On a website
Online wallets allow you to access your assets from anywhere in the world (wherever there is internet) and from any device. They are often linked to exchanges, making it easier to start trading
Bitcoins can be stored on buy and sell sites and also on sites dedicated only to storage and transfers.
- Pros: simple to understand and use; There is no need for software or downloading the blockchain; You can access your wallet from any computer; Can be accessed by cell phones.
- Cons: Bitcoins can be stolen by site administrators; The site can be attacked and its coins stolen, as happened with MtGox; If a hacker monitors your computer, he can obtain your login data and transfer your Bitcoins.
As we can see sites are good for storing small amounts of bitcoins.
The original Bitcoin software is called Bitcoin Core. There are other software of the kind, such as Armory that was designed to be more secure. In addition to making transactions, the program allows you to create an address for your wallet to send and receive the currency and also stores your secret key.
- Advantages: Easy to understand and easy to make transfers;
- Cons: The software is not very “user-friendly”. It may take hours or days to download the blockchain and occasionally problems may arise that are difficult to resolve by non-advanced users.
If you store your Bitcoins on your computer, you should remember to make regular backups of the wallet.dat file. This file contains your private keys. If you lose this file you will lose access to your Bitcoins permanently.
The safest methods are the so-called “cold storage”, which consists of storing your Bitcoins offline, that is, so that the information cannot be accessed over the internet. We will see below what these options are:
On offline storage devices
You can store Bitcoins on various media offline, that is, on a device without an internet connection, such as Pen Drives and CDs and then store them in a safe place in your home or even in a safe. Basically what you do is save a copy of the wallet.dat file on an external device and then delete it from your computer. This process must be done with the Bitcoin software closed.
- Pros: Low risk of theft, as there are no copies online or on computers; Process is simple.
- Cons: Requires the use of Bitcoin Software which takes hours to days to download the blockchain; It is not user-friendly, and novice users may experience difficulties.
Do not keep your keys on your computer or cell phone. If you install a program when you are infected with a virus, your computer can be scanned and files such as your key sent to a hacker. In addition there is the possibility that your devices will be stolen and you will lose everything.
As in the case of software that simply stores keys, it is technically a wallet, but it does not have a direct connection to the Bitcoin network (as it is a paper). The paper wallet is a private key printed on paper, encrypted with another key or placed directly, but it is interesting to mention it.
It is a rudimentary modality and not very comfortable to administer, but it can be considered very safe. It is perfect for “cold wallets” (very secure cold wallets).
- Pros: Safe
- Cons: It is not easy for newbies to import coins; If you buy the ballot from a third party, they will know the secret key.
Click on the button below and see how to make a paper wallet step by step quickly.
They are identical to paper wallets with the difference that the key is kept in a sealed package that needs to be broken to access it.
- Pros: Immune to hacker attacks; Mechanism easy to understand even for laypeople.
- Cons: for transactions that are not face-to-face, it is necessary to violate the packaging; They are more expensive; The manufacturer had access to the key when making the coin, make sure it is reliable.
They are aimed at those who want to keep their cryptocurrency as safe as possible. They work without an Internet connection, which prevents hackers from stealing. Instead, it will be physically stolen than coins removed from it. It can be connected to any computer and downloaded from the Internet for currency trading
- Pros: Keys are stored securely and cannot be transferred from the device as text; Immune to viruses; It can be used without having to transfer to software to use the currency.
- Cons: There may be security holes in the manufacturer’s software. Look for trusted companies.
Standalone software portfolios
These wallets are very popular, they are easy to use and independent. Even if all online services stop working, you will still have access to your money. It also means that hackers will have to break into your computer to steal your coins. You are protected and there is no need to undergo special identification.
With the help of the cryptocurrency, which is stored in these wallets, you can pay in stores and make transfers between accounts without additional difficulties. However, these portfolios can also be hacked.
SPV coin purse
Simplified payment verification. These wallets are an intermediate step between the full wallet and the light wallet to take advantage of both worlds: they take up little, but they cryptographically check the data received to avoid showing the user false information due to a possible attack on the server that sends the information.
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We recommend reading our other posts so as not to be fooled when buying your precious Bitcoins.
- We recommend reading Cryptocurrency Mining. This book shares the vision of two cryptocurrency insiders as they analyze the hardware, software and strategies needed to extract Bitcoin, Ethereum, Monero, LiteCoin and Dash. The book also provides information on how to stay ahead of the curve to maximize your return on investment.