Like a physical bank account or wallet, you need a place to store your Bitcoins after you buy them.
Bitcoin is stored in a digital wallet, a type of computer software that connects to the Bitcoin network. Just as a bank card has an account number, a digital wallet has a unique address that you can share with others when you make a transaction.
This unique address is a short, usable version of your public key. It consists of 26-35 random alphanumeric characters and is usually displayed as: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa.
It is worth noting that all letters and numbers are important in this direction. Be sure to check your Bitcoin address before sending or receiving money.
Keep Bitcoin’s private key secret
In addition to the public key, the Bitcoin address also has a private key. And, as the name implies, this key should not be shared with anyone. Anyone with access to your private key can easily access your wallet and steal your money. Similarly, if you keep your private key secure and can’t lose it, it’s probably impossible to get Bitcoin back. An easy way to understand public and private keys is to think of them as your home address. Anyone can see it and use it to send a courier, in this case a transaction. Your private key is like the key to the door of your home. This is something you only want to own and prevent others from accessing your digital wallet content.
The private key is used to verify that you are the owner of the public key. It gives you access to your wallet and records transactions. Some wallets will automatically generate a secure seed phrase. A set of words that you can use to unlock your wallet if you lose your key. Print this phrase or write it on a piece of paper and keep it in a safe place. Never take keyword photos or screenshots.
Read more: 4 ways to be cryptographically secure
Bitcoin wallet type
Like bank accounts, there are different types of wallets for storing Bitcoins, each with its own strengths and weaknesses. In a broad sense, Bitcoin wallets come in two main categories.
Hot Wallets-These types of Bitcoin wallets are connected to the internet and are usually available online or on your smartphone. Cold Wallets-These types of Bitcoin wallets are not available on the internet. This often includes physical devices (such as USB sticks) that can securely store Bitcoin and other cryptocurrencies offline. Warm purse
Although relatively insecure, hot wallets are the most popular in the cryptocurrency world because of their convenience. This means that people can quickly access and exchange funds because the active wallet is already connected to the internet. This is important if you want to trade quickly when the crypto market is moving. Popular examples in this category include mobile wallets (eg BitPay), web or online wallets (eg Coinbase), and desktop wallets (eg Bitcoin Core).
When you sign up for the cryptocurrency trading platform, a web portfolio for storing Bitcoins will be created automatically. One of the drawbacks of using a web portfolio on the Exchange platform is that the private key is held by a third party. Do you remember the analogy of the front door key? Imagine someone now has the key to your home. If desired, the key owner can decide to lock the key. Or, if the owner hands the key into the hands of a malicious person, someone can enter it without their knowledge.