One of the primary things that any investor or trader does before investing in Bitcoins is learning about the Bitcoin Wallet. In this article, we will help you with tips to store bitcoin. We will also look at addressing some important questions on wallets like-
- How Bitcoin wallets work,
- How you can store Bitcoins and
- What are the different types of wallets you can use
Bitcoins are not physical currencies like coins or cash. Rather, they exist in a purely digital framework. A wallet is necessary for storing your private keys. Your Bitcoin address is stored on the Blockchain and the private key helps you access that.
It is important to ensure that you always have a very safe and secure wallet to store your private keys. Hackers are using advanced tech and software to gain access to private keys and removing coins worth millions of dollars.
Why Investors are opting for Offline Wallets-
If you talk to any seasoned Bitcoin investor, they will always suggest keeping a record of your wallet and private keys offline. This is because if your private keys are connected to the internet and are stored in the cloud, it becomes easier for potential hackers to gain access to them.
You can store your private keys in different secure software hosts. However, you need to feel confident that the security of the host is secure enough to keep nefarious actors out of your wallet keys.
This method of storing the Bitcoin wallet is also knows as the cold storage method. However, even if you are not connected to the internet, if someone manages to get access to your computer, you will lose your Bitcoins. The security of your personal computer needs to be a top priority.
Why Hardware Wallets are finding many takers for their convenience and security?
A hardware wallet is very close to a cold storage wallet or offline wallet. However, rather than the personal computer, you store your Bitcoin wallet and the private keys in a USB hardware. This means that you can hold the private keys in devices like a pen drive or an external hard disk.
Hardware wallets are an old, but time tested way of storing Bitcoin keys. They are not connected to the internet, can have their own security protocols for accessing the pen drive or the USB drive. These kinds of wallets are immune to any hacks or spyware attacks.
The only problem, which you can have with them, is when they can be stolen. However, experts state that even if you lose the physical hardware, you can recover the funds on your Bitcoin wallet using a secure and one time generated seed phrase.
Big investors and exchanges, who deal with thousands of Bitcoins, use banks as their hardware wallet to store their keys. The only way you are going to get defrauded from a hardware wallet is when you misplace your keys somehow.
Paper Wallets and Physical Bitcoins
In the last few years, Paper Wallets are fast emerging as a cool and secure source of maintaining your funds. This literally means that your Bitcoin wallet and keys are printed on a piece of paper using a complicated software. You can carry it around physically on yourself at all times, just like the hardware wallet.
Many companies are also coming up, which are offering real physical coins of pre-determined value against your Bitcoin value. They contain a chip and a code, which can be easily used by merchants when you are using them as a form of transaction. However, please bear in mind, which you will have to pay a small premium over and above the value you want to get.
Hardware wallets are the safest way to store your Bitcoin keys, as they are not connected to the internet. However, you should use a medium, which you feel most comfortable in using.