You’re living under a rock, if you haven’t come across the word Bitcoin, despite all its popularity in the recent years. It is the latest technological trend that is shaping the world of digital currency. Although they do exist in a physical form, they’re not stored anywhere because they’re private keys that are primarily used to access your Bitcoin wallet.
If it’s already going above your head, we’ll narrow it down for you in this article. Read ahead to find out.
Types of wallets
There are various kinds of Bitcoin wallets, both online and offline. They are:
- Paper wallet: As the name implies, paper wallets are the wallets that comprise of the document that contains Bitcoin address and the private key. They’re often printed in the form of QR Codes which can be scanned to make a digital transaction.
- Physical Bitcoin: They’re physically available coins that are preloaded with a fixed amount of BTC. As long as the private keys associated with the bitcoins are safe, the amount inside it cannot tamper. To satisfy this purpose, they’re often provided with a tamper-evident lock.
- Mobile wallet: These types are wallets are the ones that are essential for people who undergo daily transaction. It runs like other payment applied on the Smartphone, which also stores your private keys. You can directly pay through the mobile app that contains your Bitcoin account.
- Web wallets: A third-party source generally controls them, and they’re generally online wallets. They work just like the mobile wallets, but with the use of web applications and internet or an Ethernet connection.
- Hardware wallet: It is a unique type of wallet that contains the account’s private key, inside a device reminiscent to a pen drive. It is voted as the most secure way of using a Bitcoin wallet.
Security of Bitcoin wallets
The security of your Bitcoin wallets depends on the type of Bitcoin wallet you’re using. Like mentioned above, the security of some are far better than the security of other Bitcoin wallets. Some of the problems that hamper the security of the wallet is mentioned below:
- Online or web-based Bitcoin wallets are generally at a higher risk of being exposed to malicious malware. Malicious software on the computer can harm the security and sometimes wipe out the coins and the BTC.
- A Trojan is used to encrypt all the files that are present in a hard drive of the computer. Once they’re installed, all the links for your wallets can be found in the same file. Once you know how much money is there in the wallet, it can be used against you to generate code for decrypting the wallet.
- Digital exchanges generally make off with your money.
- If you’re using a pen drive like device to store your private keys, then the chances of losing its hardware could be higher, which will lead to loss of millions worth of bitcoin currency.