We need a digital wallet to store Bitcoin or other cryptocurrencies when we buy them. The digital wallet is web-based or can be accessed using the Internet. Through the digital wallet, we can send and receive Bitcoin and other cryptos from any address.
The storage or transaction of cryptocurrencies is based on digital keys, addresses, and digital signatures. These keys are basically your “bank account” the private keys are not stored online, but are created and stored in the wallet.
* Note: If you want to store other cryptocurrencies than Bitcoin (such as Ripple, Ethereum, and Litecoin), make sure the intended wallet you install supports the cryptocurrency type.
The keys are created independently of the various protocols and are managed by the different wallet software. The scope of this article does not cover the detailed technology. However, we will address some basic terms, such as private key, public key, and public address. In fact, a wallet contains a collection of key couplings that include a private and public key.
A private key is a random number that uses a one-to-one mathematical function to generate a public key. The private key is the way that cryptocurrencies are held since only the private key holder can send and sign transactions in the wallet.
- Introduction to Digital Wallets:
- Purpose of digital wallets for storing and transacting with Bitcoin and other cryptocurrencies.
- Importance of digital keys, addresses, and signatures in cryptocurrency transactions.
- Basic Terminology:
- Private key, public key, and public address explained.
- Public addresses and their transparency on the blockchain through Block Explorer.
- Private Key and Seed:
- Significance of the private key in controlling wallet funds.
- Introduction to the seed as a backup for wallet access.
- Security Measures:
- Rarity of identical private keys.
- Importance of keeping the private key secure.
- Hot Wallets:
- Definition and characteristics of hot wallets.
- Risks associated with constant internet connectivity.
- Recommendations for securing hot wallets with PIN and 2-FA.
- Cold Wallets:
- Definition and features of cold wallets.
- Higher security level for storing large amounts of crypto assets.
- Types of cold wallets: paper wallets, brain wallets, and hardware wallets (HD).
- Deterministic Wallets (HD):
- Explanation of deterministic wallets and their ability to recover derivative keys.
- Advantages of HD wallets in creating new public addresses for transactions.
- Recommended Wallets for Beginners:
- MyCelium: Open-source Android wallet with high usability and security features.
- Jaxx: Web and app wallet supporting various currencies and ShapeShift Exchange.
- Bread: User-friendly wallet for IOS and Android devices supporting multiple cryptocurrencies.
- Edge: Android and IOS wallet with local key generation and additional security layers.
- Recommended Hardware Wallets:
- Trezor One & Trezor Model T: Compact and easy-to-use hardware wallets with advanced features.
- Ledger Nano S & Nano X: Well-known hardware wallets supporting various cryptocurrencies.
- Keepkey: HD wallet with secure storage for multiple cryptocurrencies.
- Other Recommended Wallets:
- Electrum: Veteran software wallet with multi-sig wallet capabilities.
- Bitcoin Core: Original software for a full Bitcoin node, requiring constant syncing.
- Bitamp: Open-source, client-oriented Bitcoin wallet with no personal information requirements.
- Exodus: Software-based wallet with an intuitive interface for multi-currency storage.
- Copay: Multi-currency wallet by BitPay, known for security and ease of use.
- Samourai: Privacy-focused Bitcoin wallet emphasizing anonymity.
- Lumi Wallet: Client-side HD wallet app for Android, iOS, and web with quick in-wallet exchange.
- Blockchain Info: Hybrid wallet accessible via the web with unique features for advanced users.