Bitcoin wallets

First thing you need to start earning bitcoins is creating bitcoin wallet and getting the wallet address. Cryptocurrencies don’t exist in any physical shape or form and they can’t technically be stored in digital wallets. All that exists are records of transactions stored on the blockchain, and cryptocurrency wallets interact with the blockchain to enable users to send and receive cryptocoins and monitor their balance. Bitcoin wallet holds the private key that allows you to access your bitcoin address (which is also your public key) and sign for transactions.

Bitcoin Wallets

Pick Your Bitcoin Wallet

Gone are the days of learning how to use Bitcoin QT. Full bitcoin wallet is still available, and is a powerful tool, but is not necessary for most people. Instead, a light desktop wallet, online wallet, or mobile wallet will suffice, and all are very easy to use. The most difficult part is determining which one you want to use. There are pros and cons to each.

Online Bitcoin Wallets

Online wallets enable users to access their funds via web browser from any device connected to the Internet. Cryptocurrency wallets which are connected to the internet are called hot wallets. Online wallets store your private keys on a server which is constantly online.

Advantages of online bitcoin wallets:

  • More convenient to access. Fastest way to complete transactions.
  • They are good for holding small amounts of cryptocurrency. The best choice for all who earn bitcoin online.
  • Most of them are directly integrated into an exchange, so you can manage and trade multiple cryptocurrencies.

Disadvantages of online bitcoin wallets:

  • Your wallet are controlled by a third party, so you must trust them.
  • They store your private keys online that makes them more vulnerable to hacking attacks.

When using an online Bitcoin wallet, you must trust your BTC to a 3rd party, and that can be dangerous. However, things are changing, and multisignature online wallets provide more security to the user.

Still, there are trusted companies that provide online wallets, and make it very easy to get started.

coinbaseCOINBASE

Coinbase is one of the biggest cryptocurrency exchanges and provides its users with an online wallet where they can store bitcoin (BTC), ethereum (ETH), litecoin (LTC), and bitcoin cash (BCH). Coinbase is based in San-Francisco and has been operating since 2012. The service is very well known and supported. You can register within a couple seconds and get started without any hassle at all. You can exchange currencies or use coinbase as a cryptocurrency wallet to receive and send BTC, ETH, LTC or BCH.

blockchainBLOCKCHAIN

Blockchain is one of the most popular online Bitcoin wallets. Founded in Luxembourg in 2011, it’s one of the oldest and most widely used bitcoin wallets. Blockchain is similar to Coinbase in that it is an online wallet, but you can’t buy or sell directly through Blockchain, which means your Bitcoin storage is separate from your Bitcoin marketplace. This separation adds a level of security, but also a level of complexity in your Bitcoin use.

Desktop Bitcoin Wallets

While online wallets are the easiest choice for a beginner, and may be the best option for you, please understand that with Bitcoin, you only truly own it if you are the only one that can control it.

Desktop wallets are downloaded and installed on your computer. These wallets store your private key, which you do not need to know, in a file on your hard drive, which gives you the ability to control your bitcoins.

A full Bitcoin wallet needs to download the entire blockchain, which is around 25 gigabytes in size at this time, and growing. The download process can be quite time consuming, but for certain individuals, it is worth the time and harddrive space. Of course, it is important that the network has “full nodes”, which are full wallets, such as Bitcoin Core, as this is the backbone of the Bitcoin network. That being said, as long as there are individuals with a need to run full nodes, it is not necessary for everyone else to do so.

A light Bitcoin wallet gives a user the ability to control their funds, and handle any sort of transaction that the average person would need, but only downloads a small portion of the blockchain. Light wallets only need to download the portions of the blockchain that contain information about the addresses the wallet contains. This means that instead of requiring nearly 25 GB of storage space, the average user would only need to store 25-50 MB of data.

Advantages of desktop bitcoin wallets:

Disadvantages of desktop bitcoin wallets:

electrumELECTRUM

Electrum is a secure, software wallet that can be downloaded on your PC and is one of the most reliable desktop wallets you can use. Electrum use dynamic transaction fees in order to make sure that the fee you pay with your transaction is adequate. Electrum has desktop and mobile versions. It is currently available for Windows, Mac OS X, Linux and Android.

Mobile Bitcoin Wallets

Mobile Bitcoin wallets are, essentially, light wallets that work on mobile devices. On the surface, this seems like a bad idea, because losing/breaking your phone, or tablet, would result in the loss of your private keys, and thus your bitcoins. However, to solve this issue, most mobile wallets can also be synced / backed up to a computer, and/or have features that allow your private keys to be regenerated by using a password that you choose when first configuring the wallet. This password is used as a seed for the private key, and allows the private key to be recovered even if the wallet files are destroyed or lost.

Advantages of mobile bitcoin wallets:

Disadvantages of mobile bitcoin wallets:

myceliumMYCELIUM

Mycelium is the most popular mobile bitcoin wallet, with Android and iPhone versions available. It is a robust mobile wallet that can be backed up to other devices, including personal computers. The company behind Mycelium is also working on interesting other products, such as a “Bitcoincard”, which looks like a traditional debit card, but acts as a Bitcoin wallet, and functions without the need to be connected to the internet.

Hardware Bitcoin Wallets

Hardware wallets store your private keys in a hardware device like a USB, which are immune to computer viruses. You hold your bitcoins in an offline environment and plug in the device to any internet-connected computer only to make online transactions.

Advantages of hardware bitcoin wallets:

Disadvantages of hardware bitcoin wallets:

Ledger NanoLedger Nano

Ledger Nano is a Bitcoin wallet on a smartcard device. This is the most popular hardware bitcoin wallet, because it is secure, easy to use, and affordable. The Ledger Nano S can be used with bitcoin, litecoin, ethereum, and other altcoins and has memory for five different coins at a time. Once the device is plugged in, it is accessed using a pincode. It comes with a built-in display where you can check transactions, and buttons to use for confirmation.