{"id":18514,"date":"2020-08-17T04:00:00","date_gmt":"2020-08-17T04:00:00","guid":{"rendered":"http:\/\/ci027d035f70002697"},"modified":"2020-08-17T04:00:00","modified_gmt":"2020-08-17T04:00:00","slug":"what-are-bitcoin-wallets","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/guides\/what-are-bitcoin-wallets","title":{"rendered":"What Are Bitcoin Wallets?"},"content":{"rendered":"
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Bitcoin wallets can be hardware products<\/a>, or software running on mobile, the web or through apps. Some of the most popular bitcoin hardware wallets<\/a> include Trezor and Ledger<\/a> devices, while other popular bitcoin wallets include the mobile app Blue Wallet<\/a> and the desktop app Wasabi Wallet<\/a>. <\/p>\n

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Storing bitcoin in a safe location comes with interesting challenges. This is because bitcoins aren\u2019t physically \u201cstored\u201d anywhere. As a purely digital entity, it is not as if they are held in bank vaults or stuffed under mattresses. They are accessible through Bitcoin addresses, which require a set of digital keys for entry. So, the question of how to securely store<\/a> bitcoin always comes down to the security of these keys<\/a>.<\/p>\n

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Every Bitcoin address has two keys: a \u201cpublic key\u201d and a \u201cprivate key.\u201d Bitcoin addresses are derived from public keys, and these Bitcoin addresses are shared. Think of it like sharing your email address with someone: They can send you an email but can\u2019t get into your inbox to read your mail. Similarly, nobody can get into a wallet and take bitcoins from it with a public key; it can only be used to send bitcoins to. Therefore, it is safe to share.<\/p>\n

A private key, on the other hand, represents the ability to access bitcoins belonging to a specific Bitcoin address. This is the key that needs to be secured in a safe place<\/a>.<\/p>\n

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Before getting deep into the discussion, it is worth noting that people who don\u2019t want to control their private keys don\u2019t have to. While it is strongly advised that Bitcoin users maintain control over their keys<\/a>, there are alternatives that don\u2019t require this, like Cash App and cryptocurrency exchanges<\/a> such as Binance. By design, most exchanges have wallets built in to allow for deposits and withdrawals of different assets. <\/p>\n

By depositing bitcoin into an exchange\u2019s wallet, a user is essentially handing over the control of their bitcoins to the exchange as well. Doing so comes with a certain amount of risk. Some exchanges have been vulnerable to hacks<\/a>, while other, less reputable ones, have lost<\/a> or even stolen user funds.<\/p>\n

Keeping your funds on an exchange as a primary storage facility is generally not advised. After all, the principles that led to the creation of Bitcoin itself are based on principles of financial freedom and personal responsibility. Keeping private keys secure in the hands of people who truly own them strikes the same chord as these principles.<\/p>\n

Hardware Wallets<\/h2>\n
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Many consider hardware wallets (including the wide variety available on sale in our hardware store<\/a>) to be the safest way to protect ownership<\/a> over bitcoins. These wallets, as implied in the name, take the form of a physical device that protects a user\u2019s keys by encrypting all the information, and grant access to the user via a password or seed phrase.<\/p>\n

The most important quality of hardware wallets <\/a>is the physical protection of your private keys, as opposed to protecting them on the computer. This is what makes them more secure than every other type of wallet.<\/p>\n

By removing these keys from an internet-connected computer, it is highly unlikely that hackers or a malicious program can steal your private keys. All good hardware wallets<\/a> generate keys within the wallet<\/a> to avoid this type of risk.<\/p>\n