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There are a lot of Bitcoin wallets available out there in the Bitcoin world. Read how they can be differentiated easily on certain criteria basis such as custodianship, online connectivity, and device availability.
Physical cash or currency are kept in Wallets, it is useful for storage. Similarly Bitcoin Wallets stores your bitcoins.
Bitcoin Wallets are similar to an email address. Suppose your email address is XXXX@serviceprovider.com. Suppose XXX is your personalized name in email which you can share it with your friends and service provider or software like Gmail, yahoo or Hotmail that can help you send and receive emails. Personalized name and service provider make your email address (public address). If you want to access your email id you will need a password (private address) which is private. Service provider or software understands both the Email address and your Password (private address) to successfully log you in and send/receive/store emails.
We require a wallet on the Bitcoin network for sending/receiving/storing and receive Bitcoins. This Bitcoin Network which is nothing but a place which stores our public address (a place to receive bitcoins) and a private address (to send/spend bitcoins).
So your Bitcoin Address is your Email id and your Private Key is your Email password and the Bitcoin Client is you service Provider
- Bitcoin Address + Private Key = Bitcoin Wallet
Based on your Service Provider or the Bitcoin Client your wallets can be of different kinds.
Different types of Bitcoin Wallets on the basis of:
2) Online connectivity
3) Device availability
1* Bitcoin wallets based on custodianship of keys
Custodial Wallets (3rd Party Services)
When you entrust your bitcoins to be held by some agency/exchange on your behalf, it means you are trusting them and storing your bitcoins with them on their servers, thereby giving them custody of your bitcoins.
When you entrust your bitcoins to nobody and take responsibility for your own funds by saving your Bitcoin private keys yourself, such wallets are called non-custodial wallets.
2* Bitcoin wallets based on Connectivity
Hot Bitcoin Wallets (Online)
Wallets in which bitcoins are stored online and which are connected 24/7 to the internet are called hot wallets. Such Bitcoin platforms and services which can receive/withdraw bitcoins for their users are hot wallets. They are very much like the wallet you have in your pocket.
Similar to a cashier in a bank who has not kept the money deposited in the bank vault but left it on his/her desk, your bitcoins are always under threat when placed online and connected 24/7.
Cold Bitcoin Wallets (Offline)
And you must have guessed, those bitcoins stored offline in hard drives or USB drives or paper, away from internet connectivity are called cold wallets.
3* Bitcoin wallet based on your Platform via which you use your bitcoin
- Desktop Wallet
- Mobile Wallet
- Web Wallet (Hot/Online/Hosted Wallets)
- Hardware wallet (cold Storage)
- Paper wallet (Cold wallet)
1) Desktop Bitcoin Wallets
Desktop wallets are Bitcoin wallets which are installable on different desktops, and as per the user’s needs, are compatible with Windows, Mac, and Linux.
Below are various Bitcoin desktop wallets compatible with all operating systems.
2) Mobile Bitcoin Wallets
Bitcoin wallet applications which are installable on mobile phones are called mobile wallets. For each mobile operating system, such as iOS, Android, Windows, and Blackberry, compatible wallets are available. India’s Bitcoin space has Zebpay, Unocoin, and Coinsecure as the leading platforms.
Below are the various Bitcoin mobile wallets and each mobile OS compatibility.
3) Web Bitcoin Wallets
Wallets which are basically web services and are accessible through web/internet-based browsers such as Google Chrome, Firefox, and IE are called web-based Bitcoin wallets. They are also called “hosted wallets” because you store your bitcoins on the servers of the agency which you have chosen as your online wallet. The private keys are held online in these kinds of wallets. They are accessible via an internet address
4) Hardware Bitcoin Wallets
This is the most secure and safest way to store your bitcoins because they are stored in an offline environment.
At the time of this writing, there has been no reported theft or loss of bitcoins from a hardware wallet. The private keys and digital signature needed to spend bitcoins are generated via these wallets.
5) Paper Bitcoin Wallets
Paper wallets are a piece of paper with a public address and the private address printed on them.
You can use the public address to send any amount of bitcoins. You can then save the piece of paper as it also contains the private key which can be used to transfer/spend bitcoins, or sweep the Bitcoin paper wallet completely to an another wallet.
Since the keys are offline, printed and secured by the owner, there is no threat of any electronic damage to bitcoins unless the printed keys are lost.
Next Article will be on Which Bitcoin Wallet Should You Use?
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