Bitcoin is the first decentralized currency that followed a person-to-person system to allow people to transfer funds electronically. Many cryptocurrencies have been introduced in the cryptocurrencies, but bitcoin is considered the first modern digital currency. People appreciate the bitcoin network and its underlying technology because they are provided freedom of payment. To invest in bitcoin, you must use Bitcoin Prime App as you can earn a profit daily.
Earlier, people used to trust financial institutions and governments, but the financial crisis has made them believe in digital currencies. Bitcoin was introduced by a mysterious entity named Satoshi Nakamoto in 2009. As bitcoin is a digital currency and has no physical appearance, these are stored digitally. It is quite a challenge to store bitcoins in a secured location. An individual can only access bitcoin via bitcoin addresses, which can only be used with a set of digital keys.
The public key and Private Key
The security of bitcoins completely depends on the keys. Each bitcoin address tends to have two crucial keys: a public key and a private key. The bitcoin address of the wallet is derived from the public keys of the wallet. For instance, if you share your email address with another person, he can only send you mail but cannot enter your mailbox and read your emails. Similarly, no wallet user can enter into your wallet or know about your bitcoins.
On the other hand, a private key provides access to bitcoins belonging to a particular bitcoin address. Users need to secure the private key in a safe location. A private key can only provide you access to your bitcoin wallet; therefore, users must implement methods to prevent unauthorized access to private keys. The users must maintain control over their private keys because if private keys are lost, you will lose all your bitcoins.
In this article, we will explore the two most popular wallets to store bitcoins, which are as follows:
As its name implies, hardware wallets are the physical devices that store and protect users’ private keys by encrypting the information and providing access to users through a seed phrase or a password. Because it encrypts the information, most people consider it the safest wallet. This wallet’s main quality is that it physically protects the private key and doesn’t store online. This feature of a hardware wallet makes it a secure wallet than other types of wallets.
To avoid the risk of malicious programs or hackers, it is suggested to remove the private and public key from a computer connected to the internet. It will prevent hackers from attacking or stealing private keys or yours. The paper wallet is the most popular form of physical wallet but doesn’t have the hardware device used to secure the private keys. Paper wallets are also considered safe because these generate a private key on a piece of paper that cannot be attacked or hacked. It generates a private key in the form of a QR code that can be easily scanned.
The wallets that don’t have a physical appearance are known to be the software wallet. The software wallets are the wallets that generally exist on the computer, mobile phones, or on the web. The web wallet is a software wallet that can only be accessed by a web browser with an internet connection. The main feature of these wallets is that it uses encryption, which protects the private keys stored on devices.
Because the software wallets are accessible over the web, there are high risks of malicious attacks and hacks. These wallets tend to offer more and enhanced privacy options than hardware wallets. The main advantage of a software wallet is that the user doesn’t have to worry about accessing his/her wallet, and it can be accessed anywhere with an internet connection. It is suggested never to store many bitcoins in software wallets because these are made for a small amount for regular use.
In a nutshell, it depends on users to secure their wallets by implementing some enhanced privacy methods. You can use any of the wallets, but it is important to protect the private keys through which bitcoins are accessed.