You might have heard of a Bitcoin wallet, but what does that actually mean? As Bitcoin is a digital currency, it is stored in a digital wallet. A Bitcoin wallet refers to a digital wallet which stores BTC (and often other cryptocurrencies too.). There are several different types of wallet, each with their pros and cons, so people can find a product specific to their needs.
It’s important to note that while all transactions on the Bitcoin blockchain are visible for people to see and the network is entirely decentralized - wallets below to individuals and controlled by owning the wallets private keys.
Each Bitcoin wallet has a set of public and private keys. Public keys refer to the wallet’s address (to where users can send you BTC), similar to a bank account number. Private keys are more akin to pin numbers, and allow users to send BTC. Private keys should never be shared with anyone.
Different Types Of Bitcoin Wallets
There are several different types of Bitcoin wallets that one could use. They typically fall into one of these two categories: cold wallets and hot wallets.
Hot wallets are online wallets that are constantly connected to the internet and easy to access. These generally are more vulnerable to hacking.
Cold wallets are stored offline, and only briefly connected to the internet when sending and receiving BTC. This makes them more secure and less likely to be hacked.
Within these two categories, there are several options.
- Web wallet (created and operated by a website)
- Mobile wallet (app on your phone)
- Desktop wallet (software stored on your computer)
- Hardware wallets (external devices that use USB or bluetooth)
- Paper wallets (public and private keys stored on a piece of paper)
For a more in-depth look at Bitcoin wallets: