Your success or failure in the bitcoin economy is largely down to one thing: wallets. You make a mistake on the setup, and you’re done in. But before we get deep into it, let’s first look at the process of bitcoin transaction. If I want to send you some BTC’s, I obviously require your address, but more than that, there needs to be a digital mark generated from a familiar private key, and then the Bitcoin network would give it a pass. Depending on the type of wallet you have, you can keep your private key offline, inside of software, or hosted on the web. It goes without saying that offline private keys make for the most secure bitcoin wallets. Software stored and web-based private keys are not as secure. Of course, we are assuming the worst; in the normal run of things, almost every option should be considerably secure.
These are main types of bitcoin wallets that you need to be aware of.
As we have already said, wallets initiate requests to transact, but it’s the private keys that authenticate the transactions. Hardware wallets afford us the opportunity to keep our private keys away from a computer and out of the web. You get to walk around with your private keys. They come in many forms: Bluetooth devices, USB sticks, Bitcoin sticks, smart cards, etc. This means that if hackers visited your website with ill intentions, they’d be helpless. This immunity against hackers and the responsive design of the hardware wallets is what makes them lords of bitcoin security.
Compact and durable
OLED screen + buttons
SSH Access and GPG
Easy and secure
Third party wallet integration
PC, Mac, Linux, Windows support
Virus & malware proof
High industry ratings
A paper wallet doesn’t store bitcoins, but rather, it stores the private keys associated with one or more addresses. In that sense, a paper wallet provides security for your BTC’s (wherever they may be). Like hardware wallets, securely-made paper wallets guarantee 100% security for your private keys. Your bitcoins are protected from hackers. But since the paper wallet contains both the addresses and the private keys, you need to keep it as safe as humanly possible.
Software wallets make for another option. You just have to look for a provider with positive reviews like multibit. And then install the software on your device. It’s important that you watch out for news about your chosen software. I say this because the bitcoin economy is laden with horror stories about scam portals and software that unleash malware on your devices so that they may steal your BTC’s at will. You know why the bitcoin economy is full of scammers and hackers and retards? There is no easy way to get the coins. Unless you can hack and wipe clean all the accounts. As long as you can keep your device updated to tackle malware, there’s no real risk with installing software wallets, as at least you have a fair control of your digital assets.
Ya, these are the sort of wallets you’d create today on a web portal and a few months later you’d try to login but get an error report!
I’m just being silly; it doesn’t happen, obviously. But if you had better options, and more importantly, the resources, why wouldn’t you upgrade your wallet safety?
Web wallets sound not too safe because your registrar holds your private keys. And as you know, the private key is the silverbone (oh my god I just created a word! Want a Nobel) in bitcoin transactions.
Few things about private keys
Explaining cryptocurrency to a newbie is easy until you mention private keys. Private keys are integral in transactions in the Bitcoin system.
Functions like a messaging platform; a bitcoin transaction is merely the system alerting public keys of a transfer of data. And therefore you need to provide the private key to authenticate the transfer. This blockchain technology is simply astonishing it doesn’t even seem like what humans are capable of. The blockchain technology is set to revolutionize the world as we know it.
Private Key theft; if a hacker got their hands on your private key they might be able to steal your BTC’s. They’d just need to have a system that detects your transaction period and they’d be able to track your address on the public ledger through mass appropriation and from there they’d trade on your addresses and supply your private keys and re-channel the assets.
No passwords; the blockchain technology doesn’t employ the use of passwords as it knows they can be easily corrupted or the whole system can be compromised. Instead, blockchain a special form of digital correspondence in order to approve transactions. The peer to peer transactions almost makes users equals.
Where are private keys fetched? This is an answer that no human is supposed to answer. Why? The Bitcoin system operates on cryptography. Therefore, the processes are encrypted, and it is hard to guess. However, conventional knowledge suggests that private keys are mined from the data silos of public and addresses. They are long-chain for a reason; in probability math, an average human cannot guess accurately more than a few units. That’s why it’s impossible to even guess a credit card number, or vouchers would not be an expense, as you’d be topping up your phone by crunching numbers (pins) out of your head.
Cold storage; it’s the best storage option out there because only then you have maximum custodial of your private keys. Considering the value of hardware wallets, they are cheap.