Bitcoin is a cryptocurrency, a form of electronic cash.It is a type of money that is completely virtual.It’s like an online version of cash. You can use it to buy products and services in places where it is accepted. Often referred to as “cash for the Internet,” Bitcoin is one of several popular digital payment currencies. It facilitates instant payment.
However, Bitcoin which is the most popular cryptocurrency which has seen a massive success, has caused a shock in the world today, offering a cash alternative to the government-backed currencies. Bitcoin is an incredibly speculative and volatile buy.
Bitcoin could easily double in value over the next few years, but it could just as easily drop to near zero in value.
Most Cryptocurrency can be transacted anonymously, and can be used as discreet online cash anywhere in the world.
They are three main ways people get Bitcoins ;
- You can buy Bitcoins using ‘real’ money.
- You can sell things and let people pay you with Bitcoins.
- They can be created using a computer.
What a Bitcoin wallet is?
According to investorpedia “A Bitcoin wallet is a software program where Bitcoins are stored. To be technically accurate, Bitcoins are not stored anywhere; there is a private key (secret number) for every Bitcoin address that is saved in the Bitcoin wallet of the person who owns the balance.
Bitcoins wallets are platforms that spearhead the sending and receiving Bitcoins and gives ownership of the Bitcoin balance to the user. The Bitcoin wallet comes in many forms; desktop, mobile, web, and hardware are the four main types of wallets.”The Bitcoin wallet is referred to as electronic Wallet.Just as Bitcoins are the digital equivalent of cash, a Bitcoin wallet is analogous to a physical wallet.Just as Bitcoins are the digital equivalent of cash, a Bitcoins can be stored in two kinds of digital wallets:
Hot wallet: Digital currency is stored in the cloud on a trusted exchange or provider, and accessed through a computer browser, desktop or smartphone app.
Cold wallet: An encrypted portable device much like a thumb drive that allows you to download and carry your bitcoins.
Basically, a hot wallet is connected to the internet; a cold wallet is not. But you need a hot wallet to download bitcoin into a portable cold wallet.Bitcoin wallet is analogous to a physical wallet.
Software wallets come in many different types, each with its own unique characteristics. Most of them are somehow connected to the Internet (hot wallets). Following are descriptions of some of the most common and important types: web, desktop, and mobile wallets.
You can use web wallets to access blockchains through a browser interface without having to download or install anything. This includes both exchange wallets and other browser-based wallet providers.
As the name implies, a desktop wallet is a software you download and execute locally on your computer. Unlike some web-based versions, desktop wallets give you full control over your keys and funds. When you generate a new desktop wallet, a file called “wallet.dat” will be stored locally on your computer. This file contains the private key information used to access your cryptocurrency addresses so you should encrypt it with a personal password.
In general, desktop wallets may be considered safer than most web versions, but it’s crucial to make sure your computer is clean of viruses and malware before setting up and using a cryptocurrency wallet.
Mobile wallets function much like their desktop counterparts but designed specifically as smartphone applications. These are quite convenient as they allow you to send and receive cryptocurrencies through the use of QR codes.
Hardware wallets are physical, electronic devices that use a random number generator (RNG) to generate public and private keys. The keys are then stored in the device itself, which isn’t connected to the Internet. As such, hardware storage constitutes a type of cold wallet and is deemed as one of the most secure alternatives.
While these wallets offer higher levels of security against online attacks, they may present risks if the firmware implementation is not done properly. Also, hardware wallets tend to be less user-friendly, and the funds are more difficult to access when compared to hot wallets.