Bitcoin (BTC), the world’s most valuable cryptocurrency by market capitalization, does not exist in any kind of physical form. This means that users cannot store it anywhere, but they must use their personal private keys to access their BTC. Bitcoin transactions are made possible, thanks to the receiver’s public keys and your private keys. While there are several forms of BTC wallets, they differ in terms of accessibility, security, convenience, and other features. Provided you have a BTC wallet, you can spend, trade, and store bitcoins as and when you want. A bitcoin wallet is simply a digital currency (crypto) storage medium designed for keeping bitcoins.
Bitcoin wallets, private keys, and public keys
Essentially, a BTC wallet represents a unique address in the bitcoin network database. All BTC wallets consist of the user’s private keys and public keys. Your public key allows you to receive BTC from other people. This means that other users of the BTC network can transfer bitcoins to you once they know your public key.
While a public key is comparable to a person’s unique email address, a private key represents the password to that email account. As the name implies, a private key is a strictly confidential piece of cryptocurrency asset information. Therefore, you must take great care not to lose or reveal your private key to third parties. Also, if you misplace your private keys, it will be virtually impossible for you to gain access to your bitcoins. You can generate private keys using a random number generator.
Two main types of BTC storage
You can either store BTC in hot or cold wallets. This storage categorization is primarily based on internet connectivity status.
· Hot storage (wallets)
In simple terms, hot storage refers to wallets that are connected to the internet. Generally, many people find hot wallets to be very convenient in terms of usability. However, because they depend on the internet, hot wallets are vulnerable to cybersecurity risks.
· Cold wallets
Also referred to as offline wallets, cold storage is less vulnerable to hackers because it doesn’t depend on internet connectivity.
Types of BTC wallets
BTC wallets can further be classified according to their medium of storage such as the web, paper, mobile, desktop, and hardware wallets.
· Web wallets
Web wallets are termed as online wallets. They can be accessed through internet browsers such as Chrome, Firefox, and Internet Explorer. With these types of wallets, servers host the private keys to the bitcoins. And these can be accessed through websites such as YouHodler, and Coinbase.
YouHodler offers one of the most advanced bitcoin wallet options on the market. Users can HODL, earn crypto, and multiply their assets in one place. With YouHodler, you can earn interest up to 12% APY. Those looking for a high level of security for their crypto wallets can create their YouHodler accounts and have wallets for BTC, LTC, USDT, and other popular cryptocurrencies.
· Mobile wallets
These come in the form of apps that can be used on mobile devices. Your phone stores the private key to the wallet. You can download and install mobile wallets on both iOS and Android platforms.
· Desktop wallet
Desktop wallets save their private keys on a computer hard drive. They are classified as hot wallets because of their active connections to the internet. You can use desktop wallets on Linux OS, Mac OS, and Windows PCs.
· Paper Wallet
This is simply a piece of paper or card that provides the private and public keys for a BTC account. They usually have QR codes that can be scanned by users when they want to make a transaction.
Finally, these types of BTC wallets store their private keys on portable hardware devices such as pen drives, they can be connected to a PC via USB.