What is Cryptocurrency Wallet? How to Store Bitcoins?
The more costliest thing in this world is Cryptocurrency (Bitcoin), almost the value of 1 Bitcoin equals (13,190.90 United States Dollar) which makes the most valuable thing in this world, but all these Cryptocurrencies are in digital form and the main problem is to store it in the safest place, Here in this article, I'll show you How to Store Bitcoins in Cryptocurrency Wallet.
What is a cryptocurrency wallet? How to store bitcoins?
A cryptocurrency wallet is a software that enables you to send & receive cryptocurrencies such as bitcoin, ethereum, etc. It stores the record of transactions & also public & private keys that are used to perform transactions. A public key is similar to an account number. A private key is similar to an account password. Only the account holder knows the private key. The private key is used to send money. Public-private keys are always present in pairs.
Traditional wallet vs cryptocurrency wallet
A traditional wallet stores the currency. While a cryptocurrency wallet never stores any cryptocurrencies. It contains the record transactions performed by the users. It also stores the public & private keys of the user.
Methods of storing cryptocurrencies
1. Hot storage
Hot storage refers to the type of storage that is connected to the internet. Hot storage, being connected to the internet, allows the user easy & quick access to funds. It is helpful in daily transactions.
The different types of hot storage wallets are:
• online(cloud) wallets:
Examples: exchanges like Bittrex or quadrigacx, & online wallets like coins.ph and green address.
• desktop wallets:
Examples: exodus, multibit, armory, & bitcoin core.
• mobile wallets:
Examples: Jaxx, bread wallet, mycelium & copay.
2. Cold storage
Cold storage refers to the type of storage that is not connected to the internet. It is also known as offline storage. Cold storage provides a higher level of security than hot storage. It is useful for long-term storage, unlike hot wallets.
The different types of cold storage wallets are:
• hardware wallets:
Examples: ledger, trezor & keep key.
• paper wallets:
Examples: bitaddress.org & bitcoin armory
3. Multi-signature wallet
Multi-signature wallets are those wallets that require more than one private key to execute a transaction. The number of private keys required depends upon the initial configuration of that wallet. It can either be 2-of-3 keys or 3 of-5 keys.
4. Multi-currency wallet:
Multi-currency wallets, as the name suggests, are those types of wallets that allow the user to store more than one cryptocurrency in the same wallet. This means that it can perform transactions that require bitcoin, ethereum, etc. Using the same wallet.
Which wallet to choose?
It depends on the reference & usage type. There is a tradeoff between convenience & security. Convenient wallets are less secure while secure wallets not as convenient to use.
If the funds are used for a shorter time & easily accessible
For day to day transaction then choose hot wallets while cold wallets will be helpful if considering to store funds for a longer period of time.
At the end of the day, cryptocurrency is programmable money.