How can you store Bitcoins?
The moment you take any amount of Bitcoin into possession, you will need a place to store it, just like you need a place to keep your credit cards and cash. A place where you can keep your Bitcoins is simply called a Bitcoin wallet. There are four kinds of wallets you can open, but most likely you’ll need two of them: one to store the majority of your coins and one for spending them.
Bitcoin wallets are actually a lot safer than a physical one with your cash and cards; this can be stolen by anyone and compromised, but a properly secured Bitcoin wallet of the correct type is practically impossible to steal from.
They are safer than most physical wallets, because when properly secured, Bitcoin wallets are basically impossible to steal from.
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What type of a Bitcoin wallet should you get?
Web wallets (online/hot wallets) are hosted on online servers, usually of a third party, like a dedicated hosting service or an exchange. They can be used to make real time transactions and can be accessed easily.
The next ones, software wallets, are the kind of wallets that are stored on a specific computer. They are safer than web wallets, because any cyber-attacks can’t compromise what the computer contains. Software wallets can be used to make instant transactions. Opening this kind of wallets requires 20 gigabytes of space (to download the Bitcoin blockchain file to the host computer).
One of the safest kinds of wallets are cold storage wallets (offline wallets), which are disconnected from host devices and the internet. They are the place where most Bitcoins should be stored, as it’s impossible to steal from a cold storage wallet unless the owner hands over all security details voluntarily.
The last kind of wallets is a hardware wallet, which is similar to the cold storage one but uses an additional hardware device to give an extra layer of security and should be used if you want to get an ultimate protection for your funds.
To be fair, Bitcoin wallets don’t hold actual Bitcoins as they are stored on the blockchain. The wallets hold private keys that allow users to use their coins.
All kinds of wallets come with two or more keys that you can think of as passwords. One of them is public and will be the address which people can use to send you Bitcoins, and by means of which they will identify your wallet in the blockchain. The other key is private.