What is a Bitcoin Wallet?

It's not the most rocket science question, but you should still know that a Bitcoin wallet is either a physical device or an application that is utilized to transact Bitcoins back and forth. A physical wallet is used to hold physical currencies.

We all are familiar with the mechanisms of a physical wallet, in short, your Debit Card.

The Debit card in the folds of your wallet isn't paper money, but it's called plastic money, and it helps you access cash from your bank account. Bitcoin Wallet functions in a similar fashion.

The only obvious difference is that a centralized entity governs Debit cards, whereas no entity governs Bitcoin.

How do Bitcoin Wallets function?

Considering the example of a debit card, a Bitcoin account can hold at least one account, which is equivalent to a debit card. If you look closely, you'll see that a debit card has a lot of data linked to it, for example, the holder's account number along with a unique password that only he knows. Sames goes for Bitcoin. Every Bitcoin inside the Bitcoin wallet holds information linked to it, i.e., a Public Bitcoin address and a Private Key (password). A private key is basically a combination of 256-bit secret numbers.

Example

108165236279178313660610114131826512483935470542150824153737659708197206310322

In the example above, you notice that the secret number is a weird number. The key functionalities of Bitcoin Wallet are to store and manage this private key. To be precise, these secret numbers are never given directly to the holder. There is a way to write it down in a human-readable format, also known as a backup -phrase, confidential passphrase or seed phrase. To understand this better, it's more like a password hint that helps you remember your password. The backup phrase is a list of words ranging from 12 to 24, which will enable you to gain access to your wallet and funds, even if your wallet is destroyed.

Let's see a quick example

Urge

Cricket

Scissors

Pretty

Arctic

Mango

Fence

Suggest

River

Install

Dog

Muffin

Since the backup phrase is very similar to a password you should never share it with anyone.

Anything being a secret is always a desire for someone, which means storing it on your computer isn't the best option as hackers are on the look or anyone you know can easily access it. A lot of people store their phrases by writing them down on paper. This brings up problems again because writing it on paper is also not a safe option.

Bitcoin Wallet comes to the rescue to cancel these unsafe methods. Bitcoin wallet integrates something called a Cloud Backup system. This can help you generate a single personalized passkey which can utilized to unlock your private keys. This will be stored in the form of a Google or iCloud account.

Kinds of Bitcoin Wallets

As mentioned earlier, there exist 2 forms of Bitcoin Wallet, i.e., Physical Wallet or Digital Wallet (Software)

Hardware Wallets

They are termed to be the most secure kind of Bitcoin wallet simply because they store private keys in a physical device which cannot be assessed via a PC or the internet. It's very much like a pen drive.

How to use this wallet?

Whenever a person wants to make a Bitcoin transaction, he/she will plug it into their PC. The hardware wallet will sign transactions without compromising the security of the private key. One sad part about these types of wallets is that despite being the most secure, they also are the most expensive.

Software Wallets

They are just the way they sound, like a PC, mobile phone or web browser. They exist on computing devices. This doesn't make it any less safe. Any hacking, malware or phishing activities cannot break the security of Bitcoin Software Wallet since it's built on Blockchain, making it safe for everyday use.

How to choose the best Bitcoin wallet for yourself?

It's really simple, but you still have to be vigilant.

Step 1

Make sure the Bitcoin Wallet has absolute security

(Facial and fingerprint recognition)

Step 2

The Bitcoin wallet should have a High Reputation

Step 3

You should have access to private keys (owning your Bitcoin)

Step 4

Cloud backup features

Step 5

An option to customize fee

Step 6

It should definitely have multi-signature functionalities

Want to create your own Bitcoin Wallet?

At Mobiloitte, we deliver services like Mobile Wallet Development, Web Wallet Development, Desktop Wallet Development, Bitcoin Blockchain Integration, Multi-currency Wallet Integration, Private Key Management, Two-Factor Authentication, Payment Integration services, and many more. Ready to get your own Bitcoin Wallet? Contact us today!!

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