What is a Bitcoin wallet?
A Bitcoin wallet at first glance may look complicated to a lot of people. In this article we dive into the bitcoin wallets and explain what it is.
The Bitcoin wallet
A Bitcoin wallet is similar to a regular old-fashioned wallet in the certain regards. You can:
- Store Bitcoin in it
- View how many Bitcoins you have
- Send Bitcoin to others
- Receive Bitcoin from others
However, there are also some differences. The first difference between a regular wallet and a Bitcoin wallet is that the Bitcoins aren’t actually stored inside the wallet. Bitcoins always remain in the blockchain and can never be removed from it. The wallet however holds your private key. The key gives you access to your Bitcoins in the blockchain and the right to send them to other addresses. The key itself is accessed through twelve seemingly random words called a “seed”.
Losing the device that the wallet has been installed on is no problem as long as you keep the twelve-word seed phrase written down in a safe place somewhere. Just install the wallet software on your new device, enter the seed phrase and you will have restored access to your Bitcoin.
Pro Tip:
Whichever wallet you decide to use, always back up your seed phrase immediately. Never store the seed phrase digitally or take a picture of it. The seed phrase is what hackers are specifically looking for.
Make a puzzle out of your seed phrase that only you can solve. This is an extra layer of protection.
What is Blockchain?
In short, Blockchain is the technology that records where every Bitcoin currently is. It is a growing distributed ledger (list of records), called blocks. These blocks are linked (chained) together and a new block containing transactions is added every 10 minutes. Hence the name Blockchain. In the case of Bitcoin, the ledger is shared and distributed between the miners so that no one can make fake changes in the blockchain.
Millions of miners worldwide are constantly confirming if the ledger is still correct and that makes the Bitcoin blockchain the least corruptible system on earth. To fake a transaction on the Bitcoin blockchain you would have to hack 51% off all miners worldwide, an almost impossible task as this would cost tens of billions of dollars and take many years to accomplish.
Best Bitcoin wallet
The best Bitcoin wallet does not exist. Every wallet has its benefits and drawbacks. What is the best wallet for you? That depends on what you value most from the wallet. Do you want ease of use? Or do you want to focus on maximum security?
An important distinction between Bitcoin wallets is where its private key is stored. The private key is a complex password you need to access your Bitcoins. So, whoever has this key has control over the Bitcoins. The private key is also used to generate a Bitcoin address.
With a Bitcoin address generated from your wallet you can receive Bitcoin on your wallet. Hierarchical Deterministic wallets generate an initial phrase also known as a seed. With the seed you can always reconstruct the privet key to access your Bitcoins. On most Bitcoin wallets, you can also see the current Bitcoin price and the value of your current holdings.
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- For ease of use and holding many different coins besides Bitcoin while keeping transaction fees low we recommend “Atomic wallet”. (Pc and mobile)
- If privacy is important for you we recommend you use the “Smouraiwallet“
- For maximum security without paying for a hardware wallet we advise ”Electrum” (Pc only)
- For cheap transactions over the lightning network, we recommend “Muun” (Mobile only)
Further explanation about hardware wallets and the lighting network will follow in a later blog. And remember, back up you seed. Merry hodling and a happy new bull run!
Think of a Bitcoin wallet like your own personal treasure chest! Inside, you’ll store all of your precious bitcoins, just like how you would store gold coins and other valuables in a physical treasure chest.
But unlike a physical treasure chest that you can lock with a key, a Bitcoin wallet uses a special code called a “private key” to keep your bitcoins safe and secure. This private key is like the secret password to your treasure chest, and without it, no one can access or steal your bitcoins.
There are different types of Bitcoin wallets, just like there are different types of treasure chests. Some wallets can be installed on your computer, like a big metal treasure chest that you keep at home. Others can be installed on your phone, like a portable treasure chest that you can take with you on the go. And there are even web-based wallets, like a treasure chest that you can access through the internet!
But the most secure type of wallet is a hardware wallet, which is like a super-secret treasure chest that you keep locked up in a vault. This type of wallet keeps your private key offline, making it almost impossible for anyone to hack into.
When you’re ready to spend your bitcoins, you can “open” your treasure chest using your private key and send them to someone else’s public address, just like how you would hand over a gold coin to a friend.
So, to sum it up, a Bitcoin wallet is like your very own treasure chest where you can store, send and receive your bitcoins safely and securely, with the added fun of different types of wallets, that can be used depending on your needs, but always keeping in mind to keep your private key safe, just like how you would keep the key to your treasure chest safe!
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