SatoshiLibrary

Cryptocurrency for Beginners

What is a Bitcoin Wallet? The BEST ones for beginners

3 min read
To receive Bitcoin, you just need to provide your public key. The public key works like your bank account number except is longer and contains both letters and numbers.

What is a Bitcoin Wallet? For Beginners

A Bitcoin Wallet is where you store your Bitcoin.

It works a lot like an online bank account, except you get a username and password as well as an account number for each currency.

So if you are creating a Bitcoin (BTC) wallet, you will get a username and password (A.K.A private key) and an account number (public key) to receive .

 

What is a Bitcoin Wallet?

The Bitcoin wallet is like your personal bank where where you store your Bitcoin.

This means that the Bitcoin wallet is entirely under your control.

You can send any amount of Bitcoin to any BTC wallet 24/7 at any part of the world.

Bitcoin is a online bank as well as payment gateway.

 

There are 3 important features you need to master when using a Bitcoin wallet:

  1. How to receive Bitcoin
  2. How to send Bitcoin
  3. How to keep your Bitcoin safe

 

1. How do you receive Bitcoin?

To receive Bitcoin, you just need to provide your public key (not private key) or your receive address.

The public key works like your bank account number except is longer and contains both letters and numbers.

So, just like you need to give your USD bank account to receive USD, unless you are willing to pay the banking exchange rates, which we both agree , are usually above market rates.

 

Therefore to send Bitcoin, you need to give the other person your BTC public key for them to send your Bitcoin.

  • Pro-Tip 1 :

ALWAYS check the first two and last two characters to make sure that you provided the complete wallet address

  • Pro-Tip 2 :

If the person is in front of you can ask for the scanner code of his/her BTC address so you don’t need to worry about sending that long public key.

  • Pro-tip 3:

some exchanges like Binance have contact address book systems which makes it easier to save and re-use the public key of someone.

 

2. How do you send Bitcoin?

To receive Bitcoin all you need to do is provide the sender your Bitcoin public key.

  • Pro-tip: receiving Bitcoin is faster from wallets within the same platform is always faster.

While most cryptocurrency exchanges like commonly have BTC wallets , others may choose other types of wallets platforms and this could take slightly longer compared if you were using the same exchanges.

 

3. Keeping your Bitcoin safe

Bitcoin is disruptive because you become your own bank.

While this is great for the tech-savvy, it can be viewed as high risk for those who are not tech savvy.

You are 100% responsible for your BTC.

You do not get any form of refund if you somehow lose your account information or get hacked.

 

Public Key =your username and password

Some wallets will convert the private key 26 digit private key into a 9-11 word passcode for easy back-up.

NEVER(!!) give your public key to ANYONE!

 

If someone obtains your private key, they will not only be able to log into your wallet but they will be able to send your Bitcoin to another wallet and empty your wallet!

For this reason, hackers target centralized exchanges.

Exchanges contain lists of private keys and it is the “easiest way” (for hackers) to steal Bitcoin.

 

Keep back ups of your public key separately

If you you store your public key on a separate device or paper, you can easily restore your BTC wallet on a different device.

Never give your private key to ANYONE!

 

What is the best type Bitcoin wallet to use?

While all BTC wallets have their merits in terms of convenience,

the best wallet for you is the one which you have the most skill to keep safe.

In other words, the best Bitcoin wallet is the one which is the easiest to use.

 

Types of Bitcoin Wallet:

1. Online wallets

Online wallets are usually available on centralized exchanges like Binance or Bybit.

Who are online wallets for?

  1. Beginners with small sums of BTC
  2. Users looking for faster transfer of BTC
  3. Short-term holders
  4. Newbies who are afraid of making a mistake on their phones
  • Pros : people like these wallets because they are easy to use and have displays like online banking
  • Cons: 
  1. They are common targets of hackers and they are many copy-cat websites designed to trick users
  2. Exchanges like Coinbase have a reputation of locking people out.
  3. They are many copy-cat websites designed to trick users into giving their login information.

 

2. Desktop wallets

Desktop wallets are downloadable offline.

Who are desktop wallets for

  1. Ideal for long-term holders with larger Bitcoin holdings.
  2. These users also know how to create back ups
  3. Intermediate level investors
  • Pros :
  1. You can disconnect from the internet for extra protection
  2. You are unlikely to accidentally click on fake copy-cat website if you are trying to buy a newly launched crypto.

 

  • Cons:
  1. You need to keep a hardcopy (paper) back-up of your private key in case your PC crashes or become compromised

Here is the ultimate Bitcoin Desktop Wallet HORROR story: 

The Dump Disaster: Half a Billion Bitcoins Gone Forever

 

3. Mobile wallets

While most centralized cryptocurrency exchanges have mobile wallets, some there are some companies like Exodus which provide wallet.

Who are mobile wallets best for:
  1. Short-term investors and traders.
  2. Travellers
  • Pros : people like mobile wallets because they are just convenient.
  • Cons:

 

Not recommended for those who tend to lose their phones often or if you have an older model.

Cryptocurrency Exchanges are a favorite target of hackers.

 

4.USB (ledger) wallets

Ledger wallets have become increasingly popular over paper wallets especially for people who are bad at storing paper.

  • Pros:
  1. You public key is unattached to any form of “list” and therefore less likely to be a target of hackers
  2. It is detached from back-up if your pc and therefore less vulnerable to viruses
  3. Easier to hide than the mobile phone when travelling.
  • Cons:
  1. There are lots of compromised wallets sold by resellers

 

5. Paper wallets

Paper wallets are the ultimate private key back up.

Paper wallets are usually a handwritten version of the private key and/or passcode.

 

Who are paper wallets best for:

Paper wallets are recommended for everyone.

However, they are particularly popular for certain investors:

  1. Long-term Bitcoin holders
  2. People who have large sums of Bitcoin
  • Pros:

You public key is unattached to any form of “list” and therefore less likely to be a target of hackers

It’s the ultimate back-up if your pc or phone crashes

  • Cons:

It’s 100% offline so you can not send or receive BTC with it.

 

Conclusion: Welcome to the Wild West of Banking

While becoming your own bank comes with a lot of perks such as 24/7 international limitless sized transfers or amazing returns.

The biggest downside is that some investors are not tech-savvy enough to protect their wallets.

If you have a few dollars, you might not have any reason to invest time in all the extra-protection.

However, for the investors who own larger sums of Bitcoin, they tend to forget that becoming your own bank means that there is no insurance or refund if you lose your How does Bitcoin work? (For Beginners)✅Bitcoin.

 

Now that you know how what a bitcoin wallet is, click here if you would like to know How Beginners Buy Bitcoin

About The Author