Although cryptocurrencies exist only in digital form, they still need to be stored somewhere, whether you want to use them to buy goods or services, or your goal is a long-term investment.
That’s why when you start buying your bitcoins, you will necessarily have to start using a so-called Wallet, a device or program that is used to send and receive bitcoins or other cryptocurrencies.
Choosing the right wallet implies carefully evaluating the technology used, the level of security, the quality/price ratio, and ease of use.
In this article, we will help you understand how to do it.
- What is a Bitcoin wallet?
- Don’t Confuse Wallets and Exchanges
- Bitcoin Wallet: What can you do with it?
- Custodial Wallet vs Non-Custodial Wallet
- The types of Bitcoin wallets
- Choosing the most suitable Bitcoin wallet
- Why choose Swaggy?
What is a Bitcoin wallet?
Let’s start with the basics, a Bitcoin Wallet is a virtual wallet that allows you to manage and store your cryptocurrencies, including bitcoins, safely.
With a cryptocurrency wallet, you can store, send, and receive various coins and tokens. Some support only the simplest transactions, while others include additional features, such as integrated access to decentralized applications based on blockchain, commonly known as Dapps.
In summary, the wallet can be seen as a digital wallet that allows users to make transactions with Bitcoin, receive them, or send them to other people. The wallet can be hosted on hardware devices such as a computer, a smartphone, or another storage device, or it can be cloud-based.
Don’t Confuse Wallets and Exchanges
Wallets and exchanges are not the same things, but it’s easy to get confused at the beginning. In fact, there are platforms that do both. Let’s clear things up.
Digital wallet platforms are software or applications where you can open your account, create a wallet, and manage common operations, which may not be investments.
Exchanges, on the other hand, are platforms for buying, selling, and exchanging cryptocurrencies. The transfer is completed when the amount of Bitcoin arrives in the wallet. The platform may therefore require the connection of an external wallet or give you the option to create one within it, allowing you to store your bitcoins directly there.
So, how can you tell if it’s an exchange, a wallet provider, or both?
Simply check the services offered by the site and their related fees. . Exchanges usually offer cryptocurrency trading services, while wallet providers offer cryptocurrency storage and management services. If the company offers both services, then it could be both an exchange and a wallet provider.
If an exchange asks you to create a wallet, it will surely allow you to manage it too.
If, on the other hand, it asks you to open a profile to start investing and at some point during registration asks for the address of an “external” wallet to connect, it means that it will not provide you with direct management of the wallet itself.
Bitcoin Wallet: What can you do with it?
What are the exact functions of a Bitcoin wallet?
- Transfer of Bitcoin
- Storage of Bitcoin
- Payments
- Receiving payments
- Monitoring
To perform these operations, a public key is needed. The key is actually the wallet address, which must always be provided to complete the operation. For example, if you receive bitcoins, the person who sent them to you provided your wallet address for the transfer. The address is a personal code of numbers and letters.
Custodial Wallet vs Non-Custodial Wallet
Before delving into the main types of wallets, let’s talk about the fundamental distinction between custodial wallets and non-custodial wallets.
Wallet custodial
Custodial wallets are managed by third parties, i.e. specialized companies that offer custody and management services for cryptocurrencies. In this type of wallet, the user does not have direct control over their private keys but must rely on the service provider.
Custodial wallets, therefore, presuppose trust in the third party that offers you the service, relieving you of many responsibilities for your funds but not totally without risks.
If you think about it, it is not uncommon for someone to leave their money under the control of an intermediary. You do it every day with the money you leave in the bank!
Non-Custodial Wallet
Non-custodial wallets, on the other hand, are those in which the user has complete control over their private keys. In this case, the user is solely responsible for the management and security of their bitcoins and/or cryptocurrencies.
This type of wallet is theoretically safer but requires greater technical knowledge and greater attention from the user to avoid losing their private keys or falling victim to cyberattacks.
In general, custodial wallets are recommended for those with limited knowledge of cryptocurrencies who prefer a simpler and more intuitive interface. Non-custodial wallets, on the other hand, are more suitable for those who are experts and want to have full control over their private keys and do not want to rely on third parties for the management of their bitcoins.
The types of Bitcoin wallets
As mentioned from the beginning, there are different types of Bitcoin wallets, each of which has advantages and disadvantages in terms of security, ease of use, and functionality.
Hardware wallet
The hardware wallet is considered one of the safest wallets because private keys are stored offline and cannot be hacked or compromised by a cyber-attack. However, they can be more expensive than other types of wallets and there may be a learning curve for the proper and safe use of the device.
Generally, they are physical devices like USB sticks that are not connected to the web. To make transactions, you must first connect the hardware wallet to the Internet, either through the wallet itself or through another device with connectivity. Usually, another password must be entered to establish the connection: this does increase security, but it is also true that if you lose this password, you risk not being able to access your cryptocurrencies.
Cryptocurrency wallets based on hardware are also known as “cold storage” or “cold wallets“. Internet-connected wallets, on the other hand, are called “hot wallets“.
Desktop wallet
A desktop wallet is a popular option for those who want full control over their cryptocurrencies. Private keys are stored on the user’s computer, not on third-party servers. This offers greater control over transactions. However, it may be vulnerable to cyber-attacks if the computer is not adequately protected. Additionally, it may be necessary to regularly back up the wallet to protect private keys in case of technical problems or computer loss.
Mobile wallet
The mobile wallet is very convenient to use as it allows access to cryptocurrencies anywhere. Some mobile wallets are free and offer high-level functionality. However, it may be less secure than other types of wallets because private keys are stored on the user’s phone which may be compromised by a cyber-attack. Additionally, it may be necessary to regularly back up the wallet to protect private keys in case of technical problems or phone loss.
Web Wallet
The web wallet is similar to the mobile wallet in that it is very convenient to use and allows access to cryptocurrencies anywhere. Some web wallets are free and offer high-level functionality. However, it may be less secure than other types of wallets because private keys are stored on a remote server controlled by third parties. This makes it vulnerable to cyber-attacks, and you could lose access to the wallet if the server is compromised or if the website stops working.
Paper Wallet
With a paper wallet, you print your key, typically a QR code, on a piece of paper. It is considered one of the safest wallets because private keys are stored offline, not on a computer or remote server. Additionally, it does not require access to the Internet. However, it may be vulnerable to physical loss or damage of the piece of paper and requires some basic knowledge of wallet usage.
Multisignature wallet
Finally, the multi-signature wallet is an option that offers a higher level of security because it requires the authorization of multiple people to make a transaction. This makes it an ideal solution for those who want greater control over transactions.
Choosing the most suitable Bitcoin wallet
To choose the most suitable Bitcoin wallet for you, there are some factors that you should consider. Let’s see them below.
Security. Security. Security is the top priority in choosing a Bitcoin wallet. Choosing a wallet that offers security options such as encryption and two-factor authentication (2FA) is essential to protect your investments.
Ease of use. A Bitcoin wallet should be easy to use and not require advanced technical knowledge. Ease of use is particularly important for new investors who may have difficulty using a complex wallet.
Compatibility. The wallet should be compatible with the device’s operating system that you intend to use. Choosing a wallet that is not compatible with your device could lead to compatibility issues and make it difficult or impossible to use.
Features. The features offered by the wallet should also be considered. Some wallets offer advanced features such as multi-signature support, while others may be more basic. Consider what features are important to you and choose a wallet that meets your needs.
Cost. Finally, the cost of the wallet should also be considered. Some wallets are free, while others may have a cost associated with them. Consider your budget and choose a wallet that fits your financial situation.
In conclusion, choosing the right Bitcoin wallet is crucial to ensure the security and accessibility of your investments. By considering the factors mentioned above and doing some research, you can find a wallet that meets your needs and offers the necessary level of security to protect your investments.
Why choose Swaggy?
Swaggy is an innovative and revolutionary electronic wallet, as easy to use as a traditional wallet, but rich in technology that allows users to manage and organize every payment directly and securely, in both traditional currency and crypto. All in real-time and with complete security thanks to a product always at your fingertips.
It is a unique tool to manage your transactions with the utmost reliability and support
of the most advanced available technology.
One of Swaggy’s most important steps concerns security, a topic always highly relevant to the crypto and online payment community, with the implementation of services offered by Coincover. Learn more here about how to protect your cryptocurrencies.
Founded in the UK in 2018, Coincover now offers the most advanced security technologies for the entire blockchain chain, protecting wallets in particular from a long series of possible human and technological errors, but also from possible fraud and phishing activities. Swaggy thus offers its users, at a significantly favorable cost, a level of security that has very few competitors on the market.
From suggestions designed to maximize your assets, to integration with artificial intelligence, from various additional payment tools to the possibility of interfacing the wallet with the mining services offered by Swag, you will understand what it means to live the blockchain as a protagonist. At this point, all you have to do is try it out! Register here.
From suggestions designed to maximize your assets, to integration with artificial intelligence, from various additional payment tools to the possibility of interfacing the wallet with the mining services offered by Swag, you will understand what it means to live the blockchain as a protagonist.
At this point, all you have to do is try it out! Register here.