Bitcoin is the #1 cryptocurrency available today. It is secured by cryptography and is exchanged like traditional currencies online. Bitcoin is the first launched cryptocurrency that was created in 2009 by an anonymous individual, named Santoshi Nakamoto. Now, its widely accepted form of digital currency across the world and the popularity is increasing rapidly.
A bitcoin wallet is a repository that allows you to manage your bitcoin. The wallet is a programme to send bitcoin, to receive and to maintain bitcoin balances.
Wallets interface with the bitcoin blockchain to monitor bitcoin address and update their balances with each transaction. The most important part of a bitcoin wallet is its private key. It is a very long string of alphanumerical password that allows access to your bitcoin account.
They are like secret coordinates for locating your bitcoins. This private key is essential for generating your bitcoin address, the public key, which is available to all. The wallet’s core function is to secure the private keys. If you fail to protect your wallets private keys the bitcoin will be irretrievably lost.
Some of the wallets hold the full copy of the blockchain in order to validate each and every transaction. These are known as nodes.
SPV or Simple payment verification wallets are faster and consume less disc space and they rely on full nodes to validate transactions. Then we have the ‘hot wallet’ which is a bitcoin wallet that is connected to the internet. These are more popular but least secure.
Markets, exchanges and betting sites and other bitcoin services frequently requires you to deposit fund in their wallets in order to conduct your business. These web wallets are the least secure option for storing bitcoins as you don’t have access to your private keys.
They are not recommended for storing any significant amount of bitcoin. The desktop wallets store your private key on your computer. Mobile wallets store the key on mobile phones. Both of them have a low-security feature even though they are extremely convenient.
The most secure wallet is the cold storage wallet. This includes hardware wallets, paper wallets, and brain wallets. They cannot be hacked as they are free from any internet connection.
To get more detailed information on Bitcoin and Blockchain Technology, please check the following infographic, and this is really helpful for all the beginners who are willing to learn this sophisticated technology. This infographic was developed by our friends at Bitcoinfy.net, and we thank them for this wonderful creation.