How to Store Your Bitcoin?
Like any type of financial-based system, it is necessary that you know how to safely store your assets. In this case, how to safely store your Bitcoin. Whether you want to acquire, invest or pay for services using the currency, there are many options for keeping your Bitcoin safe and it is necessary for you to know where and how to keep it safe because in the past people have actually lost their Bitcoin.
First and foremost, it is very necessary to know that Bitcoins are stored on the Bitcoin blockchain network. Before you can access your coins, you would need a 'wallet', so what is the Bitcoin wallet?
One common confusion most people will have is to understand the word 'wallet'. It might imply that you need to have physical storage or a device where all your Bitcoins will clink safely, but that is not exactly the case. Your Bitcoin is technically not stored in one place just like your money is not necessarily in a bank.
A Bitcoin wallet is a special software program where your private key is securely stored. If you have a balance stored, you have both a private and public key. Your public key is a public address that you can share with people in order to get money from them, in other words, they can send money to you through your public key. Your private key, however, is a series of secret numbers that relate to your public key and it is what gives you access to your Bitcoins. It is very important to note that under no circumstance, should you share your private key, it is the password to your asset, and just like with traditional banking, if anyone knows your password they can access your account and steal your money.
Forms Of Bitcoin Wallet
While there are many forms of Bitcoin wallet types, they can be classified into two major categories;
1. Hot (online) Wallet
2. Cold (offline) wallet
Hot (online) Wallets as the name implies are online safes like the internet where your private key is kept and accessed by you from any mobile device you own that is connected to the internet.
On the other hand, Cold (offline) wallets are solid, and tangible safes like a vault, paper, or even your memory where your private key is stored.
Online Wallets are very susceptible to hacking and have been a major cause for people losing their digital assets in recent time this it is necessary to store your private key on both forms of wallet and also take great care in ensuring that you do not divulge your own private details to anyone who might use it to rob you.
Types of Bitcoin Wallets
These two forms of wallet can be further broken down into four major types; cloud, desktop, hardware, and mobile.
Cloud wallets allows you to access your Bitcoins through mobile devices on any browser through plugins. They exist online and are secured in a server by a third party operator. While they are very easy to interact with, it is important to note that you will be entrusting the safety of your private keys in the hands of either an organization or a person. Due to the sensitive nature of your key, it is necessary to be vigilant when choosing a cloud wallet. Examples of cloud wallets include Blockchain, Coinbase, etc.
A desktop wallet is a software that is installed on your PC and it gives you full control over your wallet. Your desktop wallet becomes the public address through which you can send and receive funds. You can also store your private key there. However, take necessary precautions because the safety of your wallet is largely dependent on how secure your PC is.
Hardware wallets allow you to store your private key on a secure external device. They connect you to the internet for the purposes of enabling transactions. Again, it is necessary to take caution with them because their physical nature makes them highly susceptible to theft so ensure you interact with it securely or keep it in safe and secure places.
Mobile wallets are very similar to desktop wallets. They function as applications on your phone that you can use to buy or pay for something. However, these apps will store your private key on your phone making it very possible for you to lose your key in the event your phone gets missing or stolen so it is best to always have backup storage for your key. Most wallets have mobile versions however brands like 'Bread' and 'Abra' were created specifically for Mobile.
The process of storing Bitcoin is not hard, however, it requires a lot of deliberation, research, and caution in order to put safety at the forefront of your decision.
Before you begin, you need to know how many storage options, from the ones listed above, you would prefer to use. If you intend to store your Bitcoin for an extended period of time then it is best to use cold storage however if you are going to be using it daily then it is best to choose a medium of ease and conveniences like the cloud or mobile wallet. All you have to do is transfer them to your private address and once you confirm the transactions the payment is complete.
The most important part is the protocols you install that ensure no one can access your wallet without your permission.
The numerous Bitcoin storage options above exist for your convenience and the safety of both your transactions. It is necessary that you take your time to explore all the options before making a decision. The choice you make is what will determine whether you will have a secure account that cannot be accessed by anyone except you or whether your funds will be siphoned by criminals looking for loopholes within the system.
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