Bitcoin transactions are increasing every day, and with time there are many different kinds of wallets coming up to make transactions fast and easy. Each of these Bitcoin wallets is known to have different characteristics and functionalities, however, more or less all of them work similarly. Bitcoin wallets store private and public keys. Bitcoin wallets are available in different forms and based on your device, many types are coming up in the market. There are even paper storage options also available to avoid storing it on a computer. However, it is important that you backup and secure your bitcoin wallet on a regular basis.
What are Bitcoin wallets?
Bitcoins is a digital currency which is equivalent to cash and in many places it is used for day to day transactions. Merchants from different places are accepting Bitcoin in exchange for products or services. Bitcoin is a digital currency which is creating a huge impact all around the globe . And it is slowly but surely making its way into traditional banking systems. Like traditional currencies, bitcoins are also stored in wallets called a Bitcoin Wallet. Normal currencies are physical, and hence we need normal wallets, for digital currencies you need to use digital wallets. Makes sense, doesn’t it?
To be accurate, Bitcoins are not technically “stored”anywhere. In reality, you are storing the secure digital keys which are used for accessing public Bitcoin addresses as well as sign transactions. Bitcoin wallet keeps track of all this information. There are different forms of Bitcoin wallets coming up in the market, here are five main types of wallets:
- Mobile wallet
- Desktop wallet
- Web wallet
- Hardware wallet
- Paper wallet
Here is how these wallets work:
Mobile wallets are very popular, and it is like running an app on your smartphone or tablet. The advantage of the mobile wallet is that it stores private keys for Bitcoin addresses and helps you to pay for products and services directly from your phone. Some of the more advanced Bitcoin wallets will give you the advantage of smartphone NFC, or Near Field Communication, which enables you to tap the phone and pay with Bitcoins without even entering any information. Some of the examples of Mobile wallets are Blockchain, Mycelium, and Xapo.
Desktop wallets are mainly used for laptops and computers. The advantage of the desktop wallet is that, in addition to relaying transactions on the network, this tool helps you to create a digital currency address for receiving and sending of virtual currency. This wallet can also be used for storing private keys. Different desktop wallets are becoming available in the market which include a wide range of features. OSX, for example, is for Mac and MultiBit runs on Windows. Some of the latest desktop wallets are tailored for advanced security.
Online wallets are also known as “web wallets” and they are popular among many Bitcoin users. The specialty of this online or web-based wallet is that it stores all of your private keys online or on a computer. The best thing about this wallet is that it can be accessed from any place irrespective of the device you are using. Many popular online wallets are available in the market such as: Coinbase, Circle, Blockchain, Xapo and many more.
Hardware wallets are another popular type of cryptocurrency wallet, but at present time, they are very limited. These are mainly devices which can hold private keys electrically and help in making payments. Cryptolabs, Mycelium, and BitStash are popular hardware. Many new concepts are coming up within this type of wallet which will eventually make transactions fast and easy.
Paper wallets are a popular form of the digital wallet and is known to be the most popular and cheapest option for storing digital currencies. Many online portals are offering paper Bitcoin wallet services, and in present-day time many are opting for this digital wallet. This wallet is known to generate Bitcoin address and create an image which contains two QR codes. One QR code is a public address which can be used for receiving Bitcoins, and the other is the Private key used for spending Bitcoins. There are numerous benefits of Bitcoin paper wallet. The best thing about a paper wallet is that it is not subject to hardware failures and cyber-attacks.