Quick Lessons about Cryptocurrencies and Bitcoin
Different kind of Wallets
You can download the software or host it in the cloud. The first is simply a file format that is stored in your computer or device, which facilitates transactions. Hosted purses (cloud-based) tend to have a simple interface, but you must provide your private keys to a third party.
Online wallets or in the cloud, offer greater comfort as you will be able to access your bitcoin from any device if you have the proper passwords. All are easy to install, it comes with desktop and mobile applications that make it easy to provide and receive Bitcoin, and most are free. The disadvantage is that, they have a lower level of security considering the private keys are stored in the cloud, you have to place your trust in the security methods of the host, and that it won’t disappear with your money, or shut down and deny you access. Some main online wallets are associated with exchanges, for example, Coinbase and Blockchain, and some offer additional security features such as offline storage, Coinbase, and XAPO between them.
Mobile wallet, App
Mobile wallets are available as apps for your smartphone, especially useful if you want to pay for something in Bitcoin in a store, or if you want to buy, sell or ship while travelling. All online wallets mentioned above have a mobile version, while others like Abra, Airbitz, and Bread were created with mobile devices in mind.
The Wallet Software
Installing a wallet directly into your computer, will provide you with complete access to your private keys. Most have relatively easy setup processes, and are completely free. The disadvantage is that they don’t require maintenance in the way of security copies. If your computer is stolen or damaged and you didn’t store your private keys somewhere elsewhere, that bitcoin will be lost forever. Also they require greater security measures. If your computer is hacked and the hacker steals your purse or private keys, they can also take all your Bitcoin. The original wallet software is the Core Bitcoin protocol, the program running on the Bitcoin network.
Most wallets in use today are “light” wallets or simplified verification SPV (with a fee) where your won’t have to download the whole book, but a synchronization to the real thing is also known as bitcoin wallet, that offers “cold storage” (An offline option for additional security). This can track multiple assets with a sophisticated user interface. Some ( like Jaxx) can contain a wide range of digital assets, and some (Copago) offer the possibility of shared accounts.
These are small devices that occasionally connect to the web to start a bitcoin transaction in an extremely safe way, because it is done offline and, therefore, can not be hacked. They can be stolen or you could lose them, but so the bitcoins that were linked to those stored private keys . Some big investors keep their hardware wallets in safe places, such as in bank vaults. Trezor and Keepkey are good examples of this type of wallets.
Perhaps the simplest of all wallets, these are pieces of paper containing the Bitcoin private keys and public addresses. Ideal for long-term storage of a Bitcoin (away from fire and water, obviously), or for the delivery of a Bitcoin as a gift, these wallets are safer because they are not connected to a network. They are, however, easier to lose. One example is WalletGenerator, and you can easily create a new address and print it on your wallet: you can fold it, seal it, and it will be ready. Then you can send your Bitcoins to that address, and then storing it in a safe place.