Unlike U.S dollars that are backed by physical gold, bitcoins are digital coins that aren't backed by gold or the government. Bitcoin is a digital currency that isn’t present in its physical form and doesn’t even require government or bank to govern it. It was the first cryptocurrency that was launched in 2009 and is abbreviated as BTC. Being a decentralized currency, bitcoin uses cryptography that secures it and is controlled by a huge network of computers that individuals operate. Instead of being backed by government or gold, Bitcoin is supported by source code known as the blockchain. Ethereum is another cryptocurrency that is built on blockchain technology. If you want to join Ethereum code, visit immediate-edge.co
There's no presence of a bank in the entire work of Bitcoin, and therefore it gets complicated for users to store bitcoin. Before you own or invest in bitcoin, it is crucial to store these digital coins securely.
Where are bitcoins stored?
Bitcoins aren't available in physical form, and therefore, the bitcoin organization suggests storing bitcoins in digital wallets. There are multiple types of digital wallets categorized under two main categories: hot wallets and cold wallets.
Hot spending wallet
Hot wallets are designed to store a small or limited number of bitcoins that can be used to transferring and spending. These are online wallets and can be stored digitally on a computer or mobile device.
Cold saving wallet
On the other hand, Cold wallets are designed to facilitate investors that want to hold a large amount or majority of bitcoins. These wallets are offline wallets that don’t require users to get connected to the internet to transfer money.
Beyond these main categories of bitcoin, there are four different types of digital wallets: hardware, mobile, desktop, and web wallets. These wallets are either hot, i.e., internet-connected or cold, i.e., not connected to the internet. It doesn't matter what type of wallet you use to store your digital currency; the main thing that matters is to store private keys securely. Private keys are secret keys that must be kept confidential. If the private keys are stolen or lost, you’ll lose your bitcoins. There’s a risk to every currency, whether it is stored digitally or physically.
Types of Digital Wallets
Hardware wallets
Hardware wallets mean the digital coins in these wallets are stored on hardware like USB. These wallets offer maximum anonymity, and the users aren't required to share their details or confidential information. These wallets are flexible to malware attacks and have the seed phrase that will help you create your wallets again and recover all your funds if you lose your private key. Hardware wallets store seed phrase at a place that is safely locked and cannot be accessed by anyone else.
Paper wallets
Paper wallets are the best and most straightforward option to store digital coins. Paper wallets are required to be used with great knowledge. These wallets provide complete anonymity, and these generate private keys on paper that can be stored in a safe place. Users can easily generate or print paper wallets using different services. Paper wallets are suitable for users that use bitcoins on a daily basis.
Offline wallets
Offline wallets are categorized under cold storage wallets that aren't required to be connected to the internet in order to be accessible. These are safer wallets because of no internet connection; these aren’t exposed to online attacks and offer a great level of security. Suppose offline wallets are downloaded on the desktop. In that case, these are still become the target of computer malware and therefore consider using the antivirus software that provides protection to your bitcoins against the malware.
Digital wallets
Digital wallets are web-based wallets that can be installed on mobile device or computer. These wallets are best to store a limited number of bitcoins and aren't safe for storing a bulk number of bitcoins. These wallets must be encrypted as there's a high risk of fraudsters attacking your private keys. Digital wallets are best as these are highly accessible, and users don't need to carry physical cash while travelling. Make sure to use the digital wallet from the provider company that doesn't have any security breaches in the past and provide you with complete control over your funds.
