A beginner's guide to Bitcoin Wallets

Bitcoin (BTC) is a pretty unique kind of money that works solely digitally. Unlike fiat currencies, it doesn't have any paper bills and coins. This dominant crypto is kept in very special storage called digital or Bitcoin wallet, which comes in various forms.

If you're entirely new to the crypto sphere and are searching for a suitable wallet where you can store your crypto funds, you're in the right place! To help you decide and jumpstart your Bitcoin adventure, here's a list of different types of BTC wallets and how they work.

Different types of Bitcoin wallets

Earlier, we've mentioned that BTC works purely digitally. This means you can utilize its notable uses through your smartphone or personal computer as long as your device is connected to the Internet. Now, the appropriate follow-up question to that is, "how?" Interestingly, Bitcoin wallets serve as a powerful means to utilize this digital coin.

You can find lots of BTC wallets on the web, which fall under the categories of hot and cold wallets. Let's further explore each of these.

Hot wallets

Bitcoin wallets that fall under this category are the ones that only work if they're connected to the Internet. Simply put, hot wallets are online wallets. They're convenient and easy to use, which is why they're known to be the most popular type of BTC wallet in the crypto sphere. What makes them more fascinating is that you can get them at very low prices, if not for free. Hot wallets come in two types:

• Mobile wallets
  This type of Bitcoin wallet is ideal for people who use their crypto to shop online, transfer funds, pay bills, and make other payments and transactions. Mobile wallets allow you to send, receive, store, and track your crypto funds in real-time. You can install it on your smartphone, which means you can access and bring your crypto anytime and anywhere you want!
  
  On the flip side, since mobile wallets are accessible online, they're more prone to cyberattacks. This is why it's important to scout for reputable mobile wallet providers that offer robust security features.
  
  
• Web wallets
  Web wallets are accessible through web browsers. Usually, crypto traders access their web wallets when they sell or buy Bitcoin and other cryptocurrencies. This type of hot wallet comes with a mobile version, making it handy and efficient to use.

Cold wallets

This type of BTC wallet can't be accessed via the Internet. Cold wallets are physical devices where you can securely keep your Bitcoin funds. Here are its three most popular types:

• Desktop wallets
  If you want to store your hard-earned BTC on your home or personal computer, a desktop wallet is among your top options. It works as an address where you can receive BTC funds sent by your trading partners or friends in the crypto sphere. Desktop wallets also give you full control and access to your BTC and private keys, which is another excellent way to secure your crypto assets.
  
  
• Hardware wallets
  These are portable devices, such as Universal Serial Bus (USB) flash drives and other external devices. Hardware wallets use strong password combinations or Personal Information Numbers (PINs) to prevent instant access to your BTC funds. Since hardware wallets can't be accessed through the Internet, they aren't susceptible to cyber attacks.
  
  However, if you aren't careful, your hardware wallet can be misplaced or physically stolen from you. When that happens, hackers will make every possible effort to acquire your stored BTC funds. That's why it's essential to keep it in a secure place.
  
  
• Paper wallets
  You've read it right! This type of cold wallet is literally a piece of paper where your public address and private keys are printed out. Paper wallets aren't connected to the Internet, making it highly unlikely to be hacked by cybercriminals.
  
  However, this is also deemed the riskiest type of Bitcoin wallet in the crypto sphere. Imagine the pain you'll experience if your paper wallet happens to be blown by the wind, crumpled, or splashed with water or your favorite drink. You'll likely have to wave goodbye to your hard-earned BTC. Ouch.

But wait, there's more! Aside from the famous hot and cold wallets, there's also this storage called a multi-signature wallet. It generates and combines multiple unique signatures from a group of people who can access the funds, which are used to sign documents and transactions.

Hot or cold wallet: Which one should you get?

Let's have a quick recap before we end. Bitcoin wallets come in two categories: hot wallets accessible via the Internet and cold wallets or physical devices where you can keep your funds secure. Each type has its fair share of benefits and drawbacks, which is also why it's important to consider having multiple backups for your crypto wallet.

If you're still having a hard time deciding which wallet you should get, you can ask yourself questions like, “How much am I willing to pay for a Bitcoin wallet?” or “How much storage space do I need?” It all boils down to what best fits your crypto needs. Another crucial thing you should never forget is this: only you must have access to your BTC. Take your time in choosing a reliable and highly reputable Bitcoin wallet provider.

Good luck on your crypto adventure!

Sponsored by Paxful

This article has been contributed on behalf of Paxful. However, the information provided herein is not and is not intended to be, investment, financial, or other advice.