Bitcoin is the first, most popular and expensive coin in the world of cryptocurrency. She became the equivalent of the dollar in fiatnyh money. Even if you are not going to trade or mine, you still have to think about where to store bitcoins.
Bitcoin is included in half of currency pairs on any exchange and is often used as an intermediate coin when exchanging one cryptocurrency for another, so it is unlikely to be able to do without buying it.
The concept of cryptocurrency wallet
Cryptocurrencies don’t have a physical shell, they exist in electronic form and circulate on the Internet. The question arises how in this case to buy and store Bitcoin.
In a bitcoin system, this function is performed by bitcoin addresses. They represent a 160-bit hash from the ECDSA public key. To make a transfer in the system, you need to generate a pair of keys – public and private. Public is your bitcoin address. You will transfer it to transfer money to it, and close it to sign transactions for spending funds.
When a user wants to send coins, he transfers them to a bitcoin address. Bitcoin address isn’t tied to a specific person, because the basic principle of blockchain technology is anonymity.
The system doesn’t limit users in the number of addresses. You can create as many as you want. In most cases, a new address is created for each new operation.
We came to the answer to the question of where to store Bitcoin. The wallet collects all private keys and bitcoin addresses together, ensures their safe storage and provides a convenient interface for managing all this.
Cryptocurrency wallets are software or hardware and software tools that provide users access to the Bitcoin system. They allow you to find out the balance and make transfers. Some are equipped with additional functions, up to the built-in exchanges, in which you can exchange cryptocurrency for another.
Hot and cold storage
Places where you can store Bitcoin, are divided into two large groups by storage technology. Hot storage involves constant communication with the Bitcoin network and the willingness at any time to send money to any Bitcoin address.
Cold storage means that the storage is disconnected from the network, in some cases from the Internet. Coins can be listed in it at any time, but you can send them only by connecting to the network.
- online services;
- exchanges and exchangers.
- mobile applications;
- desktop clients;
Exchanges and exchangers
Before you start trading cryptocurrency, you must make money on the exchange. For these purposes, each site already has a built-in storage. Some see the stock exchange as a place where you can buy and store Bitcoins at the same time.
At first glance, it is very convenient. Registration on the exchange is similar to registration in regular mail, and do not bother with installing and configuring software. For the safety of your keys is responsible exchange. But if they are at the disposal of the exchange, then control over your funds is in its management.
A short cryptocurrency history remembers several major hacking exchanges and theft of user funds. And the exchanges themselves sometimes do not differ in cleanliness and may “lose” your coins, and technical support will be silent for months.
To decide whether to keep Bitcoins on exmo and similar services, assess the reputation of the site and your readiness in case of force majeure to lose the amount of money you trust.
Cryptocurrency online wallets resemble ordinary electronic (QIWI, Yandex.Money, WebMoney). Some of these payment systems work alongside Fiat money with Bitcoin (WebMoney, PAYEER, AdvCash, Capitalist), while others are only sharpened for work with cryptocurrency (Blockchain, Coinbase, Cryptopay, BitGo).
Wallets for one cryptocurrency are rare, most of these services are multicurrency. Is it possible to store bitcoins on them? Their operating principle is similar to exchanges. From the moment you take the funds, they completely come under the control of the service.
Desktop clients are programs that are installed on a computer, where you can store bitcoins after purchase.
Unlike online services, keys are under the control of the user and stored on his hard drive. But he is also responsible for their safety.
It is necessary to protect the machine from viruses and make regular backups. Otherwise, if you break the iron or attack hackers, you risk losing your coins.
Desktop clients are divided into two classes: thick and thin. A fat client downloads the whole blockchain to a computer. You must be patient and provide a few dozen gigabytes of free space.
An example of a fat client is Bitcoin Core, developed by the Bitcoin team. Bitcoin Core is considered a cold storage, as it can be disconnected from the network. Usually such a client is downloaded for mining. The graphical shell does not fully reflect its capabilities, some functions are available from the command line.
Thin clients do without downloading the blockchain, so they take up less space. Where it is better to store Bitcoin depends on the user’s goals and his technical knowledge. If Bitcoin Core is a tool for professionals, thin clients do an excellent job with the needs of ordinary users.
- Electrum – has rich functionality (list of contacts, sending coins to a group of addresses at once, support for checks, import of private keys).
- Exodus – a multicurrency client that contains a built-in ShapeShift converter that allows you to convert BTC, ETH, LTC and DOGE to each other.
- JAXX – besides the desktop has mobile versions for IOS and Android and extensions for Google Chrome and Firefox browsers.
Mobile wallets for cryptocurrencies are thin clients, because no smartphone can fit the blockchain. Of the benefits can be noted full control over the keys (they are stored directly on the device) and convenience. Smartphone is really always at hand. Examples of popular and reliable mobile applications where you can store bitcoin:
- Bitcoin Wallet (Android, BlackBerry OS) – very first open source application recommended by the official Bitcoin website.
- Mycelium (Android) – allows you to bind a Coinapult account in dollars and buy coins for Fiat, leave announcements about the exchange.
- Electrum (Android) – provides the ability to backup and create a personal payment server.
- Blockchain (Android, IOS) – an application from Blockchain online service. Unlike the service, it stores keys on the user’s device.
Often, exchanges release applications to provide users access to their accounts from a mobile phone. In this case, control of the keys remains with the exchange, and the mobile application is used as an interface.
Usually, the personal computer on which you install special software is used by you for hundreds of other purposes, including active Internet surfing. In such conditions, infection of spyware and theft of your keys, and with them the coins, are not excluded.
Hardware wallets solve this problem. They are a device that looks like a flash drive, equipped with its own screen and buttons. Viruses will not be able to penetrate a separate device, therefore, such cryptocurrency storage is associated with users, as a way to store Bitcoin on a flash drive. For complete security, it is recommended to connect the device to a computer with a freshly installed operating system.
- Ledger supports bitcoins, XRP, Ethereum, Litecoin, EOS, Monero, Dash and a few more dozen coins;
- KeepKey supports Bitcoin, Dash, Dogecoin, Ethereum, Litecoin, and many ERC-20 tokens;
- Trezor supports Bitcoin, Litecoin, Zcash, Dash, NEM, Ethereum, Ethereum Classic.
A paper wallet is a hardware wallet for the poor. How to store bitcoins on paper? It’s simple, not coins are stored on paper, but keys, because they are just a sequence of characters. Pairs of private and public keys are generated using a special service and printed on paper.
Be careful when choosing a service for generation. The main thing is that he does not save your pair of keys and do not use it after you transfer money to a Bitcoin address. It is better to download a program from a trusted source for generating to a computer, disconnect from the Internet, generate and print the resulting sequence of characters.
A paper wallet is one of the places where Bitcoin is safe to store, but you should think about the safety of the paper itself. If you lose it, you lose money. Paper wallets are recommended to keep in safes, and also to multiply them in several copies.
Which is better to choose
The choice of which wallet to store bitcoins depends on the amount and purpose. The larger the amount, the more offensive it will be to lose. For solid accumulations it is recommended to use cold storages: paper or hardware. They are considered the safest.
It is also necessary to always have on hand a small amount of cryptocurrency for prompt payments. This is especially true for traders, whose activities account for seconds, and profit depends on the timeliness of the transaction. For such purposes, more suitable storage of the hot type.