Introduction to bitcoin wallets
The one thing that every person treasures in the financial world is a wallet. Whereas wallets are often used to carry lots of documents, such as identification cards and voters’ cards, ideally they are primarily used for carrying money and credit cards.
For this reason, irrespective of the amount of money being carried, wallets are valued and protected by all means. In the same way that people carry physical wallets, virtual currencies (all cryptocurrencies) require that users have non-physical wallets for themselves and, in this regard, a Bitcoin wallet is used for Bitcoins. Using Bitcoin wallets, you are sure to be able to receive and send Bitcoins from and to different persons for various transactions.
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Bitcoin wallets are essentially made up of two key components: public and private keys. It is these keys that make up what is otherwise referred to as your Bitcoin address. All your Bitcoin transactions come to your wallet through this address. In the same way one would have several wallets, you are at liberty to have more than one public key(s), for purposes of minimizing losses in the event your keys are tampered with. The private keys are basically long and complex codes in nature, symbolic of the actual Bitcoins going out to the person you are sending coins to. These private keys are linked to the recipient’s public key(s), otherwise known as the Bitcoin address.
This would, in essence, mean that all transactions for cryptocurrencies must make use of both keys (public and private), to be considered complete.
What are the major types of Bitcoin wallets?
Your choice of Bitcoin wallet should be informed by the alternatives within your reach and convenience, while thinking about security concerns. Here are the three major types of Bitcoin wallets:
- Offline wallets: as the name suggests, this type of wallet has got nothing to do with the internet or being online. These wallets are only available on your computer drives, and it would be up to you to ensure that such drives are disconnected from all networks. Your security needs to be good, as the only assurance you would have that your Bitcoins/wallets are safe is to ensure that no one disappears with your computer drives, that they are not corrupted by viruses or otherwise, and that you don’t misplace them or lose them altogether.
- Online wallets: usually there are websites that offer these services, and all you would need to do is to subscribe to them. While such sites are abundant, popular examples include https://blockchain.info/wallet and https://bitcoin.org/en/choose-your-wallet. While considering these options, you must always remember to regulate how much of your coins are available online, and for how long, just in case someone outsmarts you and gets access to your wallets.
- Paper wallets: here, you don’t need to crack your brain thinking hard. All you need to do is to print both your public keys (the Bitcoin address) and your private keys on a piece of paper. Of course, the quality of the printing paper should be considered, but that would only be of small benefit if the paper is safely kept, far from possible misplacement or any damage whatsoever. Ideally, this is meant to keep you safe from online fraudsters.
How Bitcoin paper wallets work
Paper wallets are the solution to all the problems posed by online wallets and hard drives, as far as being compromised with ease is concerned. To that extent, their reliability in the storage of your coins is well regarded. Although hardware has been developed that is secure from malware infections and although alternative means of storing Bitcoins do exist, paper wallets remain on the forefront in the fight against Bitcoins insecurity, guaranteeing immeasurable security and a cost effective alternative to online wallets.
To begin with, you will need to access a printer, using which you will move all your digital Bitcoins to the safety of a physical paper. By so doing, you are sure to be far from the reach of hackers, and any other persons of ill motive. While at it, it remain you are solely responsible that your printed paper or papers are kept safe from any possible damage by water, fire, careless folding/unfolding, or possibly finding its way to a dustbin, courtesy of a child or other potential cause. You have to use all your means to make sure that you don’t lose your Bitcoins paper wallet.
Upon generating your public and private keys, proceed to have them printed out (on paper), so as to ensure that they no longer exist anywhere else digitally. To this end, any possibilities of hardware failure, any malfunction of your drives or cyber attacks would in no way impact on your finances negatively.
Any time you would need to do a transaction, all you need to do is scan the codes (QR codes), key them to the software being used, and you are good to go.
How to keep your paper wallet safe
Securing your Bitcoins does not end with simply having your paper wallet printed. There are several measures you can put in place for a more secure paper wallet.
- The sites you use for creating your wallets should be sites that allow you to encrypt your private keys
- Be sure that you don’t entertain anyone around you while creating your paper wallet. Remember you are the only one who should see it
- See to it that the operating system (OS) in use is actually clean
- While you paper wallet should be created online, the other crucial bit of generating the public and private keys should be offline
- Your printer should be disconnected from all networks while printing the physical paper wallets
- A sealed plastic bag will come in handy with regards to keeping your paper wallet safe
- To avoid cases of theft or fire damage, be sure to keep your wallet in a safe or the custody of people you completely trust, such as family members or friends
- Be sure to export your private keys from altcoins wallets or from Bitcoin QT wallets
- Go to your app store on your Smartphone to download the Google Authenticator. Using your computer, scan the QR code - this should be changing every 30 seconds. A potential hacker will require access to these codes or your phone (including your password) to tamper with your wallets!
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