Bitcoin unlike traditional government backed currencies, is a decentralised purely digital currency. As it is both digital and decentralised, the way in which we acquire, store and hold it is different to what we expect from traditional currencies.
Access to your bitcoins is through your digital bitcoin wallet. Bitcoin wallets come in several different forms, varying in ease, accessibility, price and security. Here we have detailed some of the more common varieties.
For those who are using bitcoin day to day, from paying for goods or services to sending bits to friends/family or engaging in other trades, then the speed and ease of access of a mobile wallet is very convenient.
Mobile wallets can be run as an app through your phone. Many of these wallets will also have built in near-field-communication, meaning you can scan or give out a QR code version of your bitcoin address for sending or receiving payments.
Despite being convenient for on the go transactions and as a means of storage, bitcoin mobile wallets are regular targets for hackers. Also if you lose your phone, someone may be able to access your bitcoins.
Popular mobile wallets include:
Web Wallets like mobile wallets are high on convenience, as they can be accessed from any device connected to the internet. Web wallets are generally user-intuitive and can be set up within minutes.
However with this convenience, comes greater risk. In many cases the website running the wallet, holds your private keys and if they are hacked then your coins will become vulnerable to theft.
Many web wallets are found on exchanges, again there is a risk the exchange will become insolvent, hacked or run away with the customers bitcoins it holds. In some cases the exchanges can decide to arbitrarily freeze your account and foaccess to it. It is not recommended to keep your coins on exchanges medium to long term.
Popular web wallets include:
Desktop bitcoin wallets are downloaded and installed on your computer. They store your private key, access to your bitcoins, locally on your hard drive. This is more secure than web or mobile wallets as you do not rely on third part to secure your coins and it is more difficult to steal.
However as you hold access to your own private keys, need to ensure your desktop is secure and not victim to viruses that could impede security or key-loggers.
Popular desktop wallets include:
– Bitcoin Core
Hardware wallets are an increasingly popular option for holding bitcoin, particularly for larger amounts. Hardware wallets store users private key on a secure hardware device, this is the most securing way of storing your bitcoin.
Hardware devices are immune to computer viruses if secured on an authentic device. A word of reminder is to always make a note of the back-up key that a hardware wallet provides, this allows you to access your coins if your devise is lost or broken. Hardware wallets unlike the previous varieties mentioned are not free, with the cheapest coming in around 60 euro.
Popular hardware wallets include: