Bitcoin wallets and storage

A bitcoin wallet allows you to be your own bank.

Wallets are the software that allow you to store, send, receive and view the value of your bitcoins and other cryptocurrency. Some wallets allow you to instantly purchase more coins.

Bitcoin wallet

Before choosing your wallets or wallet for serious transactions, we strongly suggest familiarising yourself with how to secure your bitcoin. Many users will use different types of wallet, for example they may buy bitcoin through a web hosted wallet but then transfer their coins to a hardware or paper wallet for increased security.

What follows is a basic overview of the four different types of wallet. For more information and help in choosing your bitcoin wallet, also go to bitcoin.org/en/choose-your-wallet

Four Types of Wallet


Software Wallets

A software wallet is installed on your computer or mobile device and has probably the highest degree of security (as the private keys are not trusted with a third party). This option however can be technical and confusing for newcomers and may not be practical for all users.

There are two types of software wallet: a full wallet and a lightweight wallet.
  • A full wallet (or full client) will download and store a full copy of the blockchain. Due to the blockchain’s size and time required to keep updated, this wallet is only suitable for advanced users. This is also known as a node and running a full node is the only certain way of knowing that bitcoin’s rules haven’t been broken, as all other wallets require a trusted third party server.
  • A lightweight wallet can be downloaded to any computer, mobile device or tablet which communicate with a third party full wallet. This avoids having to download the full blockchain and these wallets are also known as SPV wallets (Simplified Payment Verification).

Web Hosted Wallets

Web wallets are hosted on third party servers and are popular with newcomers and novice bitcoin users to get them started. They work a little like online banking in that a login will enable the purchasing, sending and storing of bitcoins.

Coinbase
Coinbase - the easiest way to buy and store bitcoins

Probably the best known is the Coinbase wallet, which has a strong reputation in the cryptocurrency space. Coinbase has attracted investment from prominent venture capitalists and is one of the few large bitcoin companies never to have suffered a major hack.

Hardware Wallets

Hardware Wallets keep all functionality offline with added security which make them the most secure way of storing bitcoins (also known as cold storage). They are effectively mini computers which keep all private keys offline and a hardware wallet must be connected to a phone, tablet or computer before bitcoins stored on the hardware wallet can be spent.

Trezor Bitcoin Wallet
Trezor cold storage hardware wallet

Paper Wallet

Possibly superseded by the Hardware Wallet, a Paper Wallet allows offline storage of bitcoin by printing the private keys on a piece of paper. However a Paper Wallet is still a novel way of cold storing bitcoins or gifting them to others.

You can make your own paper wallet here >> https://bitcoinpaperwallet.com/

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