Digital Wallet is an electronic device that allows the user to make a transaction online. A digital wallet has become reality nowadays. One can use digital wallets to purchase anything online and make payments using a digital wallet. There are many digital wallets available online, however, bitcoin wallets have become immensely popular these days. So, let’s find out what a bitcoin wallet is?
A bitcoin wallet is similar to a bank account. It contains all features of a bank account. Using a wallet, you can receive bitcoins, store them and send them to others. Bitcoin wallets offer great security, hence, one should not be anxious about security threats. Basically, a bitcoin wallet is of two types Software Wallet and Web Wallet.
A software wallet can be installed on a personal computer or mobile phone. You have full control over the security of the coins, but sometimes it is difficult for you to install and maintain the wallet. On the other hand, a web wallet or hosted wallet is handled by a third party. It is easy to use this kind of wallet. It offers a high level of security to protect your coins. However, you have to trust service providers for providing security to your coins.
Apart from the above-mentioned bitcoin wallets, there are other wallets available
1. Hot Wallet vs Cold Wallet:
All wallets are classified either as hot or cold. A hot wallet is connected to the internet. On the other hand, a cold wallet is an offline wallet or a wallet that is not connected to the internet.
Talking about security and usability, A cold wallet is more secure and frequently used, whereas, a hot wallet is used to access funds instantly. Therefore, a hot wallet is better for regular use and a cold wallet is for long-term use.
2. Desktop wallets:
This type of wallet can be installed on a personal computer or laptop. This type of wallet can be easy to access and use even when the system is not connected to the internet.
3. Mobile wallets:
If you are a frequent mobile user and have no time to access your desktop or laptop, then you can install bitcoin wallets on your mobile phone. There are several bitcoin wallets available online for both Android and iPhone users. Talking about the most important feature of Mobile wallets is the QR code capability that enhances security.
4. Paper Wallets:
Paper wallets are more secure compared to the other online and software wallets. It is easy to store a private or public key on paper. The reason why it is more secure is that you have your keys printed on a piece of paper. Paper wallet falls under the cold storage method or offline. However, sometimes it is difficult to manage a paper wallet. A paper wallet can be easily misplaced or torn or damaged. Therefore, instead of having a single copy of the keys, create four-five copies of the key and store it in a safe place.
5. Hardware Wallets:
Hardware wallets are different types of wallets. Hardware wallets are standalone hardware cold storage devices that store your keys. Hardware wallets are USB-type devices that you need to attach to your computer or laptop for making any transaction. A hardware wallet is highly secured because it stores keys offline. It generates private keys offline, therefore, it protects your keys from malware or hackers. It is extremely easy to use a hardware wallet and doesn’t require understanding the complex mechanism of blockchain or bitcoin. Overall compared to other available wallets, it is one of the most secure wallet options.