Bitcoin or cryptocurrency is not a buzzword anymore. Everyone may not possess it, but almost all of us know what it is. Unlike actual paper and metal currency, bitcoin is a digital currency that resides on the blockchain. You can own it by transferring it to your anonymous bitcoin wallet.
Some may say, what kind of wallet is it, or is there a wallet for bitcoin? To answer the question, yes. There is a special kind of wallet for bitcoin. Let’s read ahead and uncover what digital wallet can be used for bitcoin transactions.
What is a Bitcoin Wallet?
A bitcoin wallet is used to make bitcoin transactions easy for users. Basically, a bitcoin wallet is a wallet that stores the private keys that are required to authorize bitcoin transactions. Don’t worry! You don’t have to do any complex brainstorming.
The wallet automatically signs the outgoing transactions with the private key and also creates wallet addresses. Wallet addresses are used for receiving change and bitcoin itself. Bitcoins are never stored in the wallet but are just private keys.
What Digital Wallet Can Be Used For Bitcoin Transactions?
Well, various types of bitcoin wallets can be leveraged to conduct bitcoin transactions. Here are some of them!
This is the most common type of anonymous bitcoin wallet as it is used as an app on the smartphone. The cool feature about this wallet is that you can use it on the go to pay, receive and trade bitcoin. All confidential information, like private keys, public keys, etc., is stored on the wallet itself.
These wallets leverage the power of simplified payment verification technology, and some wallet apps are also equipped with near-field communication technology. So, instead of tapping on your phone screen, you can tap the phone on the terminal to pay.
These are also known as exchange wallets. Web wallets store the private keys of the users on an online server. These servers are always online, making it easy for users to pay, receive, and trade bitcoin anytime, just like the mobile wallet.
The drawback of this wallet is that all of your critical information (private keys) is with the service provider or the exchange. If a cyberattack happens, all of your data and funds will be compromised. However, some exchanges offer insurance and backup funds to repay if any mishap occurs.
This anonymous bitcoin wallet is downloaded and installed on the desktop. Unlike mobile and web wallets, these wallets keep your private keys more secure. However, it is still connected to the network; it can be hacked only if you do something. A desktop wallet is only vulnerable to a ransomware attack, for which you can prepare by making a backup.
It is ideal for trading small amounts of bitcoins.
These are some of the most common anonymous bitcoin wallets. There are also other wallets, such as hardware and paper wallets. These wallets are the most secure as they are not connected to the network.
So, bitcoin transactions depend on an anonymous wallet as it stores the private keys. When opting for a wallet, ensure that you have all the mentioned information in mind, as everything connected to the web is vulnerable to damage.