December 7, 2021

Hot to set up a Bitcoin Wallet – Beginner’s Guide

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Bitcoin is the famed cryptocurrency whose price is estimated at around $63,000 right as we write this article. One of the first things we learned about crypto is that it is a ​​decentralized electronic payment system. Bitcoin and other cryptocurrencies aren’t backed by any governments or banks, meaning you will be your own bank and the only one responsible for handling your crypto. If you are one of its lucky owners, you know how important it is to manage it safely and find a place to store it securely. That’s where Bitcoin wallets come into play.

What Is a Bitcoin Wallet?

A Bitcoin wallet is like a digital bank account that allows you to receive, send, and store your crypto. Bitcoin wallets not only keep your crypto, but secure it with a unique private key that ensures only those who have the code can access the wallet. The key is something similar to the password people usually have on their online bank accounts. It is believed that there are tens of billions of dollars worth of Bitcoin locked out forever by users who forgot their private keys, which is why you should be very careful with your keys. What’s also important to note is that a Bitcoin wallet does not store the actual coins. It stores your Bitcoin address and the private keys needed to access your Bitcoin. Depending on your preferences and requirements, there are a few different forms of Bitcoin wallets you can go with. Let’s check them out.

Types of Bitcoin Wallets

The main types of Bitcoin wallets are hot and cold wallets. Hot wallets are connected to the internet and include desktop wallets, web wallets, and mobile wallets. On the other hand, cold wallets are disconnected from the internet, either in the form of paper or hardware. Hot wallets are more vulnerable to attacks, but they make trading crypto easy, while cold wallets are much safer, but their contents need to be transferred to a hot wallet to be used.

Desktop Wallets

Desktop wallets are programs you can download to your desktop or laptop device. Although they provide complete control over your wallet, they are often considered less secure, due to the fact that your computer can easily be compromised, and is connected to the internet.

Web Wallets

Web-based wallets are online services that can store and send crypto on your behalf. Their main advantage is accessibility, but they come with significant security risks, mainly due to being completely internet-dependent.

Mobile Wallets

Mobile wallets are similar to desktop wallets. The only difference is that, instead of installing them on your PC or laptop, you can download an app to your phone, tablet, or some other mobile device. Many mobile wallets allow quick payment processing in physical stores. All you need to do is scan a QR code, and you’re set. As much as we like their flexibility, mobile wallets are the least secure. Not only are mobile devices prone to hacking and malware, but they are also much easier to lose or be stolen.

Hardware Wallets

Hardware wallets are physical devices, such as USB drives, that aren’t connected to the internet. This makes them the most secure type of Bitcoin wallet and physically immune to virus attacks. If you have a hardware wallet, you need to plug it into your computer, and you will be able to manage your Bitcoin.

Setting Up a Bitcoin Wallet

Depending on the type of wallet you choose, the setup will look different. 

If you wish to go with the desktop wallet option, these are the steps you should take:

  • Find the provider you’re interested in and download its software.
  • Follow the installation instructions.
  • Create an account.
  • Write down your private key and keep it in a safe location.
  • Transfer crypto into your wallet.

The process is pretty similar for mobile wallets. You just need to initiate it by downloading the corresponding app to your mobile device instead.

If you prefer the option of a web-based, hosted wallet, all you need to do is:

  • Choose a reliable platform.
  • Create an account (it is recommended you use two-factor authentication to boost the level of security).
  • Transfer crypto into it.

When it comes to hardware or cold wallets, the procedure is a bit different. You should:

  • Buy the hardware.
  • Install the appropriate software on it.
  • Transfer your crypto.

Whichever option you choose, you must have your private keys safely stored and avoid sharing them with anybody else. If you wish to keep things simple, a web-based wallet might be the best pick. On the other hand, if you wish to have complete control of your crypto, a desktop or a mobile wallet might be a better choice. And, if you value security more than anything, go for the hardware wallet.

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