Introduction of Bitcoin Wallet

fiona December 15, 2018 No Comments

Introduction of Bitcoin Wallet

The bitcoin wallet is the place where Bitcoins are stored. It is the equivalent to the bank account since it consists of a number from where you can make transfers or receive them.

As big advantages compared to traditional bank accounts, Bitcoin wallets are created more easily and in addition, depends on the type of portfolio you use, will give you the opportunity to be the only one who can exercise control over that money.

What is the Bitcoin Wallet?

A portfolio of Bitcoins fulfills the same function as a bank account, store money. The operation of the portfolios can be based on two elements:

  • The public address
  • The private key

Basically, a wallet is the union of the two previous elements and, therefore, the type of wallet depends on the way in which the private key is stored. Therefore, there are some wallets that are safer than others, and wallets that are more comfortable or uncomfortable to use. Normally, the degree of comfort of use is usually inverse to security, as we will see later.

SEE ALSO:: Know Bitcoin from the Scratch

How Does the Bitcoin Wallet Work?

In theory, Bitcoins are not stored in any specific place because they are registered, in the form of transactions, in the chain of blocks within all the nodes or computers that configure the network.

To know the owner of Bitcoins there are public addresses that allow you to determine the number of Bitcoins that correspond to a specific portfolio. That is, the blockchain registers the Bitcoins that have sent or received a particular public address (a bitcoin wallet) and, therefore, at all times you can know the balance publicly that has a Bitcoin wallet.

To be able to carry out a transfer between two portfolios, you must use the private key, as it is the password that allows the owner to verify that the transfer has been ordered by him and not by another person.

Finally, if the key is entered correctly, the transfer is launched and through the chain of blocks, it is verified as correct and is considered valid. This system avoids fraud because for a transfer to be carried out between two portfolios there must be a consensus in the network, through the mining process that avoids fraud in transactions.

Knowing how a bitcoin wallet works are just as important as knowing how bitcoin works because it allows us to know the advantages that this monetary system offers us.

Types of Bitcoin Wallet

The only difference between one type of purse and another is how to store the private key. The purse consists of a public address and private key and, therefore, the place where we store the private key will determine the type of purse and the degree of security of that purse. The different types that there are currently are the following:

Online wallets

They are the most used, the easiest to use and the least safe. This type of wallet stores the private key of users on a server controlled by a company. That is to say, the client does not know or which has the private key of the wallet and, therefore, the responsibility for maintaining and saving that private key is the company that offers the wallet.

The great advantage of online wallets is the ease of use and accessibility. They are accessible from anywhere and allow payments and transfers to be made quickly. In my opinion, they are ideal to have a small amount and be able to operate quickly and comfortably, but not to deposit all the savings there.

This type of purses is offered by almost all exchange houses because when the purchase of Bitcoins is made they are automatically deposited in an online purse and then the user can choose whether to transfer them to another or leave it there.

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Categories : Cryptocurrency