A Bitcoin wallet is the way through which Bitcoin is stored or kept. Bitcoin wallets are important because they facilitate the sending and receiving of BTC (Bitcoin). Besides, wallets guarantee the user ownership of the Bitcoin balance through the issuance of a private key associated with that wallet which no one else knows.
Types of Bitcoin wallets
There are four main types of Bitcoin wallets that come in various forms. They include mobile, desktop, hardware, and web wallets. For any person to trade in BTC, they must have one of the wallet types below in order to own, send, or receive Bitcoin.
Desktop wallets
Desktop wallets are usually installed on a computer and give the user an opportunity to access and control his or her wallet. Besides, desktop wallets also serve as addresses for users to send and receive Bitcoins as well as store private keys. Examples of desktop wallets can include but are not limited to Armory, Electrum, and Bitcoin Core.
Mobile wallets
A mobile wallet is a platform that serves similar functions as a desktop wallet. They generally facilitate payments for people conducting physical transactions through “touch-to-pay” and QR code scanning. Examples of mobile wallets can include but are not limited to the Bitcoin mobile wallet, Bitpay, and Electrum. Most Bitcoin wallets are compatible with both iOS and Android.
Web wallets
A web wallet allows Bitcoin transactions from anywhere through a mobile device or browser. If you choose to use a web wallet, then you should ensure that you are using a secure browser. This is because the browser stores your private keys online. You can get a web wallet through services like Coinbase or Cash App who also facilitate the buying and selling of Bitcoin through their exchanges
Hardware wallets (Cold Storage)
A hardware wallet is considered one of the most secure types of BTC wallets. This is probably because it is stored in a physical piece of hardware that is normally attached to a computer using a USB port. Hardware wallets are more likely to be free from virus attacks, hacking, and any form of security breaches. Unlike other BTC wallets that are often free, a hardware wallet can cost you anywhere between $50 and $200. Some of the most common cold storage solutions include but are not limited to the Ledger Nano X or the Trezor Model T.
Wallet security
One of the important things to consider when getting a Bitcoin wallet is security. This is because addresses associated with wallets can become the target of hackers who are looking to steal Bitcoin. It is argued that the best way to protect your Bitcoin is with a cold storage wallet. Cold storage simply means storing your Bitcoin offline in a way that it is not accessible from the internet, desktop or mobile devices.
The best precautions you can take to keep your BTC safe is by also storing your private keys offline. This is to prevent you from losing all your holdings in case of a mobile or computer crash and you are not able to re-access the Bitcoins in your wallet. If you have access to your private keys or your recovery phrase associated with your wallet address, you should have no issue getting back into your wallet from a separate device.