In the world of currencies and assets, Bitcoin became something of an oddity — a fully digital currency. As it inspired other cryptos to follow in its steps, an issue of how to keep them safe arose.
Since Bitcoin is fully digital, it can’t be just stored anywhere. What can be stored is access to BTC, meaning private keys. With that realization, a new type of wallets sprung up — a crypto wallet. Today, the Changelly team wrote up a short instruction on how to use most of Bitcoin Wallets out here. Let’s dive in!
Types of Wallets
Now, let’s take a look at different types of Bitcoin wallets that you might find. Different types of wallets have different strengths and weaknesses, as well as features, so you will need to choose wisely what it is that you need from your wallet before you use it.
One of the most common types of wallets, web wallets is essentially online storage for your private keys. It allows users to quickly access and move their assets, as they always will have it on hand. In addition to that, many web wallets support multicurrency format, so people can store more than one in one place.
However, it also results in lower security, with hackers having more opportunities to access your account and steal all assets that they can find. And for people who store all of their cryptos in one place it would mean the loss of everything they have.
An opposite of web wallets, a hardware wallet is a physical device that stores your private key. It is a secure and reliable way to keep your coins safe, especially since hardware wallets can be used as cold storage (i.e. disconnected from the internet).
Quite a few models allow you to store different coins on one device, negating this drawback. The other (and rather huge) one would be that users couldn’t move their assets as quickly as they could by using web wallets, making them riskier during the turbulent times like March 2020.
Desktop wallets are programs that you install on your computer to store your private key. You can say that it is a middle ground between an always-online web wallet and the cold hardware wallet. It is still prone to hacker attacks, especially if you are not careful with your private information and cybersecurity, but it is also better protected as you can always make it cold storage should the need arise.
A mobile wallet is an app that allows users to manage and control their assets through the mobile device. It is similar to the desktop wallet but allows for greater mobility, so it is a great choice for people who need to move around a lot. Of course, this increase in mobility comes at the price of the variety of features, though lately it is less of an issue.
This type of wallet is basically a printed list containing the private key to your account. It is the coldest of the coldest wallets, with no way for it to be compromised by the virus. However, it also has quite a few drawbacks: paper by its nature is very fragile, you can easily lose it, and you can’t quickly access coins stored on it, as you will need to type it the key by hand every time, not to mention get it out of the storage. You can find more about paper wallets and how to use them in our article.
Though that last drawback paper wallets share with all cold wallets. Still, some would argue that the safety of your assets is worth the discomfort.
How to Use Bitcoin Wallet Step-by-Step
While Bitcoin wallets often have different features and requirements to use them, usually all of those follow a similar path. In light of that, we’ve created a guide that will help you to set up an account and use the wallet.
If needed, download and install the wallet (for mobile and desktop, as well as web wallets)
Create an account
Generate a reliable password
You either already got a Bitcoin address, or you will need to generate one
Some wallets allow you to store multiple Bitcoin addresses, so you can use a different one for each transaction for better anonymity
Make a secure backup of your wallet
By following these simple steps, you would be able to create and use your own Bitcoin wallet.
With your wallet set up, you can start mining, trading, and buying Bitcoin. In case you want to buy it, you can easily do that via our widget in a few easy steps.
Just like that, we’ve completed our short guide on Bitcoin wallets and how to use them. You now have a basic understanding of the different types of wallets, their advantages, and drawbacks. With that, you can choose what kind of wallet you need, going by what you intend to do with your Bitcoins.
You have a general instruction on how to work with your Bitcoin wallet once you’ve chosen one. While some steps might be different between them, most work pretty much the same way. So choose your wallet, start your crypto career, and stay tuned for more crypto-related guides!