Bitcoin Wallets

May 22, 2020

After Satoshi Nakamoto created a digital currency in 2008 the market value of Bitcoin has risen, purley because of supply and demand. So with its increasing popularity, demand and limited supply of 21 million Bitcoins, there is a lot of interest in trading. If you are trading on a daily basis, once a week or year having a BTC wallet system to store your assets is crucial.

Since Bitcoin is a digital currency, it needs a specialized Bitcoin wallet or a digital wallet to store the coins. Using these wallets, you can buy, sell, and transfer BTC from one wallet to another.

In this article we will take a look at what a Bitcoin wallet is and how it is useful for anyone trading. Plus we will look into the different types of wallets.

What is a Bitcoin Wallet?

With digital cryptocurrencies becoming more popular in the market, digital wallets emerged to help store and transfer these currencies. You can’t store digital currencies in a traditional wallet, so you need a digital wallet to store them.

A digital wallet can be on your mobile phone, Desktop, a physical hardware device, or even a piece of paper.

A crypto wallet is made secure using a private and public key. Your private key is like a pin that you need to remember to access the wallet. The public key or address is essential to send or receive BTC between parties.

To transfer BTC to a person, you need the recipient’s public key or address and your private key. Similarly, to receive BTC from anyone, you need to provide your public key or address.

Types of Bitcoin Wallets

You can store Bitcoin securely in various places. For instance, when you download the Zipmex app, you can access your digital wallet and store your BTC there. There are also accessible wallets for Desktop and popular Hardware options such as Trezor and Ledger. Finally, as a last resort writing your keys down on paper and laminating, is also a good option.

Mobile

Mobile Bitcoin Wallets are one of the most easily accessible wallets that is mainly useful for those who use Bitcoin daily for purchases or trading. This wallet is generally an app on your mobile that stores your private key and allows you to pay directly.

Newer versions of these wallets allow you to use proximity transactions where you need not share your public keys, and the transaction will still be completed. Your mobile has to be within the vicinity of the recipient, and the transaction will take place.

Generally, any Bitcoin client requires you to access the entire Bitcoin ledger, which is several gigabytes worth of storage. But the mobile client runs on a small subset of the blockchain and uses trusted notes of the network to verify the information.

Pros
  • Easily Accessible.
  • Using the near-field mode, you can perform a transaction without sharing your public key.
  • Perfect for daily users.
Cons
  • Prone to security issues and hackers.
  • If you lose your mobile phone, your wallet may be compromised.

Desktop

If you prefer to use a desktop to transact you can download a wallet onto your computer. You can then store your private keys on a hard drive. They are much more secure than the online wallets and less prone to hackers. All the necessary data is on a physical hard drive which only accessible by you. A desktop application such as the wallet found on Zipmex is perfect for those who trade small amounts of BTC.

Pros
  • More secure than mobile or paper wallets.
  • Perfect for trading smaller amounts of BTC.
Cons
  • Not an ideal solution if you are travelling.

Hardware

Hardware Bitcoin Wallets are one of the most secure wallets in the market. The private keys are stored on the physical hardware, and it can capacitate any amount of BTC. These wallets can be used directly and require no specific software, unlike other kinds of wallets.

Many hardware wallets also come with screens that help to verify information providing another layer of security. It provides an interface for transactions as well. If you purchase an authentic device from a trustworthy manufacturer, your BTC will be safe and secure.

Pros
  • It’s the most secure form of Bitcoin Wallet.
  • A Hardware Wallet keeps all your assets offline.
Cons
  • Like any hardware, there could well be unknown vulnerabilities.

Paper

A paper wallet is a document containing your public address for receiving BTC and a private key that lets you spend or transfer the BTC stored.

Paper Bitcoin wallets are generally printed in the form of QR codes so that you can scan it and retrieve the keys for the transaction. It lets you store your private keys offline, keeping it safe from hackers and various malware attacks.

Although the paper wallet is quite secure, you need to take extra precautions before printing it out. Use an operating system running on a bootable drive, generate keys offline in the browser after the website code is loaded, and use a printer that is not connected to the internet.

You’re printing valuable information on a paper, and you need to keep it safe from being tampered. You can laminate it or store it in a plastic covering.

Pros
  • Safe from online attacks and malware.
Cons
  • If you lose the paper wallet, then you lose your credentials.

Bitcoin Wallet Security

Bitcoin wallets can store all your BTC and your private and public keys that help you to send and receive BTC. However, they are prone to some security threats and breaches.

Online Bitcoin Wallets are the most prone to such attacks. Any trojan or malware can breach the files on your drive, and you may lose all your BTC in an instant. You may also lose your phone, paper, or laptop with the wallets installed. Therefore we encourage you always to have a backup plan.

Do

  • Keep your paper wallets safe by laminating them or storing the paper in a plastic casing.
  • You can opt for hardware wallets as they are the safest.
  • If you use a desktop wallet, ensure your hard drives are encrypted to ensure viruses and malware do not breach your data.

Don’t

  • Avoid using wallets that require internet connection.
  • Do not lose your digital wallets as you may lose all your BTC. 
  • Please do not click on random links you receive in the email claiming they are from your wallet company; it may be a malicious link looking to steal your BTC.

Bitcoin wallets are the perfect storage for your BTC. But it would be best if you stored them in a safe wallet so that you don’t lose all your coins.

With multiple Bitcoin wallets available in the market, you need to find a legitimate and secure one that won’t cheat and take away all your money. Hardware wallets do seem the perfect fit to safely and securely store all your coins, but there are chances of losing the wallet as well. You may even lose your mobile or desktop wallet in the worst case.

Before deciding on any digital wallet, you need to do enough research and find out whether your cryptocurrency will be safe. We encourage you to take a look at Zipmex’s wealth of resources to help navigate your way when setting up an account [2]. In addition you can find answers to common questions surrounding wallets, BTC and trading.

[1] – https://cointelegraph.com/bitcoin-for-beginners/what-is-bitcoin-wallets

[2] – https://zipmex.com/#id-getting