In our previous article I explained about Bitcoins mining and this time I would be talking about creating your online Bitcoins wallet to store your Bitcoins. Once you withdraw bitcoins from your account, you need a small personal database to store it in. Keep in mind that you never actually store your digital currency in the wallet. Basically, you just store the secure digital keys used to access the BTC addresses and sign transaction. These details are stored in a Bitcoin wallet.
You need a personal address to receive the Bitcoins that you withdraw. Remember that the address must be unique. You may consider the working of this BTC address as your email such that anyone can send bitcoins to it. A program named ‘Bitcoin Client’ serves the users having bitcoin addresses and facilitates the similar as like your email programs. To log in to your BTC Client, you are required to enter your BTC address and the unique matching private key. However, for multiple bitcoin addresses, you can use the same private key just like you use same email password to access multiple email addresses.
Now, it might strike your brain for what Bitcoin wallet is. These are the aforementioned details that are stored in your BTC wallet. If you learn your address and private key by heart, then your brain can be called as bitcoin wallet in this case. No matter what kind of wallets you use, keeping those small pieces of information safe and secured is of great significance.
Still, in case, you doubt how safe the wallets are, you must know that it ultimately depends on the way you manage and handle your BTC wallet. The private key should strictly not be known to anyone else so that you never lose any of your bitcoins. Clearly note that the private key is the only way to access your bitcoin address and carry out your transactions.
Following are few ways through which you can secure your Bitcoins wallet:
- Since the wallets have online existence, hacking is ON for it. In order to combat the hacking risk, you have a choice to switch to Cold Storage Wallets. These store private bitcoin keys offline, protecting them from getting stolen by hacker on the Web.
- You may even fear of your wallet getting corrupt or mislaid. In such case, keeping a back up of your wallet is strongly advised so that you have secured copies of the private key.
- Another method is to encrypt your wallet with a password. However, it is not that safe too since, once your encrypted password is revealed, even then your wallet can be accessed by others.
It’s interesting to note that the bitcoin wallets come in various forms for different kinds of devices where they are stored. Below are the four types of wallets widely in use:
- Online wallets: Web-based wallets store the private keys online and can be accessed from anywhere, being device independent. Best examples are: Coinbase, Blockchain, Strongcoin, etc.
- Desktop wallets: Desktop wallets like Multibit run on Windows, Mac OSX, and Linux. For using desktop wallets, you will have to install the Bitcoin QT (BTC Client) and run your wallet.
- Mobile wallets: Desktop wallets work successfully until you are out and not more on your PC. In this case, working on mobile wallet app is preferable. One striking feature that it holds is the use of NFC. On tapping the phone’s NFC against a reader, you can pay with your bitcoins wherein you are not required to enter your details. Examples of mobile wallets are Mycelium, Blockchain, Coinbase, Kipochi, etc.
- Hardware wallets: Though in limited quantity, these store the private keys electronically and handle the transactions. Trezor and Mycelium are working on designing their hardware wallets too.
As of today, most programs like Blockchain.info act as combination of both the Bitcoin client and a Bitcoin wallet. No doubt the services and options provided are wide and each one versatile in its own way, but at the end it’s you who have to carefully facilitate all the wallet related tasks. We hope now you are completely aware about the bitcoin wallet concept.