A Bitcoin wallet address is equivalent to a bank account for tangible cash. In bank accounts the money is deposited, withdrawn and transferred to other users. Same is the case with bitcoin wallets. These wallets are used to store/withdraw bitcoins and transfer them to other users. There are three major types of bitcoin wallets: web wallets, software wallets, and mobile wallets.
Also known as “eWallets” or “browser-based wallets”; web wallets are the easiest to protect and give you complete freedom to use/obtain bitcoins.
Some of the examples of web wallets are:
- Green Address
Software wallets are installed on your PC. The users have complete control over Software Wallets and are responsible for bitcoins’ protection and backups.
Some Examples of Software Wallets:
- Bitcoin Core
- Green Address
The users with Mobile Wallets have the freedom to store bitcoins on mobile devices. Mobile Wallets are simple and easy to use while transferring coins. All a user has to do is to scan the QR code using “tap to pay”.
How Do Wallets Work?
Each Bitcoin wallet comes with a private key. The key allows a user to spend the coins. It’s usually the owner only who knows about the key. However, if you are not careful enough with protecting the key, there is a huge chance that someone else will be able to figure it out and spend your coins.
What Are Some of The Tips to Keep My Bitcoin Wallet Secure?
As mentioned above, the key-protection should be your top priority while using online Bitcoin wallets. Otherwise, someone else could easily hack into your account to steal your coins. To make sure your wallet is well protected, follow the tips given below.
Weak passwords are easy to crack. There are several programs that run different patterns, names, and combinations to crack these passwords. To make sure your password is resilient to these attacks, do not use commonly used patterns or names. Instead, go with the strings of random letters, numbers, and symbols.
Multifactor Authentication is an additional security authentication to your password. This could be something like a favorite quote, secret question or a captcha.
Private Key Encryption:
Encrypt your private keys. A private key in plain text is easy to guess and easy to access. So, make sure your key is encrypted.
If Possible – Use Open Source Software:
Use open source software where possible as it gives you the freedom to review the source code and ensure it does what it says.Moreover, an open source software is quick to fix the security laps than closed source software. A good example of open source software is Linux which is used by most of the world’s financial system.
Lastly - Keep Backup of Everything:
Keep backup of your private keys and every single information in your wallet. Having a backup is of great significance. If your data is only stored in one hard-drive, and the drive dies, the information will be lost for good.