Bitcoins are becoming a modern equivalent of cash and, every day, many merchants start accepting them as payment.
We know how they are generated and how a bitcoin transaction works, but how are they stored and its very important to note that Once you’ve to purchase any amount of Bitcoin, you will need to store it somewhere secure and safe, just like the same way you secure your cash or credit card.
In other to do this, you’ll need a Bitcoin wallet, Bitcoin wallets is a software program where bitcoins are securely stored, in another way round, Bitcoin wallet can be seen as a bank account, it comes in many forms.
Mobile wallets, desktop wallets, web wallets and even hardware wallets, Depending where the wallet is installed, Bitcoin wallets are far safer than a physical one with your cash and cards; this can be stolen by anyone and compromised, but a properly secured Bitcoin wallet of the correct type is practically impossible to steal from. Presently we have four types of Bitcoin Wallets in use. I am going to outline the importance of this various wallets
Web wallet: also known as an online wallet or hot wallet, this is wallets that run in your web browser just like any website, it is usually hosted by the third party (An Exchanger) or a dedicated hosting company like Blockchain Info.
Kindly note that large amount of bitcoin should not be stored in your online wallet, if you are looking for more ways to secure your bitcoin, then I will advise you to use Hardware wallet but the good thing is that using Web wallet, gives you full control over your coins as you are able to extract the private keys from the wallet’s and can be used for transaction immediately
Hardware Wallet: these are the tamper-proof electronic device specially designed to store private keys of your coins in an offline setting. One of the most secure ways to store your Bitcoins is on hardware wallets.
Solutions such as Trezor, KeepKey, and Ledger are all awesome options if you are looking to increase the security of your funds. Furthermore, these wallets provide a completely anonymous option to transact crypto currency.
Don’t worry about your hardware wallet getting stolen, lost or damaged either; so long as you create a secret backup code, you can always retrieve your bitcoins.
Cold storage wallet, also known as an offline wallet, A wallet completely disconnected from the internet or a host device. This is where the majority of your bitcoins should be stored as they cannot be stolen unless you hand over all the security details voluntarily. Think of it as a safe and the two wallet types above as a physical wallet.
Software wallet – A wallet stored on a specific computer. This is more secure than a web wallet in that cyber-attacks cannot compromise its contents (but attacks on that computer may still be able to). It can also be used instantly to make transactions.
Opening a software wallet requires downloading the Bitcoin blockchain as a file onto the host computer, which requires around 20 gigabytes of space.