What Is a Bitcoin Wallet, and Do I Need One?

What is a Bitcoin wallet? Bitcoin coins in wallet on yellow background

With the growing popularity and regulation of digital assets, the future of Bitcoin as a legal tender is inevitable.

Bitcoin was the first digital asset created and remains the most popular in the world. Between January 2017 and March 2021, Bitcoin’s value increased by 5809%. Currently, there are 68.24 million active blockchain wallet users throughout the world.

What is a Bitcoin wallet? More than that, what is Bitcoin? We are going to answer these questions and more.

 

What is Bitcoin and How Does Bitcoin
Work?

Created in 2009, Bitcoin is a digital currency that is free of bank oversight, government oversight and central control. It is dependent upon peer-to-peer cryptography and software, with public ledger records maintaining all Bitcoin transactions in servers worldwide.

Bitcoin can be used when booking hotels on Expedia through Travala.com, or shopping on websites such as Overstock.  As Bitcoin is not connected to any specific country or regulation, it is popular as an investment.

Each Bitcoin is virtual money created through the science of making and breaking codes. There is nothing you can hold in your hands.

As Bitcoin is used and transferred, those transactions are recorded in a blockchain, also called a distribution ledger. The ledger is public information, showing the history of where that particular Bitcoin has electronically travelled.

 

What is a Bitcoin Wallet?

Just like a standard wallet holds your regular currency, a Bitcoin wallet stores your cryptocurrency. When you purchase digital currency, you have the option of leaving “keys” to your Bitcoin in your account as a way of storage. While your key can be used as a wallet, it is the equivalent of allowing others access to your debit card or bank account. To control your keys, you need a Bitcoin wallet.

The Bitcoin wallet stores information about your public and private keys. By using the wallet, you can receive or send your Bitcoin but keep your key information private.

There are two types of Bitcoin wallet. One is a hot wallet, which is software connected to the internet. The other is referred to as cold storage because it is completely offline.

The cold, or offline, method of storage is popular with investors who plan to hold their Bitcoin for a longer period and want this higher level of security.

A hot, or software wallet, is easier to use if you frequently use your Bitcoin. It is equivalent to the simplicity of having an online bank account. This is the best Bitcoin wallet if you are looking for ease in making frequent transactions using Bitcoin.

 

MIGI’S Involvement

When starting out, many people leave their Bitcoin stored in “keys” on the exchange platform where they obtained the currency. While these platforms offer base levels of security, you are entrusting a third party with your private keys, which are the access to your currency.

The most secure storage strategy is to decide what Bitcoin wallet is the best option for you, based on the intended use of your Bitcoin. Investors may find cold storage works well for them. Those who plan to use Bitcoin frequently for transactions may opt for the easier-to-access hot storage.

 

The Importance of Bitcoin Wallets

Now that you know the answer to “What is a Bitcoin wallet?”, you may be wondering about its importance. Whether you are buying Bitcoin for transactions or investing in Bitcoin, a Bitcoin wallet provides protection from possible cryptocurrency exchange hacks. The wallet also protects you from potential exchange freezes on your accounts.

Mawson Infrastructure Group provides a bridge between digital and traditional assets and markets. We have more than 15 years’ experience dealing with digital currency technology and funds management and can assist our investors with global intelligent investment solutions, making the process easy and smooth.

WE ARE LIVE
NASDAQ: MIGI

Mawson is listed on Nasdaq under the ticker MIGI, giving investors of all sizes easy access to the performance of digital mining.
Share article
Sign up to the newsletter
Sign up to the newsletter