Bitcoin has gained great popularity and trust over the past few years. Some proponents of cryptocurrency, in general, are convinced that they are easier and safer to use than fiat currency. Because the value of Bitcoin in comparison to the U.S. Dollar has increased reasonably, it has shown up on some people’s radar as a great investment. That is when the Bitcoin wallets started emerging.
The Bitcoin wallet is nothing but simply a software program (or platform) where Bitcoins are being stored. Well, if looking at this matter more technically, then Bitcoins are not stored just anywhere. Each user is provided with a private key for his/her Bitcoin address that is saved on the Bitcoin wallet with a specific balance. Those wallets allow the users to send and receive Bitcoins.
The use out of those wallets can be found not only on Forex or any other financial services. As the cryptocurrency and blockchain technology is gaining more popularity each year, so do industries like eSports and gambling, for instance. Thus, you can use your Bitcoin wallet to deposit or withdraw winnings on online casino portals which offer special promotions and additional free spins bonuses in rewards for using the cryptocurrency.
There are several forms of Bitcoin wallets: mobile, web, desktop, and hardware.
How do Bitcoin wallets work?
A bitcoin wallet is often referred to as a digital wallet. Before starting obtaining Bitcoins, you need to first get this wallet. Just look at it as a physical wallet where you can store your fiat money. Now let’s go through different types of this digital wallet.
Desktop wallets are installed on your desktop or laptop from where it is supposed to be pretty easy for you to control all transactions and settings. You can also create a Bitcoin address yourself for further sending and receiving Bitcoins. Moreover, you can store your private key on your computer too. However, that is not very safe as someone can still hack it. Thus, think about keeping it the old school way and write it down on the piece of paper.
Mobile wallets are usually available in the form of paid apps that you can install on your mobile device and carry around everywhere you go. Pretty convenient, isn’t it? You can easily get Bitcoins or make a payment with them without the need to go to your computer and logging in into the system. Yet another benefit of using a mobile digital wallet is the innovative function of ‘touch-to-pay’ via NFC scanning a QR code.
Despite being super convenient and easy to use, mobile wallets are prone to hacker attacks more than any other type of digital wallet. Moreover, if someone will get access to your phone, they will easily reach your Bitcoin wallet as well.
Web wallets allow you to access your crypto account through any browser and any mobile device. There are many available right now but you need to be very careful about choosing the one you will be working with. It goes to the extent of security they can provide, that’s crucial to be fond of that as you will be storing your private keys there.
Web wallets might also be called Software wallets because they do not come in a physical format. This type of wallet is not very suitable for storing Bitcoins for an extended period of time, especially in large amounts.
Hardware wallets are definitely one of the safest ones as they store Bitcoins on a physical piece of equipment that you are supposed to plug into your computer via a USB port. Even though those are pricey, they are worth it! There have been very few cases of theft reported and, therefore, many people trust their Bitcoins to this type of digital wallet. Hardware wallets, given their digital nature, are by far the safest one to store your crypto at.
As already mentioned, you need to be safe with your Bitcoin wallet as they represent high-value targets for hackers. But that is not it, there are several other possible problems you might face with them:
- Catching malware that can scan your hard drive and find all the private keys stored on it
- Catching a trojan that can encrypt all files on your hard drive. What they usually do next is finding the exact amount of Bitcoins you have stored on your wallet and demand that same amount to decrypt your hard drive
- You can simply lose your laptop, phone, or other mobile devices
To ensure your Bitcoins are safe there are several things you might do:
- Encrypting your wallet with the strong password
- Storing Bitcoin offline
- Choosing cold storage
- Backing up your desktop and mobile wallets
One last thing to mention here is that before putting a dollar into Bitcoin or any other cryptocurrency, think about possible risks connected to it. Of course, Bitcoin can easily double in value in the upcoming year, but it can also drop to near-zero in value. Thus, it would be wise to put only what you actually can afford to lose without struggling financially too much. But if you understand the risks and are ready to take them, then it is just about time for you to start watching for your Bitcoin wallet.