How to Store Your Bitcoin(BTC)

Bitcoin wallets store the private keys that you need to access a Bitcoin address and expend your funds. But which type suits you best?

Simply like with your bank account or physical wallet, you require a place to store your Bitcoin after buying it.

Bitcoin is stored in digital wallets – a type of computer software that attaches to the Bitcoin (BTC)network. Just like bank cards have account numbers, digital wallets feature a special address that can be transferred with others when you make transactions.

Types of  Bitcoin wallets

Also, as with bank accounts, there are different classes of wallets for storing your Bitcoin, each proposing its own set of pros and cons. In a broad sense, there are two main types of Bitcoin wallets:

  • Hot wallets: These types of Bitcoin wallets are attached to the internet and are typically available online or on your smartphone.
  • Cold wallets: These types of Bitcoin wallets cannot be used through the internet. They often apply physical devices (like a stick USB), where Bitcoin and other cryptocurrencies can be reserved securely offline.

Hot wallets

Although relatively less secure, hot wallets are the most famous in the crypto world because of their convenience. Because hot wallets are already attached to the internet, it means people can access and exchange funds fast– something that’s important if you like to make quick trades when the crypto market is shifting. Some popular examples of this type include mobile wallets (for example, BitPay), web or online wallets (for example, Bitdenex ), and desktop wallets (for example, Bitcoin Core).

When you recorded on a cryptocurrency trading platform, a web wallet will be automatically created for you to hold your Bitcoin. One of the downsides of utilizing web wallets on exchange platforms is your private keys are being held by a third party. Remember the front door key analogy? Imagine someone else has the key to your house. If they wanted to they could decide to lock you out or if the owner of the key lets the key slip into the wrong hands, then someone could break in without your knowledge.

Cold wallets

Cold wallets such as paper wallets or hardware wallets are the securest options when it comes to storing your Bitcoin(BTC). These are totally offline products and cannot be accessed by the internet; meaning someone would have to be in the same physical location as the wallet to steal it. When you utilize an online paper wallet generator, however, it’s important to report some can pose a security risk because you are trusting the website with key generation. Be sure to verify the code has no backdoors (ways for the website developers to see your keys) if you want to use one.