Why do I need a bitcoin wallet
Unlike most traditional currencies, bitcoin is a digital currency. Therefore, the method of this currency is completely different, especially when acquiring and storing it. Since bitcoin does not have any physical shape or form, it cannot be stored anywhere technically. Instead, it is the private key used to access your public bitcoin address and sign transactions that require secure storage. The combination of the recipient's public key and private key makes bitcoin transactions possible.There are several different forms of bitcoin wallets, which can meet different needs, and are different in terms of security, convenience, accessibility and so on.
Paper wallet
A paper wallet is essentially a document that contains a public address and private key that can be used to receive bitcoin, allowing you to spend or transfer bitcoin stored at that address. These are usually printed in the form of QR codes so that you can quickly scan them and add keys to the software wallet for transactions.
You can use services such as bitaddress or bitcoin paperwallet to generate paper wallets, allowing users to create completely random bitcoin addresses and private keys. The generated documents can then be printed, and some of these services provide tamper proof design. You can even choose to order holographic labels and use them.
The main advantage of the paper money wallet is that the keys will not be stored anywhere in digital form, which makes it completely free from hacker attacks. It can record the malicious software of users' keystrokes and basically any form of digital theft. However, some precautions still need to be taken when creating wallets.
Obviously, before generating a paper wallet, you need to make sure that no one is watching you do so. To eliminate the risk of any spyware monitoring activity, it is recommended to use a clean operating system running from a USB flash drive or DVD, such as Ubuntu.
In addition, once the paper wallet is set up, the website code should be able to run offline, which allows you to disconnect from the Internet before actually generating the key. Finally, use a printer that is not connected to the network.
In addition, it's important to know that you print valuable personal information on a piece of paper. Therefore, you need to take some measures to protect the paper. For example, it is recommended to put it in a sealed plastic bag to prevent water stop, moisture and general wear. Some people like to laminate it and store it in a safe, storage box or entrust a lawyer to deal with it.
Physical bitcoin
Physical bitcoin usually preloads a fixed number of BTCs, and the intention is that its value cannot be spent as long as the private key remains hidden. This is usually achieved by implementing tamper proof sealing.
Bitbill's first product was like a credit card, but most of its subsequent substitutes were shaped into a round medal. Mike Cadwell, a cryptocurrency enthusiast nicknamed "casascius", created the first popular casascius entity bitcoin in 2011.
The private key is hidden under a strippable hologram, leaving a tamper proof mode when it is removed. In exchange, coins lose their numerical value. Since then, there have been several new coin manufacturers.
Physical bitcoin is a very convenient way to store your funds more securely, which is very useful in offline transactions. Most importantly, they have recently become a valuable collection. However, the main disadvantage is serious security problems.
In November 2013, Mike Cadwell was asked to stop the operation of the financial crime enforcement network because his work was considered to be a money sender. The rules of this activity were unbearable, so he had to stop selling items containing digital bitcoin. Since BTC is still a legal gray area in many countries, these items may even be regarded as counterfeit money by the authorities.
move
For those who actively use bitcoin every day to pay for goods or trade them face-to-face in stores, mobile wallet BTC is an essential tool. It runs as a smartphone application, stores your private key and allows you to pay directly from your phone.
In addition, some applications enable users to use their smartphone near-field communication function, which means that they can simply click on their phone to oppose readers without having to provide any information at all.
Any complete bitcoin client needs to access the entire blockchain ledger, which is growing and requires thousands of megabytes of storage space. Therefore, mobile wallet utilizes simplified payment verification (SPV) technology. They are only applicable to a very small subset of the blockchain and rely on trusted nodes in the bitcoin network to ensure that they have the correct information.
Although bitcoin storage is a convenient mobile solution, mobile wallets are vulnerable to hackers. In addition, if someone just accesses your mobile device, you may lose control of your wallet. Devices running on Android have a variety of bitcoin wallet applications. Apple banned bitcoin wallets from the app store in February 2014, but reversed its decision a few months later.
Web Wallet
Web wallet stores your private key on the server of the company that provides such services. The server is always online and controlled by others. Different services provide different functions, some of which link to mobile and desktop wallets and copy your address on your own devices.
Users can access their money anytime, anywhere through the Internet, which is very similar to any electronic wallet. However, unless properly implemented, the organization running the website may access your private key and take full control of your funds. In addition, some e-wallets operate on the basis of exchanges, and some exchanges close and escape users' funds.
Desktop Wallet
The desktop wallet has been downloaded and installed on your computer. Store your private key on your hard disk. By definition, they are safer than online and mobile wallets because they do not rely on third parties to obtain data and are more difficult to steal. They are still connected to the Internet, which makes them inherently insecure. However, for those who trade a small amount of bitcoin from their computers, desktop wallet is a good solution.
Desktop wallet has a variety of different options to meet different needs. Some focus on security, some focus on anonymity, etc.
Hardware
Hardware wallet is a quite unique bitcoin wallet, which can store the user's private key in a secure hardware device. This is the safest way to store any amount of bitcoin. There is no verifiable theft of money from the hardware wallet.
Unlike paper wallets, paper wallets must import software at some time, and hardware wallets can be used safely and interactively. In addition, they are not affected by computer viruses, and the stored funds cannot be transmitted to output devices in clear text. In most cases, their software is open source.
Some hardware wallets even have screens, which adds another layer of security because they can be used to verify and display important wallet details. For example, the screen can be used to generate a recovery phrase and confirm the amount and address of the payment you want to make. Therefore, as long as you invest in a real equipment with a good reputation manufactured by a trusted and competent manufacturer, your capital will be safe and reliable.
Bitcoin wallet and security
Possible problems:
Capture malware. Malware can scan your disk and find your private key. After a few seconds, all your bitcoins can disappear. The Trojan horse can encrypt all files on the hard disk. After that, it may find all the links to your wallet, realize how much money you have and ask for the exact amount of bitcoin to decrypt your hard disk.
Virtual exchange can escape with your money. You can lose a laptop or mobile phone with a wallet installed on it.
