Are you watching Bitcoin rise in price and wanting to join this “wonderful new world”? If so, then you are in the right place! In this article, we are going to answer questions pertaining to crypto wallets: what is that and how to use them?
“True” Bitcoin wallet
Bitcoin’s main superpower lies in its anonymity and decentralization. This superpower comes from the distributed blockchain technology that is in and of itself great because it provides tools for creating extremely secure databases.
The blockchain principle
Cryptocoins are just entries in the database, whereas wallets are the link between users and portions of the blockchain that they control.
A bitcoin wallet is a file which contains secret keys to publically available bitcoin addresses and effectively users’ funds. Besides that, wallets are used for “signing” transactions.
There are 4 types of bitcoin wallets: desktop, mobile, web-based, and hardware. They are available on all popular operating systems: Windows, MacOS, Linux, Android, iOS, etc. There are a lot of them, but we will showcase the most noteworthy.
Clients of this type are stored on computers along with files containing keys. Can be basic and full:
Full—download full history of transactions of all users, which takes up a lot of disk space;
Basic—interact with the blockchain indirectly, therefore there is no need to download the whole thing.
Bitcoin Core is the de-facto official bitcoin wallet. It is promoted by Bitcoin Foundation whose members are core developers. It is a full client that processes network transactions, creates bitcoin addresses for sending and receiving cryptocurrency, as well as stores hidden keys.
Bitcoin Core’s functionality can be further extended by installing another wallet app on top—Armory. The second client presents even more management flexibility and keys safety.
Bitcoin client Armory
Among basic clients, Electrum is one of the most popular. The program doesn’t take up too much space, installation is easy. All one has to do is choose a server and write down a code that can be used to recover access to the funds in the future.
Installed on smartphones, allow storing secret keys and paying with cryptocurrency in stores. Some even utilize NFC: bitcoin transactions are completed when the phone is brought close to the reader.
Mobile wallets can only be basic because full wallets would not be pragmatic: there is simply not enough storage space on phones, nobody would want to waste traffic and battery for nothing. Mobile are simpler, but less secure than desktop.
Some of the most popular mobile wallets are Green Address, Bitcoin Wallet, Fruitwallet, Coin.Space and Electrum.
Bitcoin wallet Electrum for Android
Store secret keys on internet servers and offer basic functionality. With their help, mobile and desktop wallets synchronize information across multiple devices.
Web-based wallets are great because they are accessible wherever the internet is. But in this case, a compromise on security has to be made—the keys file is stored on a remote server and not on the user’s computer. Fortunately, hybrid web-based wallets appeared on the scene, and they can encrypt information in the browser before sending it to the server.
Blockchain.info is a popular web-based wallet service. Was launched in 2011 and is available in 25 languages, the total number of users exceeds 7 million. The platform’s security is made up of mechanisms responsible for the monitoring of internal and external processes. Creation of backup copies of keys sent to e-mail is implemented.
Bitcoin wallet Blockchain.info
Small electronic devices that look like USB thumb drives. Used for cold storage of cryptocurrency (off the internet).
Hardware wallets work a lot like safes—they are PIN code-protected. If such a device is lost or broken, access to the funds is recovered through a special combination of symbols.
There are not many hardware wallets in existence. Here are some of them: Trezor, DigitalBitbox, KeepKey, Ledger Nano. They are more secure but cost around $100.
Hardware wallet KeepKey on Amazon
There is no definitive answer to this question. But we can be sure that it is better to use a wallet that suits best when it comes to specific tasks and whose interface is more appealing to you:
If security is important, but you don’t want to spend extra money on it—go for desktop wallets. Choose a full client for more flexibility or basic for ease of use.
Those who want to use a smartphone to contactlessly pay with bitcoins on the go will find mobile wallets convenient. Or web-based wallets if NFC is not on the list of priorities.
Planning on dealing with Bitcoin on an industrial scale? Then it would make sense to invest in additional security measures by purchasing a hardware wallet.
What bitcoin wallet to choose?
Want all of them? It is also possible! Bitcoin is a decentralized currency, therefore there are no middlemen charging commissions for transferring money between wallets. Nobody prohibits creating 2 wallets and bouncing funds between them, the funds won’t melt away.
In a short time, cryptocurrency managed to find its place in the world of finance, and some people abandoned traditional paper money for it as an experiment. The experimentators get by just fine paying with Bitcoin only.
Subway accepts Bitcoin
But cryptocurrency is not accepted everywhere yet. You’ll have to convert it into fiat at some point.
The optimal way of cashing Bitcoin is electronic currency exchanger monitors, for example OKchanger. Monitors gather information about electronic currency exchangers and place it in tables. Thus, the user is able to compare offers by the exchangers and quickly choose the ones they like.
Say, you want to convert Bitcoin into PayPal fiat. It doesn’t matter what kind of bitcoin wallet you have. Go to OKchanger and notice the two-column currency table on the left-hand side of the main page. In the left one, select the currency you’d like to convert, in the right one—the currency you’d like to get in return: Bitcoin and PayPal USD respectively. Immediately after that the monitor will display a list of exchangers that convert funds in that direction. Note that in this picture the most favorable rate is offered by LEOexchanger—it gives 6955 USD for 1 Bitcoin:
Bitcoin to PayPal exchangers
Click on the exchanger’s name in the table and go to its website where you’ll select the currencies once again and fill out the exchange order form: