In today episode, I am covering topic of Crypto Wallet vs Exchange, types of wallet and where to store your cryptocurrencies, bitcoin & altcoins.
What is a Bitcoin & Cryptocurrency Wallet?
A crypto or Bitcoin wallet is simply an app, website, or device that manages private keys for you.
Types of Bitcoin Wallets
There are a few different types of Bitcoin wallets used today, and each of them come with their own tradeoffs between security and convenience.
An Exchange is Not a Wallet
Again, its worth stating here as well that your Bitcoin “bank” or exchange accounts that do hold Bitcoin are NOT wallets.
Generally speaking, Bitcoin wallets come in two main types:
The phrase “hot wallet” refers to any bitcoin wallet that requires the internet to function properly. Hot wallets derive their name from the fact that they need electricity to work. If the power goes out, then so does your hot wallet.
Not only do cold wallets work without an active internet connection, but many cold wallets don’t even need a computer.
Is “Cold Storage” Different Than Using A Cold Wallet?
In general, “cold storage” refers to any bitcoin storage device that does not require electricity. A cold storage device can be a physical box, a piece of paper, or a list of numbers and letters that you keep in your head.
“Hot storage,” as you may have guessed, is simply the analogous generalization for storage devices that require an internet connection.
Thus, hot wallets are an example of hot storage devices, and cold wallets are an example of cold storage devices.
The Major Differences Between Cold Storage And Hot Storage
In contrast to hot storage, cold storage provides:
– Increased security protections
– A reliable way to keep your bitcoin offline
– An easy way to transport your bitcoin between your various wallets
What are the different types of bitcoin cold storage wallets?
When it comes to choosing a cold storage wallet that can help keep your bitcoin secure, the most popular choices tend to be:
Hardware wallets include USB sticks and other digital storage devices that you can use offline. Typically the private key to coins is never exposed to the internet because the device itself is air gapped.
The steel wallet is literally a piece of indestructible stainless steel that you can use to carry your bitcoin private keys or backups in.
If you’re concerned about malicious computer hackers getting access to your wallet, then a paper wallet is one of your best options.
Think of a hot wallet like your wallet today: you use it to store some cash, but not your life savings. Hot wallets are great if you make frequent payments, but not a good choice for the secure storage of bitcoins.
– Desktop Wallets
– iOS and iPhone Bitcoin Wallets
– Android Bitcoin Wallets
No matter which wallet you choose, remember:
Our bitcoins are only safe if the private key was generated securely, remains a secret, and–most importantly–is controlled only by YOU!
To avoid theft, scams, and any other loss of funds, follow these three basic principles:
Generate your private keys in a secure, offline environment. (Except if using trivial amounts, in which cases keys may be created in a hot wallet).
Create backups of your private keys. This helps to protect against the loss of your bitcoins due to hard drive failure or some other problem or accident. Ideally you should have a duplicate set of backups kept off-site to protect against the possibility of fire, robbery, etc.
Encrypt wallets to provide additional security. This helps prevent the physical theft of your funds in the event that your device or hardware wallet is stolen.
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DISCLAIMER: Please be advised that the content of my media is my personal opinion and is intended FOR GENERAL INFORMATION PURPOSES ONLY, not financial advice. Nothing herein shall be construed to be financial, legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Purchasing cryptocurrencies poses considerable risk of loss. The speaker will not be held responsible for any losses or gains. Always do your own research and advise with a professional before making your own investments.
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