If you want to start investing in Bitcoin, you will need a bitcoin address or a wallet. A wallet is where your Bitcoin or other cryptocurrencies will be held. There are a few different kinds and we are going to discuss the pros and cons of all of them. So let’s get started. There are four types of wallets-paper, hard drive, mobile and hosted wallets.
Software Wallet. You have complete control and anonymity when using this wallet . Its completely stored on your hard drive and doesn’t have to be connected to the internet. It is important to back up your software wallet because computers crash and people are forgetful and sometimes careless . So if you are the type of person who does not want any third party involved and you are computer savvy, you may want to look into a software wallet.
Paper Wallets. The second most secure type of wallet because it can be stored anywhere for safekeeping. This was created before the hard drive wallet This way, your bitcoins are not anywhere online so they cannot be stolen or disappear all of a sudden if the company closes down. This is by far one of the most secure wallet. The only pain point is that you will have to create a paper for every transaction that you are involved in.
Hard Drive. This is the third most secure type of wallet.. For this example, you would generate your public and privates keys then keep all of your information on a hard drive. The only thing is remembering to keep the hard drive in a safe place. You must also make sure that the hard drive never malfunctions and stays in good shape,you know virus free, because you will have to be able to turn it on to get you bitcoin information. You could always transfer the info to paper, but that would strictly be up to you.
Mobile . These are normally very secure wallets which handle all transactions through an app. You download the software and begin storing your bitcoin. These apps are a little difficult for beginners, but is very much worth learning. Not only are these apps secure, they normally support a number of cryptocurrencies.
- MyCelium Android Bitcoin wallet
- BreadWallet Android Bitcoin wallet
- Copay Android Bitcoin wallet
Hosted Wallets– They are hosted through a third party company and can be accessed all over the world. These types of wallets have the most security risks because your coins can be stolen. You have no way of knowing if the servers you access your account on is safe, if you are using unfamiliar servers . You could always start out with one of these wallets and then move to something more sophisticated once you have earned more bitcoin.
The only company I would recommend is Coinbase. They have been around for quite sometime and has not had any hacking problems.
What happens when I open a wallet? When you know that you want to start investing in Bitcoin, you will need a wallet to hold your coins. You will either go to a company that trades bitcoin and open a new wallet . After you open the new wallet you will be given two keys, a public and a private key. A public key is a set of 29-34 alphanumeric numbers that is given to someone when they want to pay you. When the public key is used to deposit money, it is uniquely identified by your private key. Your private is the actual address of your wallet, and NEVER should be shared with anyone.