Choosing Between All the Different Bitcoin Wallets Out ThereNov 13, 2019, 5:58PM
Despite there being multiple options for how and where to store your bitcoin, only a choice few are actually suggested for use.
If you’re a noob to the whole bitcoin trading world, even fewer are suggested. While there are a fair few models to choose from, experts suggest that many bitcoin wallets should be left only to the pros, or the foolish.
It’s generally advised that anyone new to the wide and wonderful world of bitcoin sticks closely with a bitcoin trading platform. Until they get their feet wet and can easily navigate the volatile markets and unusual trends and patterns.
Outside of the markets themselves being slightly more nuanced than traditional fiat and stocks, bitcoin wallets are also more widely varied and a bit more touchy than the traditional bi-fold or Apple Pay.
What is a Bitcoin Wallet
A bitcoin wallet is essentially an online or offline storage facility for your bitcoin. These wallets are, at their most basic definition, a software program that houses bitcoin at your specific address. This address is the “public key” that defines your bitcoin account. This public key is entered into the ledger anytime bitcoin is sent to or from your wallet.
So while this key says where funds are coming from or going to, it doesn’t give people the ability to access those funds. Accessibility into your wallet is controlled by a “private key”. The private key allows a person unlimited access to send or receive funds, as well as view balances and historic transactions.
Each key is a string of numbers and letters that are unique to that particular address or wallet. Wallets can either be considered “online” or “offline”.
Online wallets are directly connected to the internet and provide “hot access” to your bitcoin. These are the wallets that you can actively use the currency at hand to trade or purchase goods. Offline wallets are cold storage for your bitcoins. As they rarely connect to the internet, they’re a good place to store coins while they are not immediately needed. Offline wallets can transfer bitcoin to online wallets and vice versa, through public keys.
These are the most basic kinds of bitcoin wallets, and all that are actually suggested for the newb to hold. However, there are actually several kinds of bitcoin wallets that you can use for different reasons.
Multisig, or multi-signature, wallets are akin to a joint bank account. These wallets can be controlled by two or more people or corporations. These accounts are ideal for large groups or corporations that want to pool their resources or have equal control of when and how funds are spent.
Any signing member of a multisig wallet can receive funds or check balances autonomously, but in order to spend or trade funds, all the partners of the account must sign off in order to spend or trade funds.
These wallets are incredibly safe and well secured. Making targeted attacks difficult, as multiple personal keys are needed to expend funds.
Paper wallets are essentially a handwritten back up of your personal key and public wallet address. These are always a great idea to have, provided you keep them safe and secure.
Paper backups are spectacular as they can’t be hacked, and should something happen to your original device(s), it’s simple to load up your new wallet to whatever device you get next. Brain wallets are similar to paper wallets, however, they literally require the user to remember the address and personal key of their bitcoin wallet.
Unless you’re the next Sheldon Cooper, these types of wallets are definitely not suggested by the pros.
Vanity wallets are known for their low security and weak privacy, making them extra enticing for hackers. Often these types of wallets are created solely to increase brand reputation for businesses and high profile groups. Their public addresses consist of messages or names that are easily read and interpreted by humans.
While extremely difficult to get the hang of, bulk wallets are great for e-commerce and large corporations. They’re specifically designed to handle a number of payments and exchange. These wallets have a massive number of both private and public keys that are generally controlled via bot. Most popular bitcoin exchange programs and trading platforms use bulk wallets to handle large scale transactions.
These wallets are essentially a hacker's nightmare and very secure. But without adequate knowledge and well-honed programming skills, their almost impossible for the novice to control.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.