A bitcoin wallet is a software application that is used to store bitcoins. For every individual who has a balance in a bitcoin wallet, there is a private key which is nothing but a secret number that corresponds with the address of the bitcoin wallet. It is used to send and receive bitcoins and give ownership of the Bitcoin balance to the user. There are four main types of bitcoin wallet: Desktop, Mobile, Web, and Hardware. The other name of the bitcoin wallet is a digital wallet. To trade in bitcoins, a trader must have a digital wallet. The wallet does not store physical currency but it stores relevant information such as the security-related concerns that are storing the private key to access bitcoin addresses which are used to perform transactions. There are several types of wallets that cater to the different requirements of security, convenience, and accessibility:
They are installed on the computer and provide complete control of the wallet to the user to carry out transactions. Bitcoin cannot be stored in any physical form, technically speaking. Instead of that, it is the public key and private key that are required in combination to make transactions with the bitcoin that need to be stored.
It stores the private key on the hard drive. They are secure as compared to an online wallet or mobile wallet because there is no relying on third parties for their data and are harder to steal. They are usually suitable for those who trade small amounts of bitcoin from their computer.
A paper wallet contains a public address for receiving bitcoin and a private key to spend or transfer bitcoin stored in that address. They are usually printed in the form of QR codes so that you can scan them easily adding the keys to a software wallet to carry out the transaction. The advantage of a paper wallet is that the keys can be stored offline as well. This helps to reduce cyber threats such as hacking or cybertheft.
For that actively trading bitcoin, a mobile bitcoin wallet becomes a mandatory requirement. It stores private keys through an app like feature allowing the payment to be made directly through your phone. As the entire blockchain ledger is unbearable to store, mobile apps come out as a handy tool where they only work with the trusted nodes in the bitcoin network to get the correct information.
In this, the private keys are stored on a server that is online and managed by a third party. It can be linked to the mobile and desktop wallet where it can copy your addresses across the devices that you own. Similar to mobile wallets, web wallets have the option to access the funds from any device connected to the internet. But there’s a need to be aware and cautious because some e-wallets operate on an exchange that could gain control of your funds and there are instances where the exchange has shut down and made off with the users’ funds.
Hope, now you have a clear idea about different types of bitcoin wallets.