Bitcoin is a digital system of payment it isdigital money. The system is peer to peer; it has no central authority controlling the process. Bitcoin works by sharing a public ledger referred to as the block chain. It contains all transactions details. This allows a user to verify and authenticate every transaction. Digital signatures called private keys protect authenticity of each transaction. Each private key corresponds to the sending address. Now this is where the significance of the wallet comes in, the private key is a secret code that is directly related to the Bitcoin address. The key is saved in your Bitcoin wallet.
What is a Bitcoin Wallet and Types of Wallets
There are several types of wallet. The first one is a software wallet or otherwise known as a desktop wallet. This type of wallet is installed on your computer or mobile device. You have complete control over this type of wallet, and your coins are safe. The other type of wallet is whereby you use a third party. These are web-based types of wallets. Online wallets are preferred by people who are always on the move and need to access Bitcoin wherever they are.
The security of your Bitcoin depends entirely on the company which will be holding your wallet for you. This means trusting them with your Bitcoin. A Bitcoin wallet is not to be confused as a storage place for your coins. You can further protect your wallet by encrypting your password. This adds an extra layer of protection against hackers and malware attacks. The other option you have is to use cold storage. This means not storing your private keys online but in the real world. This protects your Bitcoin from online intruders. Bitcoin is the future for online transactions. Set up your wallet today and enjoy the great benefits.