What is a Bitcoin Wallet?
A Bitcoin wallet solves the problem of where to keep your virtual, invisible currency. If there is nothing physical backing Bitcoin, where can you keep it safe? It is a vexing problem, so there are lots of companies trying to solve the problem with hardware wallets, as well as mobile wallets and web wallets.
A Bitcoin wallet is the equivalent of a Bitcoin bank account. It is a secure place for your virtual currency to live. It can allow you to receive bitcoin, store bitcoin and send bitcoin to others. Do you want a hot wallet or a cold wallet?
A hot wallet is a Bitcoin wallet that you install on your computer or mobile device. If those devices are connected to the Internet, those wallets are hot and always in danger of being hacked. The security needs to be tight if you want to think about using a hot wallet exclusively.
Cold wallets are hardware wallets like USB sticks or solid state drives that you can disconnect from the internet. Offline storage keeps your coins off the network and out of the reach of hackers.
If you are just starting out with cryptocurrency and just buying a little bit to get your feet wet, it makes sense to stick with a web wallets like Coinbase. That account gives you access to Bitcoin and allows you to send and receive the currency over email. Once you get going and learn what the currency is all about, you can then invest in a hardware wallet and move your coins off the net.
Then there is software that allows you to install it on a desktop computer and lets you store your coins directly on your hard drive. There are many programs available for Linux and Windows, two of the most popular operating systems in the world. And the security is more robust than a web wallet. You can keep your Bitcoin safe and you can take away a phrase or password that allows you to recover your Bitcoin address if your computer or hard drive goes bust.
No matter what kind of wallet you choose, you need to make a philosophical decision here. There is no turning back. Once you buy into Bitcoin, you are joining the digital age. You need to be OK with the fact that there is no central authority backing this currency. Your actions and your mistakes will determine the efficacy and security of your holdings. You need to understand how radically different this is from other forms of currency these days. If you are willing to take the risk, then you could be at the forefront of a massive shift in how people conduct business online.
The cryptocurrency movement has been described as a fraud by many money men on Wall Street. They extol the virtues of the blockchain for revolutionizing transaction verification and speed, but they are worried about the actual currencies, like Bitcoin, Litecoin and Ethereum. The hand wringing is well founded, because many cryptocurrencies are just plays for a new kind of tech fundraising. But Bitcoin was first. And it seems very unlikely that the currency will just go bust and die out one day. Once can never know but it is very unlikely that Bitcoin will cease to exist one day. But as a novice Bitcoin wallet seeker, you want to be aware of all sides of the debate.