Cryptocurrencies such as Bitcoin are part of a decentralized payment network called “peer-to-peer” (P2P), in which there is no intermediary, bank, government, or company that can control said operation. Each person can create their own account whenever they want. This type of account is called an address, and it is always associated with a password or key with which the ownership of that address and the funds found there are certified.

Knowing the wallets

The funds (Bitcoins) are safely stored on the Bitcoin blockchain network. Other options require a special program called a wallet, which is necessary to access and use our cryptocurrencies. A wallet is actually a special software that makes it easy for us to control our cryptocurrencies, allowing us to send or receive funds from different parts of the world at any time; the best thing about these wallets is that they allow us to store and manage our cryptocurrencies safely and easily.

Types of wallets

There are different types of wallets, or virtual wallets that allow us to store our bitcoins safely, which are classified according to where the keys are stored; among the most prominent alternatives are:

Offline wallet or cold wallet

This type of wallet means that the format used to store cryptocurrencies does not have an Internet connection, and thanks to this particularity, it cannot be hacked. The private key is stored in hardware, such as a specialized password-protected USB device; you can also write the password on some paper and save it or simply memorize it.

Hot Wallet or online wallet

This type of wallet is characterized because the private keys are stored online or on devices connected to the Internet, security depends largely on the device or web platform, they are the most common, among the most prominent we have: desktop wallets, which is a type of software that is installed on computers, mobile phones, tablets or laptops; web wallets, which can be used and are a complement to the web browser (they are the most common) and mobile wallets, where the private key is stored on a smartphone.

What is the best wallet?

Although each wallet has its advantages and disadvantages, ultimately, the best wallet will be the one that best suits our needs and environment, for example, if we want to have a more versatile platform, which allows us to manage or manage our Bitcoins remotely, perhaps the most appropriate is an online wallet, while if we want to sacrifice this versatility and remote control, in favor of a higher level of security, perhaps the most appropriate is an offline wallet.

What do you think about this topic? Did you know where Bitcoins are kept?

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Image from WorldSpectrum via Flickr.com under Creative Commons license.


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