The most common problem faced by a Bitcoin trader relates to the “Bitcoin wallet”. It is usually considered a major issue but in fact availing a Bitcoin wallet is as easy as pie. First of all, it has to be understood that the Bitcoin wallet isn’t a complex thing. In fact, it is a facility that is capable of providing custodial services to users. Within this wallet, a Bitcoin trader would be keeping his Bitcoin assets and for accessing them, a key is to be provided.
A digital wallet is software and, like any software, is downloadable in any internet-based devise i.e. computer, tab, or even mobile. Upon the installation of the software, a digital wallet is then created subsequently in the device where the software was downloaded. Thereafter, if a person buys Bitcoins from a firm, then he can instantly store these Bitcoins into his digital wallet. Keeping them in the wallet will ensure their safety and accessibility to the owner.
Choosing the Right Wallet
The next task is the tricky task because there are hundreds of Bitcoin wallets that have been provided by different vendors. It would be however on the person as to which one the person would like to prefer. But the best way of choosing the wallet can be determined beforehand. The advice is that always go for such Bitcoin wallets which are highly secured and require multiple login keys for accessing the wallets’ contents. The other thing to consider is that before acquiring any wallet make sure that the custodial access is limited to the user of the wallet. The risk of third-party custodial should be avoided at all costs.
The Very Basic Software Wallet
The software-based Bitcoin wallets are those which are downloadable directly into a pc, laptop, tab or mobile device. But in order to access them, these types of wallets require an internet connection because they are attached with online connectivity. Once the software is installed, it lets the user start using all kinds of crypto services that are available in the wallet. Usually, these wallets come with custodial services, trading services, buying and selling of Bitcoins options as well. It is therefore advised that a trader should avoid keeping large amounts in this type of wallet.
Hardware Wallet – Highly Recommended
The second type of Bitcoin wallets is known as “Hardware Wallets”. They are also famously known by another word which is often used in the crypto language as “cold wallet”. These hardware wallets are comprised of a device that has been designed specifically for the purpose. The best thing about these types of wallets is that they provide the utmost and most efficient safety and protocols. Because they are cold wallets therefore they are not linked with the internet all the time. This is why there is almost zero percent chance that they can be hacked.
These hardware wallets are mostly used for storing large amounts of crypto assets. For instance, a person would not want to store more than one or two Bitcoins in the software wallets. This is so because if the two Botcins are stolen then it will cause a loss of US$ 80,000 approximately. For the purposes of storing a large number of Bitcoins or even other digital assets, hardware wallets are the best choice. But again a person would need to ensure that he has retained a backup copy of the access key. In the absence of the key, permission to access the assets lying in the hardware wallet will be refused.
Web Wallets – Although Convenient Yet Highly Risk
At last, there are web wallets which are actually the crypto exchanges with which a trader becomes a member. When a person acquires services of a crypto trading platform, he is offered the web-based version of digital wallets. Although these wallets are one of the most convenient wallets in terms of security, they are extremely vulnerable. When a crypto firm is hacked, it simply means that the wallets have been accessed by the hackers. Whatever is lying in the firm’s wallets is then at the mercy of the hackers. In addition, owning such wallets means that you are allowing third-party access or custodial services to your wallets. In case the firm you are dealing with is a scam, then there is a high probability that it will steal your funds from the wallets.