What is a bitcoin wallet and what types are available?
CoinCash10 March 2023
In this article you will learn how to:
what a cryptocurrency wallet is,
what types of wallets there are,
and which of these we recommend.
To be technically accurate, it should be noted that bitcoins are not actually stored anywhere, it's just easier to explain this way.
What are the important keys?
There are several types of wallets, but to understand their essence, it is necessary to be aware of the keys that cryptographically protect the wallets:
The private key is a cryptographic key that only you know. This key is used for encryption and signing. You should never give out your private key to anyone, if it falls into the wrong hands it can get into your wallet.
The public key is a counterpart to the private key and is available and usable by anyone, like an account number for a bank account. This key is used to decrypt and verify encrypted data. With the public key, users can refer to each other, share their data with others and properly verify signatures sent by others.
What are the different types of wallets?
Online Wallet: An online wallet is accessible via the Internet and allows you to store and manage coins. Online wallets are easy to access and often free, but because they are online, they can be risky to use. There are several types of online wallets, from decentralized wallets such as MyEtherWallet or Unstoppable to those of centralized exchanges. But the most widely used application is Metamask, an extension that can be installed in a browser (Firefox or Chrome) to store cryptocurrencies conveniently, but not without risk.
Mobile Wallet. This type of wallet is easily portable and allows for quick access and use of coins. However, mobile devices are generally not as secure as hardware wallets. Our recommended mobile wallet is the BRD wallet.
Hardware Wallet: A hardware wallet is a physical device that stores cryptocurrencies offline. Some hardware wallets also store the private keys needed to securely store the coins, which only their owner can know. This type of wallet provides a high level of security as the private keys are never exposed to the internet and therefore cannot be accessed by attackers. A big advantage of hardware wallets over software wallets is that the private keys are stored in a micro protected area, so they cannot be extracted in plain text, and the cryptographic data remains completely secure. If you want to buy cryptocurrencies of higher value, you should get one to keep your coins safe. For hardware wallets, we recommend Trezor and Ledger Nano.
Paper wallet: a paper wallet is a type of cryptocurrency wallet that is printed on paper. It is a kind of physical proof of ownership of the cryptocurrency, as it contains the private key and the public address together. The advantage of the paper wallet is that it offers a secure way to store the coins, as the data remains offline, away from the internet. However, care must be taken to ensure the physical security of the wallet, as loss, theft or damage to the wallet means that cryptocurrencies are lost. The site also contains further information on the use and security of paper wallets. It is a good idea to store the completed paper wallet in a safe place, such as a safe or locked drawer.
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