A Beginner's Guide to Storing BTC

Syafira Nur Tazkia Abdillah . September 07, 2022

Picture: Coindoo

What is a Bitcoin Wallet?

Techspace - A bitcoin wallet is a place to store Bitcoin balances safely and efficiently. This wallet will give you complete control over the coins in the wallet. No third party can freeze or even eliminate the funds in the wallet. In a bitcoin wallet, public and private key pairs must be owned if you want to authenticate a transaction. Bitcoin wallets function like physical wallets that can store money, debit, and credit cards. In a Bitcoin wallet, the code and the digital signature required for the purchase are stored for each transaction. OctoMate will be fully responsible for the security system and back up existing wallets.

How Bitcoin Wallet Works

Bitcoin wallet itself does not store cryptocurrency because ownership of all types of currency is on the blockchain network, which can only be accessed via a private key. In the bitcoin wallet, there are two keys that each user must own, namely:

  1. 1. Public key: Obtained when a new user registers crypto. This key is public, so it doesn't matter if others people know it. 

  2. 2. Private key: This key is only known by the user. How a bitcoin wallet works can be illustrated like an email, all crypto assets owned can be lost if this key is hacked by someone else. 

Types of Bitcoin Wallet

Picture: CoinMarketCap

So, using this wallet, the owner has a private key corresponding to their Bitcoin address. In general, digital wallets are divided into two types, namely:

  1. 1. Hot Wallet: Stored online through an encrypted crypto asset storage platform to secure users' private and public keys. Because it is online, users can access crypto assets anywhere and everywhere. Which is divided into:

  • a.  Web Wallets

Allows users to make bitcoin transactions directly from the web browser and makes it easy to connect with markets, exchanges, or other online service providers. However, it is not a reliable system for storing large amounts of bitcoins. The security system uses private key features or multi-signature solutions.

  • b. Multi-signature wallet

It has two critical systems that will be shared with related parties to ensure the bitcoin security system—is generally used by the web wallet provider.

  • c. Desktop wallet

You can use and download it on your computer, which gives you complete control of your bitcoins and their security system because the private key is on your desktop. There are two desktop wallet download options, namely:

  • - Full node: With the contents of all the bitcoin blockchain, it requires a capacity of about 145 GB.

  • - Simplified Payment Verification (SPV) Wallets: No need to download all blockchains because they only need synchronization. But when connected to the internet, there is a comprehensive open risk of wallet theft.

  • d. Mobile wallet

Because this wallet is stored on a smartphone, it can also hold private keys. But do not store bitcoin funds too large to prevent the risk of theft. To be safe, use multi-factor logins using strong passwords and backing up private keys.

2. Cold Wallet: A Bitcoin wallet that is available offline in the form of a paper wallet, a USB wallet, or a hardware wallet. Cold wallets offer a high level of security against hacking because they are stored off-network. The following are some types of Cold wallets:

  • a. Paper Wallet

A paper wallet is made from a combination of public and private keys in paper or other forms. Users are encouraged to delete the entire history of paper wallet information from the computer for security. The paper can also be laminated to avoid getting wet or folded.

  • b. Hardware Wallet

This wallet stores private key data on hardware securely to store bitcoins in any amount. Hardware wallets can be used more interactively. The advantage of this type of swallow is that it is safe from computer viruses and cannot be transferred out of hardware devices in plain text. Some hardware wallets use layer features to display important information and a screen that can confirm the amount and payment address.

When choosing one of the two wallets above, there are essential things to consider. Consider starting from bitcoin investment, the amount of Bitcoin that is being stored, the frequency of exchanging and spending Bitcoin, and also checking the level of security and convenience of using the Bitcoin wallet itself.

How to Make a Bitcoin Wallet

Being one of the main requirements for investing in bitcoin crypto, here are the steps to create a bitcoin wallet sourced from the most popular online bitcoin wallet site, Blockchain.com:

  1. 1. Visit the blockchain.com site.

  2. 2. Click the "Create a Wallet" button.

  3. 3. Register by filling in the email

  4. 4. Fill in the password field and confirm the password you want to use

  5. 5. Click on the terms of service & privacy policy.

  6. 6. Click "Create My Wallet"

  7. 7. Confirm the email sent by blockchain.com to the email address used to create the bitcoin wallet

  8. 8. The bitcoin wallet is ready to use

  9. 9. If the bitcoin wallet has been created, users can directly make bitcoin transfer transactions by clicking the "Send" button, then enter the recipient's address and the number of bitcoins they want to send.

  10. 10. If you want to receive bitcoins from other people, you can click the "Request" button. The blockchain system will provide an address that can be given to other people who want to send you bitcoins.

Each process of this delivery will be encrypted by the system, which identifies that you carried out this transaction. To maintain the security of data on the bitcoin wallet, you can use several ways, such as verifying your email address, using 2 Factor Authentication or 2FA, and taking down the Backup Phrase.

After understanding the various types of digital bitcoin wallets that exist, then you can plan a long-term investment by buying a digital currency that has the potential to be profitable in the future. Of course, the development of cryptocurrencies will continue to increase in the next few years, and you can benefit by starting now.

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