Bitcoins may not come in a physical form, but you still need a place to store them — someplace where only you can access them. That’s where a bitcoin wallet comes in. A bitcoin wallet is a software program that stores the record (aka private key) of every bitcoin you own. Bitcoin wallets come in many different forms, and it’s important to understand them — and how to keep them safe — before you even start buying bitcoins.
While all bitcoin wallets serve the same function, they come in different types that have various access options and levels of security. Generally speaking, the most easily accessible options are also the least secure ones (after all, easy access extends to both fraudsters and yourself).
A hardware wallet is one of the most secure options, and it’s a good choice for storing the bulk of your bitcoins. A hardware wallet is a physical piece of equipment designed specifically for storing bitcoins. Because hardware wallets can’t have additional software installed in them, you don’t have to worry about getting a malware infection that will allow a scammer to suck the bitcoins right out of your wallet. On the other hand, you must have access to the piece of equipment to use it, and you’ll definitely want to back up your wallet in case the hardware is lost or damaged.
What is a Bitcoin Wallet?
A “wallet” is basically the Bitcoin equivalent of a bank account. It allows you to receive bitcoins, store them, and then send them to others.
You can think of a wallet as your personal interface to the Bitcoin network, similar to how your online bank account is an interface to the regular monetary system.
Bitcoin wallets contain private keys; secret codes that allow you to spend your bitcoins.
In reality, it’s not bitcoins that need to be stored and secured, but the private keys that give you access to them.
A Bitcoin wallet is a program for sending and receiving bitcoins. A Bitcoin wallet does that by interacting with Bitcoin’s ledger, known as the blockchain. Bitcoin wallet programs are available for mobile phones, desktops, and even as a standalone piece of hardware (more on that later on).
Generally speaking, Bitcoin wallets are a bit similar to how email works. If you want to send and receive emails, you need some sort of a program to do so (e.g., Gmail, Outlook). Like emails, receiving Bitcoins requires a unique personal address. This unique address is called your Bitcoin address, and—just like your email address—you can share it with anyone who wants to send you bitcoins.