, a user needs to select a bitcoin wallet. A wallet is a software application or program used for the maintenance of all the bitcoin transaction details. It enables the users to spend their bitcoins and access them in an efficient way. In order for a bitcoin payment to be sent or received, a bitcoin wallet is necessary.
The private keys required for spending funds and accessing bitcoin addresses are kept safely in the bitcoin wallets. So it is essential that a bitcoin wallet has to be kept in a secure manner and a backup needs to be taken. Instead of storing cash in a physical wallet, we go for digital wallets for the purpose of storing bitcoins.
Nature and types of bitcoin wallets:
Bitcoin wallets are usually made available in a variety of sizes and forms and are being designed in different ways for different devices.
The wallets are of the following five different types:
- Web / online wallets: These are nothing but applications or websites that are responsible for the management of private keys. ‘Blockchain.info’ and ‘Coinbase.com’ are some of the examples of online wallets.
- Desktop wallets: These are nothing but a kind of applications that are installed on the user’s system. ‘Bitcoin core’ and ‘Electrum.org’ are some of the examples of desktop wallets.
- Hardware wallets: These are nothing but tiny devices, which are responsible for the safety of private keys necessary for accessing bitcoins. These are a type of physical wallets for storing bitcoins. ‘Trezor’, ‘Keepkey’ and ‘Ledger’ are some of the examples of hardware wallets.
- Mobile wallets: These are similar to desktop wallets and are normally used in smart phones. ‘Mycelium’ and ‘Bread wallet’ are some of the examples of mobile wallets.
- Paper wallets: These are fashioned wallets, where the bitcoins are stored on papers.
Safety of bitcoin wallets:
The security, as well as the safety of bitcoin wallets, relies on their extent of management. That is, the way we manage them decides their safety. There is a chance of losing our bitcoins when we lose the private keys associated with them since private keys play a major in the storage of bitcoins.
The safety of a bitcoin wallet is ensured by using a strong wallet password, which is facilitated by the usage of lowercases, uppercases, symbols and numbers.
Ways of securing bitcoin wallets:
Bitcoin wallets can be kept safe by performing the following operations:
- Taking a backup
- Cold storage or making the wallets offline
- Performing encryption
- Performing multi-signature transactions.