Bitcoin Wallet | 20 Things You Didn’t Know About Bitcoin Wallet
In this article, we’ll be talking about things you didn’t know about the bitcoin wallet. There’s no doubt how popular bitcoin has grown over the years, but even though its popularity, not everyone knows about the bitcoin wallet and its essence. We, first of all, ask, what is bitcoin? Well, it is simply a cryptocurrency that is decentralized without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
A Bitcoin wallet is a program that allows you to send and receive Bitcoin cash. It is similar to a digital bank account. Here you can send, receive, and manage your Bitcoin. If you want to know about the bitcoin wallet, then you should continue reading further below.
Bitcoin was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto and started in 2009 when its source code was released as open-source software. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. They can be exchanged for other currencies, products, and services. Research produced by the University of Cambridge estimates that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin. Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin. Now read further below in order to still know about bitcoin wallet.
What do we Have to Know About Bitcoin Wallet?
We’ll be giving you some key facts which you need to know about bitcoin wallet below:
- Bitcoin wallet can be a software, hardware, online web service, or piece of paper, that works by generating the public-key-and-private-key pair necessary for users to engage in a transaction, i.e. to transfer value between Bitcoin wallets and include this information in the blockchain.
- A bitcoin wallet is the equivalent of a physical wallet for transactions with Bitcoin, which allows you to make transactions, that is, buy and sell cryptocurrency.
- A digital currency exchange headquartered in San Francisco, California. Coinbase broker exchanges of Bitcoin, Ethereum, Litecoin, and other digital assets with fiat currencies in 32 countries, and bitcoin transactions and storage in 190 countries worldwide.
- Bitcoins are not stored anywhere, only secret digital keys are stored, which give access to public bitcoin addresses and the ability to “sign” transactions.
- To start working with bitcoins, you’ll first need a bitcoin wallet. Wallets are different, depending on the device for which they are intended — you can even do not use the computer and write the keys on paper.
- Cryptocurrency wallets are digital and physical, offline, and online methods that rely on public-key cryptography to allow users to send and receive bitcoins securely across the network.
- A bitcoin wallet uses public-key cryptography to make transactions secure. Public key cryptography is a system in which a piece of data is encrypted with a public key, and can only be decrypted using the public key’s matching private key.
- When a user wishes to send bitcoins, their private key is combined with the transaction request (which includes the receiver’s public address) to encrypt or digitally “sign” it. The digital signature produced is important because it provides the nodes in the network with the mathematical proof they use to verify the authenticity of the source and check that the sender actually has the right amount of bitcoins to spend.
- To set up a Bitcoin wallet you need to choose a wallet provider, go through a registration procedure, and to verify an email address.
- The original Bitcoin client stores private key information in a file named wallet.dat following the so-called bit keys format. The wallet.dat file is located in the Bitcoin data directory and may be encrypted with a password.
- Wallets can be classified according to whether they are physical or digital, or according to whether they are online or offline. Hardware Bitcoin wallets and paper wallets are physical.
- A hardware and paper Bitcoin wallets are meant to be used offline (cold storage). However, one could connect a hardware wallet too, or print a paper wallet from, a computer that was online.
- Digital wallets can be mobile or desktop software or web services. All these wallets are either by default or could potentially at some point be, online.
- A software wallet may be used online or offline. Web wallets are always online.
- Desktop wallets are installed on your computer and provide complete control of the currency and budget safety.
- Thick wallets Provide independent funds security management, download of network blocks, and control of their authenticity.
- For saving larger amounts, Bitcoin hardware wallets may be a better option, if the user can afford it. Software wallets on the other hand are free, and maybe more convenient for frequent transactions and handling smaller quantities.
- Users may also use a combination of wallets. The website weusecoins.com recommends using a mobile wallet as a checking account and a hardware or secure offline wallet as a savings account.
- There is no safest cryptocurrency wallet, but to ensure the safety of the Bitcoin wallet it is necessary to encrypt with a strong password is difficult to hack, but it does not give absolute protection. If your computer is infected with a keystroke recording virus, your password may become known to an attacker.
- It is also important to back up the entire wallet. The fact is that some addresses are used to store changes in transactions and may not be visible to the user. So you need to back up your entire wallet in several places.
To Setup a Bitcoin Wallet
- First, you need to go to the App Store (iOS) or Google Play store (Android) and download Coinomi.
- Open the app and write-down about 24 words phrase for your recovery in order to backup your wallet.
- You’ll be required to set a strong password which you can as well remember.
- Then add Bitcoin to your wallet.
- You’re done! You’ll then be receiving Bitcoin through your address.
How Does Bitcoin Works?
A BTC address is alphanumeric and always starts with a 1 or a 3. For instance, you can see something like this: 2GZbgi29cpjq3GjdwV8eyHuJJnkLtktZc8. Each wallet automatically generates a Bitcoin address. If you’ve just created a new wallet, then you have a unique bitcoin address right away. When you enter this address accordingly, It will be determined where Coins will be sent to you.
A new Bitcoin address is not only generated once you’ve created a new wallet but after each transaction as well. When your address changes frequently, your privacy on the network is been protected. It doesn’t matter if someone sends coins to your most recent address or to your oldest address- the Bitcoins will arrive in the same wallet. In most wallets, all generated addresses can be found in the transaction history.
- Once you buy Bitcoin at BTC Direct, it will be sent to your wallet. This wallet enables you to manage your coins. Even if you wish to send your Bitcoin somewhere, you can still choose the option ‘Send’ in your wallet, and enter the receiving address of the recipient. The coins will be sent from your wallet to the recipient’s wallet.
- A receiving address is similar to your bank account number. Each Bitcoin wallet has a unique Bitcoin receiving address. You can share this bitcoin address with others to let them know how to send coins to your wallet.
How to Send or Receive Bitcoin
- For sending or receiving Bitcoin, you need to always copy and paste the receiving address. This limits the risk of making a mistake. “Don’t write or type the address”. All cryptocurrency transactions are irreversible; once the coins have been sent, there’s no way of getting them back.
- Receiving Bitcoin Core is as easy as giving the sender your public address. Sending Bitcoin requires a few more steps and since bitcoin transactions are irreversible, it is important to pay attention when sending. Overall, the process for sending Bitcoin is actually quite easy:
- When buying or receiving Bitcoin, you use the receiving address from your wallet. Copy and paste the address or scan QR code, do not write or type it > Specify the amount you want to > confirm that the address and amount are both correct > then send.
- In order to send Bitcoin; click on ‘Send’ in your wallet. Enter the receiving address you’ve copied from the recipient. Fill in how much you would like to send, and confirm. But if you want to receive Bitcoin in your wallet; copy the receiving address from your wallet, and paste it on the BTC Direct order form. Once you do that, you’ll be notified on which wallet the coin is going to prior to the address you copied.
How to Secure your Bitcoin Wallet
- To secure your bitcoin wallet, the first thing is to learn how to backup your wallet for safety reasons. When you create a Bitcoin wallet, it’s important to make a backup as well. This way you ensure you will always have access to your wallet, and thus your Bitcoin.
- Most wallets show a series of 12 or 24 randomly generated words. This is called a seed phrase or a recovery seed, and it functions as a backup for your wallet. Write this seed down with pen and paper, and store it in a safe place. Do not store it digitally or online, since this makes it vulnerable to hacking. If you should ever lose your wallet login credentials, you can use the backup to regain access to your coins.
- You just need to write down the following details of your wallet provider on a piece of paper: login name, password, and recovery seed. Store this safely. Don’t take a picture with your phone. A mobile device has a constant connection to the internet. Having done this will make it easier for hackers to access your wallet.
- Another measure is through the use of a two-Factor Authentication method. With a Two-Factor Authentication, hackers can’t access your wallet with just your password. In order to access your wallet, a code is also required. This code could be sent to you by SMS or through an app such as Google Authenticator. To enable Two-Factor Authentication through SMS, you’ll have to enter your phone number in the safety settings of your wallet. This means you’ll need both your phone and your password to access your wallet.