Why open a Bitcoin (BTC) wallet?

We can never repeat this often enough: it is important to protect your Bitcoin (BTC) assets well. Leaving your BTC on a cryptocurrency exchange is a very bad idea. As they say, “not your keys, not your coins”, which loosely translates to “if you do not own your private keys, you do not own your bitcoins”. And to protect your BTC, there is no choice but touse a bitcoin wallet.

Ledger’s Nano Wallet is a secure solution for storing Bitcoin holdings / Photo: Adobe Stock

What is a bitcoin wallet?

A bitcoin wallet is one storage solution and exchange of BTC, leading in terms of market value but also of various cryptocurrencies. There are two types of wallets, on the one hand what is called ” warm wallets “, connected to the Internet, and on the other hand” cold wallets which is not.

An example of the wallet is Exodus

That warm wallets take the form of mobile, web or desktop applications (or are integrated with your account on a stock exchange) and are solely software.

A distinction must be made between hot wallets whose custody is secured by the user and wallets whose custody has been transferred to a third party, as shown in the diagram below:

Type of wallets cold purse like those of Treasureof General ledger (or even paper wallets) are wallets that have the special character that they do not ensure the storage of cryptocurrencies, it is actually up to the user to ensure the security of his Bitcoin (or altcoin) assets.

These different types of wallets work in the same way. They do not store your assets directly, but the information needed to access them.

Each Bitcoin address is associated with a set of private secret numbers, as well as a public key corresponding to the identification on the user’s blockchain. These keys are used to sign transactions, giving the user control over bitcoins from that address. It is this information that is stored on a crypto wallet.

Trezors cod bag

Some wallets also allow you to require more than one key to approve a transaction. This can be used to separate responsibility and control of funds between several parties.

The Coin Tracker site used a very good analogy with traditional financing to understand the differences between cold and hot wallets.

  • A hot wallet for self-sufficiency is like having cash in your wallet.
  • A “third party deposit” hot wallet is as if the money were in a current bank account.
  • A self-sufficient cold purse is like having cash under your mattress.
  • A third-party wallet is like having a safe deposit box.

Features and Benefits of a Bitcoin Wallet

  • Quick access to his assets using a password (without the need to systematically use his private keys);
  • Increased security for your assets (especially in case of cold wallets);
  • Possibility of automatic session interruption after execution of a transaction to prevent unauthorized access;
  • Easier access to transaction history for users;
  • Ability to receive push notifications in real time to see activity around the clock;
  • Quick access to the list of frequently used wallet addresses;
  • Several embodiments of transactions offered (via NFC or QR code in particular).

The Security of a Bitcoin Wallet

Wallet security is important because cryptocurrencies are valuable targets for hackers. Some security measures include encrypting the wallet with a strong password, using one two-factor authentication (2FA) for the exchange or offline storage of your information.

Ledger wallets do not store your cryptocurrencies, but your private keys

Most modern wallets are generated from a unique twelve-word code that can be used to recover it if the device is lost or damaged. These words need to be kept carefully in a safe place so that anyone who finds them can steal your cryptocurrency.

As you can see, using cryptocurrency is not as complicated as it first seems. Blockchain technology and cryptocurrencies are now symbols of economic freedom. Keeping a digital wallet allows you to partially pull yourself out of dependence on the inflections of banks and central banks and regain control over the management of your assets.

PS Are you ready to enter the cryptosphere? Do not hesitate to discover our guides dedicated to different cryptocurrencies!

Follow our affiliate links:

  • Buying cryptocurrencies in the SEPA zone, Europe and French citizensvisit Coinhouse
  • Buying cryptocurrency in Canadavisit Bitbuy
  • To generate interest with your bitcoinsgo to the BlockFi website
  • To secure or store your cryptocurrenciesget Ledger or Trezor wallets
  • To trade your cryptocurrencies anonymouslyinstall the NordVPN app

To invest in cryptocurrency mining or masternodes:

To collect coins while playing:

  • In poker on the CoinPoker gaming platform
  • To a global fantasy football on the Sorare platform

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