Bitcoin is one of the most sought-after assets in any investor's portfolio. The price of BTC has exceeded $60,000, and its market cap has also exceeded $1 trillion. In just a year, the value of Bitcoin has grown significantly or by over 200%.
So, as a lot of people are looking to trade BTC or obtain it, there is one crucial component that everyone needs to take into consideration regardless of its role in the blockchain network. That is Bitcoin wallets. Let's take a look at some important things everyone should know about Bitcoin wallets before they invest in one.
Background Information
You will come across multiple Bitcoin wallets, but what is common for all of them is the basic function of each wallet. Typically, a Bitcoin wallet is considered a special software program dedicated to storing your BTC that features both private and public keys in order to safely send and receive your BTC funds.
For this reason, it's impossible for a transaction to happen on the network without a BTC wallet. During each transaction, the private key is used to sign the transaction, thereby creating numerical proof that the BTC transaction was initiated by your BTC wallet. Next, the transaction is processed within 10 minutes on the blockchain network (on average), and the BTC funds reach the corresponding public address of your Bitcoin wallet.
Bitcoin Wallets
The different forms of one Bitcoin wallet are hardware, web, mobile, desktop, and other storage options. Furthermore, Bitcoin wallets are categorized as hot wallets and cold wallets. A hot wallet is connected to the Internet, and it needs to maintain an Internet connection in order to operate properly.
When we pick cold wallets or cold storage options, they are mainly created to protect your funds and are not generally connected to the Internet. But, because they are not connected to the Internet, it's a bit more difficult and not as convenient for users to trade online, for example.
A good starting point for anyone interested in Bitcoin trading is to sign up on an automated trading website like the Bitcoin Billionaire that is known for its Bitcoin auto trader bot. The bot utilizes AI technology to execute the trades for you, and all you need to do is to make a deposit of $250 and set up your account. What's more, you won't need more than 20 minutes a day to set up the account. In addition, you will get free comprehensive resources regarding trading on the site.
BTC Wallets
Mobile wallets are compatible will with both Apple (News - Alert) and Android devices, and they function as an app that you can download on your phone and conduct online trading as well as offline and online shopping. So, it can be used in offline shops as they offer the option of near-field communication scanning of a QR code. The main risk is malware. Desktop wallets function similarly to mobile wallets because you need to install software on your desktop or computer, or laptop.
The main advantage is that you can store your private keys securely, and you have total control over your BTC. Even though online wallets are not considered just as safe as the other ones, they are pretty accessible and convenient, not to mention cheap, because they are free on most crypto exchange sites.
However, the private keys can be stored on a third-party server which makes them vulnerable. This is why it's advisable to back up your BTC with a cold storage option.
For example, if you have a desktop wallet, you can print out your private keys and public address and store them securely. Or, you can also invest in a hardware wallet which is a physical piece of equipment, similar to a USB. Otherwise, your BTC and confidential information will be kept safe from malware and computer viruses.