Let’s about bitcoin wallet; let’s use case of fiat currency (money) as example. Usually, we don’t carry large amounts of it around but we rather save larger volumes in a bank while we carry smaller volumes around however, because of the decentralization system of bitcoin there are various ways we can also save and spend our bitcoins hence “Bitcoin Wallets”
WHAT IS A BITCOIN WALLET?
A “Bitcoin wallet” is basically the Bitcoin equivalent of a bank account. It allows you to receive bitcoins, store them, and then send them to others. There are two main types of wallets. A software wallet is one that you install on your own computer or mobile device.
Firstly, all wallets are divided into two (2) categories i.e. Cold and Hot wallet
a. Cold wallets: are those that are offline or disconnected from the internet. On the other hand, cold wallet is considered the most secure, thus, recommended for storing large amounts of bitcoins. Therefore, the best strategy is to use cold storage for long term holdings.
b. Hot wallets: are those that are connected to the internet or is online for regular use, suitable for frequently accessed funds and used to store small amounts of bitcoins.
TYPES OF WALLETS:
Bitcoin wallets store the private keys that you need to access a bitcoin address and spend your funds. They come in different forms, designed for different types of device. You can even use paper storage to avoid having them on a computer at all. Of course, it is very important to secure and back up your bitcoin wallet.
There are six main types of wallet and this includes: desktop, mobile, web, paper, bitcoin clients and hardware. Here’s how they work.
1. Desktop wallets
They are designed to be downloaded and used on laptops and personal computers. They are easy to access and use even when the computer is not connected to the internet.
They are available for different operating systems – Windows, Mac OS and Ubuntu. Armory is the most recommended desktop wallet, especially due to its security features. Others are Multibit, mSIGNA, and Hive.
2. Mobile wallets
We use phones for most tasks these days and bitcoin wallets tailored for your Smartphone is therefore very convenient. Mycelium and Blockchain are both available on Android and IOS. For Blackberry, Bitcoin Wallet is one of the few available.
Perhaps, one of the handiest features on mobile wallets, apart from enhanced security features, is the QR code capability. It enables instant payments.
3. Web wallets
These are provided on the cloud by third party wallet service companies. The wallets on these platforms are only accessible through an internet connection. Coinbase and Circle are some of such service providers. Bitgo is trusted by institutions for its vault services that include co-sign to lock accounts.
On the other hand, multi-signature wallets from Coinkite let you decide the number of cosignatories to have one account.
4. Paper wallets
If you thought bitcoins were digital only, then think again. Paper wallets can securely hold your bitcoins in cold storage form for a long time. You can store this form of wallet it in a safety deposit box along with your other valuables.
In order to generate a paper wallet, you use sites such Bitaddress.org or Blockchain.info. Once they are generated, you print them out on a piece of paper.
5. Bitcoin Clients
These are the original bitcoin wallets used by the pioneers of the currency. Computers installed with these wallets form part of the core network and thus have access to all transactions on the blockchain.
BitcoinQt, was the first ever built bitcoin client wallet. Many believe it is what Satoshi Nakamoto used. With it, you play a role in the overall state of the network. Another with richer features is Electrum, a lightweight client.
6. Hardware Wallets
Trezor and Ledger HW.1 are quickly becoming popular as portable physical vaults. They are incredibly small devices. They are secure for storage, sending and receiving transactions online. Their developers make use of top grade cryptography and take them take through continual scrutiny.
Crypto-Corner 