A wallet in the realm of Bitcoin is the equivalent of a bank account. This is where you receive, store, and spend your bitcoin. There are basically two types of wallets: software wallets and online wallets. Both of these types of solutions have their pros and cons and your decision will depend on your needs.
Part 1 of 3: Create a software wallet
Step 1. Learn about the different options
The software wallet is the original wallet for Bitcoin. There are different types. You have complete control over the security of your bitcoins in the software. The biggest problem with this kind of portfolio is installation and maintenance.
The blockchain is a public database of all transactions made with bitcoins. It is used on almost all servers to keep a history and to do checks
Step 2. Download the original
Some people claim that the original Bitcoin Core wallet is the best. It has been reviewed and it has evolved since its inception. Go to the Bitcoin website https://bitcoin.org/en/ to download the application. This program works on Mac, PC and Linux. Once you've installed it, the Bitcoin client will try to establish a connection to the network and download the blockchain.
You need all the blocks on the blockchain to send or receive transactions
Step 3. Use alternative wallets
There are many similar ones that also have their advantages and disadvantages. Exodus for example can be downloaded on all operating systems and has a link to ShapeShift which allows you to exchange various currencies directly from the software. Armory is a wallet designed to feature advanced security measures.
- Each of these programs has special features for its installation.
- Exodus is particularly easy to install, Armory more complex.
Step 4. Use a light wallet
There are several wallets that may take up less space on your hard drive. They work faster because they don't download the entire blockchain. Only a small part is used, which allows them to run faster. Among these portfolios are Multibit and Electrum.
They are still less secure than those that require a full download of the blockchain
Part 2 of 3: install the wallet
Step 1. Understand online wallets
Online wallets store your private keys on a server controlled by an admin group. Some provide a convenient link between your phone and your software wallets. You can access it anywhere, making it a popular choice. The website takes over your keys and can charge your bitcoins without your control.
Many online wallets have suffered from security breaches in the past. Be aware of these risks before investing
Step 2. Choose an online wallet
There are many who claim to ensure the safety of their clients' bitcoins. Some of the most popular are Coinbase, Circle and Xapo.
- Coinbase operates worldwide and provides exchange services between the United States and Europe.
- Circle allows you to link your bank account with your wallet. You can use your credit or debit card.
- Xapo is a very simple wallet that is easy to use and includes an additional security method called a “safe”.
Step 3. Use an anonymous wallet
The world of Bitcoin often attracts anonymous users for a number of reasons. Some of these types of wallets are less secure and offer less insurance than others. Dark Wallet is an extension on Chrome that works like an anonymous wallet. This kind of server offers fluctuating stability for your bitcoins. At any time, the server is vulnerable to attack.
Some of the features of these wallets are attractive, for example a module to quickly withdraw money
Part 3 of 3: Using a physical wallet
Step 1. Understand the physical wallet
For individuals who really care about their protection and security, the physical wallet is a good option. These are devices that store private keys and facilitate payments. You can keep them with you and you don't depend on someone else to keep your money.
They are completely protected against viruses and other types of threats that infect software wallets
Step 2. Buy a physical wallet
There are different kinds that have varying prices or qualities. Here are some of the best known.
- Ledger offers two wallets, one with a touchscreen and another with a very small screen. They connect via USB to your computer and can hold many different virtual currencies. They are very safe and easy to use.
- Trezor is a similar product with a small screen to interact with the wallet. Private keys are generated by the device and cannot be removed, making it immune to viruses.
- USB wallets are very popular and inexpensive. These devices protect your data and use microchips similar to those found on bank cards. They usually allow you to plug them into different computers to establish a secure connection.
Step 3. Encrypt your device
Most devices ask for an encryption code or password during initialization. If yours doesn't, you can always turn on encryption to make it more secure. Each physical wallet works with a different protocol to establish secure encryption.
- Keep your passwords safe and keep them separate from your wallet credentials.
- Always download a backup when you log in or receive a transaction and keep it in a safe place.
- There will be charges incurred with each transaction.
- If you like electronics, you could try putting together your own physical wallet.
- Don't use bitcoin as a savings account. Its value fluctuates often.
- Bitcoin is still in its infancy and it might not be the best of investments.