A Bitcoin wallet is the first step to using Bitcoin. You can think of a wallet as your personal interface to the Bitcoin network, similar to how your online bank account is an interface to the regular monetary system. It is basically the Bitcoin equivalent of a bank account. It allows you to receive bitcoins, store them, and then send them to others.
In reality, it’s not bitcoins that need to be stored and secured, but the private keys that give you access to them. Bitcoin wallets contain private keys; secret codes that allow you to spend your bitcoins. In essense, Bitcoin wallets facilitate sending and receiving Bitcoins and gives ownership of the Bitcoin balance to the user. The Bitcoin wallet comes in many forms; desktop, mobile, web and hardware are the four main types of wallets.
A Bitcoin wallet is also referred to as a digital Wallet. Establishing such a wallet is an important step in the process of obtaining Bitcoins. Just as Bitcoins are the digital equivalent of cash, a Bitcoin wallet is analogous to a physical wallet. But instead of storing Bitcoins literally, what is stored is a lot of relevant information like the secure private key used to access Bitcoin addresses and carry out transactions. The four main types of wallet are desktop, mobile, web and hardware.
Desktop wallets are installed on a desktop computer and provide the user with complete control over the wallet. Mobile wallets overcome the handicap of desktop wallets, as the latter are fixed in one place. These take the form of paid apps on you. Once you run the app on your smartphone, the wallet can carry out the same functions as a desktop wallet, and help you pay directly from your mobile from anywhere.
As for web wallets, they allow you to use Bitcoins from anywhere, on any browser or mobile. The selection of your web wallet must be done carefully since it stores your private keys online. Blockchain, Bitcoin.com, and Coinbase are the most popular web wallet providers.
Hardware wallets, on the other hand, are by far the most secure kind of Bitcoin wallet, as they store Bitcoins on a physical piece of equipment, generally plugged into a computer via a USB port. They are all but immune to virus attacks and very few instances of Bitcoin theft have been reported.
Keeping your Bitcoin wallet safe is essential as Bitcoin wallets represent high-value targets for hackers. Some safeguards include: encrypting the wallet with a strong password and choosing the cold storage option i.e. storing it offline. It’s also advisable to frequently back up your desktop and mobile wallets, as problems with the wallet software on your computer or mobile device could erase your holdings.
Some other Bitcoin wallets to consider are Ledger Nano S, TREZOR, and KeepKey. The Ledger Nano S is the cheapest of the three hardware wallets with a screen. Ledger, one of the most well-known Bitcoin security companies, released the device in August 2016. TREZOR, on the other hand, launched in August 2014 as the first Bitcoin hardware wallet, offering secure bitcoin storage plus the ability to spend with the convenience of a hot wallet. TREZOR is a small, thumb-sized device. Finally, KeepKey was released in September 2015 and was the second hardware Bitcoin wallet to offer a screen. The KeepKey’s larger screen gives it some extra security features that the Nano S and Trezor lack.