Your Guide Through Bitcoin Wallets
Understanding Bitcoin Wallets
Everyone is familiar with their physical wallet and how they tend to guard it jealously. For digital coins, especially Bitcoins, there is a Bitcoin wallet. The same way you walk around with a physical wallet (in which you carry your money among other documents), the world of virtual currencies also requires that you create a wallet, in which you will store your bitcoins as they come in, and from which you will get bitcoins to send to different parties.
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The two major components of the bitcoin wallet are public keys and private keys. The public keys constitute what is otherwise known as your bitcoin address, to which transactions are made both to and from. For personal reasons, you could choose to have several public keys, but mainly the idea is to spread the risk of losing them. For each transaction you carry out, the private keys are usually a long and complicated code of the bitcoins you are sending out, which basically links with the public key of the recipient.
For you to do any successful cryptocurrency transactions, you must have both the public and the private keys required. The format of bitcoin wallets you opt to use is a decision that should be informed by your available options and concerns, with security being a key part of this process.
There are three major types of bitcoin wallets:
- Online Wallets: These are wallets for which you subscribe to sites offering these services. Some of these links would include https://bitcoin.org/en/choose-your-wallet and https://blockchain.info/wallet, among many others. On security grounds, you should always remember to avoid keeping a lot of your bitcoins here, or even storing them for a long time.
- Paper Wallets: This is the direct opposite of an online wallet. In an effort to thwart security concerns, here you simply print out all your public keys (bitcoin address) and your private keys using a physical printer, in the hope that you don’t misplace or damage these paper(s) whatsoever. We will be looking into this type of wallet in more detail later in this article, highlighting why it is the best option.
- Offline Wallets: This type simply means that you avoid the first type by all means – your wallets are therefore stored in computer drives that are not by any means connected to any network. It should go without saying that the security of this option is on the premise that you don’t lose, misplace, or damage your drives, or that no one steals them altogether. This will also be highlighted later in this article.
Examples of some popular bitcoin wallets include:
- Bitcoin Paper Wallet
Can your bitcoin wallet(s) be hacked into?
Just as much as your physical wallet is prone to theft, pick-pocketing, misplacement, or completely getting lost, so to is your bitcoins wallets. The situation only gets worse when your wallet is online - and yes, it can be hacked into! With all the advancement in the world of technology, one can hardly have a clear cut line between the good and the evil that comes with it almost in equal measure. Every moment, there is surely someone, somewhere, thinking of ways to hack into your wallet(s) and steal your hard earned money.
It is, therefore, important to understand just how somebody can steal from your wallet so that you are prepared to secure your it. Whenever a thief comes to steal your money from your physical wallet, he or she would have to access it from your home or person. As far as bitcoins are concerned, they will need a way into your wallet - the private key.
This is why your private keys should be protected at all costs. so that no one gets to know it or crack it. If anyone discovers your private keys, they are able to withdraw your funds or transfer your funds to their desired destinations.
The most unfortunate thing is that once your bitcoins are stolen, there is practically no way of getting them back – just like that, they are gone for good! It is for this very reason that researchers and developers are spending many sleepless nights in an effort to curb this menace once and for all.
To enhance the security of your wallets, hardware is being developed in a quality that is not easily prone to infection by malware, while ensuring that both the public and private keys are stored in multiple devices, like mobile phones and computers (not connected to any network).
Bitcoins Paper Wallets, the Better Option
Computer hard drives and online wallets are easily compromised and cannot offer a reliable means of storing your coins. Even with the onset of hardware that is not easily infected with malware, as well as the possibility of multiple bitcoins storage options, Bitcoins paper wallets remain the most secure and cost effective format.
In this option, all you need to do is to make use of a printer to transfer your entire digital bitcoins to a physical paper. This is the only foolproof method from threats by
hackers – all you need to do is to ensure that you observe the utmost care to your printed paper, safeguarding it from water damage, destruction by fire, folding it carelessly, or even the possibility of a kid throwing it into the dustbin! Be sure not to lose your paper wallet!
As soon as the public and private keys are generated, you print them out so that they are not available digitally elsewhere. This way, you will not only be safe from possible cyber attacks,but also cushioned from possible hardware failure(s).
Whenever you need to carry out a transaction, all you will need to do is to scan the QR codes and insert them into the software in use.
How to create a paper wallet
This is usually a simple and straightforward process, executable in a matter of minutes.
- Visit your bitcoins address provider to create a new address.
- In the case of a BitAddress, you will need to type into the form randomly, which could also be done by moving the cursor haphazardly.
- The software will generate both the public and private keys for you, as well as the QR codes.
- Go to the icon on ‘Paper Wallet’ and click there.
- Pick on the quantity of addresses you want to create.
- You don’t have to keep/store the bitcoin artwork, since you could simply hide it out.
- Go to the icon on ‘Generate’ new wallets.
- Go to the ‘print’ icon to get physical copies.
- Select the printer and format (MS WORD or PDF).
- Take note of your public addresses – you are ready to deposit your coins.
Safety Measures in safeguarding your Paper Wallet
Whereas paper wallets are some of the surest ways of keeping your bitcoins secure, there are a few more things you need to do to reinforce this:
- Ensure that you are alone while creating your wallet – no one else should ever see it
- Create your wallets using sites that allow for the encryption of private keys
- The OS (operating system) you use must be clean
- Having created your paper wallet, proceed to generate the public & private keys offline
- Ensure the printer you use for printing the physical paper wallet is not connected to any network
- Plan to protect your paper wallet from effects of water by keeping it in a plastic bag (sealed)
- Keeping your paper wallet in a safe would protect it from cases of theft or damage by fire
- Keep your paper wallet in multiple places, such as with trustworthy relatives or friends
- Export private keys from Bitcoin QT Wallet or altcoins wallets
- Download Google Authenticator (app store) on your phone and scan the code from your computer – the QR Code will keep changing every half a minute. For anyone to attack your wallet, they will now need to have access to your codes and your Smartphone, as well as your main password!
With cyber attacks on the increase and with world leading exchanges like Mt.Gox suffering a major blow from such heinous crimes to the point of closure, bitcoins paper wallets are such a timely intervention, providing the best option available to you!
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