In essence, a Bitcoin is a digital wallet that may exist in a cloud or on a person’s computer. Consider it to be a virtual bank account wherein a person can send or receive bitcoins, and pay for goods, etc. Bitcoins are not regulated, thus, there is no connection with any brick and mortar banks.
How Do Bitcoin Wallets Work?
Bitcoin wallets come in many forms because they are designed for many devices. It is the process of storing money in a digital world. The types of “wallets” used by Bitcoin include: desktop wallets, mobile wallets, online wallets, paper wallets, and more. These wallets encapsulate a private key that is used to access a bitcoin address so that you can spend your money. Because they are deemed “cash”, merchants who accept as payment them have more popular than ever before. The way in which a Bitcoin is stored is that is in the form of a digital key that you can access in your wallet.
Bitcoin Wallets Online
One of the more popular ways of using Bitcoin Wallet is online. The advantage of using this type of wallet is that you can access it anytime, anywhere. One of the exchanges is Coinbase. This essentially means that the bitcoin wallet can be used worldwide. US players, for example, can buy bitcoins through its exchanges. The safest way to use Bitcoins is via the Paper Wallet. Here a bitcoin address will be generated for you and you can use it in two ways: with a public address or a private key. These keys are not stored anywhere and offer a safer alternative to public addresses. They are as safe as long as you do not lose them. You can easily secure your Bitcoin Wallet by encrypting it, using a much stronger password, and backing it up.
You can also put your Bitcoin wallet in what is called “cold storage.” This enables you to keep hackers at bay and keep the Bitcoin information offline so it cannot be compromised. As with any traditional banking system or the way in which you manage your finances, you can keep the bulk of the Bitcoin wallet private, and only use some of it for internet use either on your desktop or mobile device.