What is Bitcoin Wallet? How does Bitcoin Wallet work?

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These days, investment opportunities available to prospective investors are numerous and versatile. While typical investments options look like gold or stock, new era investors often go with alternative options. Emergence and growth of digital technology has actually widened the investment choice range.

Considerable number of people have been investing into Bitcoin and other crypto currencies. There are some risk factors present, and crypto currency sector is often a subject to unexpected upheavals, but despite that fact people still go for it. Before you can start investing in Bitcoin, some preparation is essential, and there are many great educational resources out there to help you. PaySpace Magazine regularly provides cryptocurrency news and updates about Bitcoin wallets and payment platforms.

Basics of Bitcoin wallet

Most importantly, you need a place to store the purchased Bitcoin or any other crypto coins. That is where you need a Bitcoin wallet. Much like you store cash in wallets and e-wallets, Bitcoin wallet allows you to keep crypto currency in a safe manner. 

There are two parts to it – a public key that serves as the Bitcoin address, and a private key, which is known only to the holder of the given wallet. Bitcoin wallets are typically secured with stringent encryption in order to thwart unauthorized access. 

Types of Bitcoin wallet

You can choose from different types of cryptocurrency wallets:

  • Web wallet – Web wallets let you store Bitcoin, as well as to send and receive it using the Internet. Web wallets are hosted by agencies. However, they may not be suited for users that are paranoid about the data security.

  • Software / Desktop wallet – You can install wallet software in your laptop or desktop. This allows you to have better control over the wallet and the data stored inside. Use strong passwords and keep a backup to evade any untoward developments.

  • Mobile wallet – This kind is ideal if you use smart phone for majority of the transactions.

  • Hardware wallet – Hardware wallets are offline devices that resemble USB thumb drives. They are deemed to be more secure compared to other types of Bitcoin wallets.

  • Paper wallet – This is a piece of paper used to store your Bitcoin keys and data. However, it is fragile and subject to physical wear and tear.

Working mechanism of Bitcoin wallets

Bitcoin wallet stores strings of data that defines the amount of Bitcoin you have. The data has to be protected with a strong password. Some hardware wallets allow you to use two-step authentication. It may be reasonable not to store all your cryptocoins in the same wallet. For added safety you can save an offline version of your wallet, as well as back it up in several locations.

So first, select the type of wallet you’d like to use. And before you go with any specific wallet type, make sure you learn about its features and specifications, as well as go through some user reviews.  

Once you’ve purchased the wallet, it needs to be set up. It may take some time, based on the wallet type. Once your wallet is set up, you can start storing your Bitcoin or other cryptocurrency in that wallet. Most wallets can also be used for buy and sell transactions.

 

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