Setting up a Bitcoin wallet is simple. That’s because you do it the same way you install software on a desktop computer, laptop, or mobile device. After installing the app, you automatically create a Bitcoin wallet. That means you can receive or send Bitcoin to your wallet. An ideal wallet enables you to store bitcoins safely and use them at any time.
Today, most people buy Bitcoin on crypto exchanges. Platforms like the bitcoinup enable people to purchase and sell this virtual currency. That’s because they’ve simplified the process of buying this digital currency. Registering with a crypto exchange is like opening your trading account.
But, a crypto exchange controls the funds that a trader has in their account. And this explains why you should not store your Bitcoin in a crypto exchange. Essentially, fraudsters can hack a cryptocurrency exchange. The company behind the platform can also go bankrupt. Also, you will need permission to transfer or withdraw the bitcoins from your account. And withdrawals take longer while attracting higher fees for transactions. For these reasons, people use crypto exchanges to trade while storing their bitcoins in digital wallets.
Choosing a Bitcoin Wallet
You will find countless wallet apps online from which you can choose the one to use. Each wallet comes with unique features that you should consider. Nevertheless, go for a digital wallet with the most users. Also, choose a digital wallet that provides a combination of ease of use and security. Here are the general types of wallets from which you can select the platform to store your bitcoins.
Software Wallets
Software wallets provide greater convenience when purchasing, storing, selling, using, and trading Bitcoin. That’s because these wallets are in the form of applications that users can download and install on their computers or phones. Once you’ve downloaded and installed the wallet, you can instantly open it and transact with Bitcoin.
But because software wallet maintains an internet connection, it is vulnerable to hacking. Therefore, Bitcoin users, traders, and investors should not store large amounts of funds in software wallets.
While people have reported few cases of software wallet hacking, the most significant risk so far is losing a private key. A private key is like a password for the wallet. For this reason, backup the wallet while adhering to the best practices for managing your passwords.
Also, use a non-custodial software wallet. That means only you will have access to the funds in your wallet and not the provider. That way, you can avoid the risk of the wallet provider going bankrupt or fraud.
Hardware Wallets
Hardware wallets are the best option for people that want to store more significant Bitcoin amounts on a long-term basis. Also called cold wallets, hardware wallets are generally physical devices where people store cryptocurrencies. This wallet provides better security for digital assets by insulating the user from the internet. Thus, using a hardware wallet makes it impossible for a hacker to infiltrate cryptocurrency storage.
But because accessing a hardware wallet takes time, it might not be an ideal option for somebody that wants to make frequent transactions. Thus, this wallet is suitable for long-term storage. Like with a software wallet, adhere to the best practices for managing passwords and back up private keys.
A hardware wallet is an ideal option for you if you want to store large bitcoin amounts. However, purchase your wallet from a reputable and trustworthy company to avoid compromising your device.
Paper Wallets
This option allows you to download a software package and running it to generate a private/public key pair that you print on paper. Once you’ve created the wallet, you can send Bitcoin to a wallet address and use a private key to sign in to your wallet whenever you want to complete a transaction.
You have many options when selecting a Bitcoin wallet. Take your time to analyze all options available to choose the most appropriate for you, depending on how you plan to use your bitcoins.
