A technical definition of a What is a Bitcoin Wallet is digital currency that allows transactions to be processed and completed without the need of a credit card or a central bank system. Bitcoins are designed to facilitate Bitcoin users to send money over the internet simply and efficiently. It is usually a safe and secure method of carrying out online transactions.
A Bitcoin Wallet on the other hand refers to a file that contains a collection of private keys. These keys are designed to be unique for every Bitcoin user. They allow an individual to provide proof of the ownership for his or her Bitcoins. Every Bitcoin address has its own unique private key that is saved in the wallet (file) of the owner of Bitcoin balance.
Many people usually get it wrong that Bitcoin wallet contains Bitcoins. This is a misconception. Bitcoin Wallet never holds your Bitcoins. It is important to note that it simply contains private keys, which you require to provide in order to access your personal Bitcoin address. Access to your Bitcoin address allows you to complete transactions smoothly and effectively.
It is very important to secure and protect your Bitcoin wallet by encrypting it. By using a password to lock your folder containing your Bitcoin wallet, it creates an extra layer of security file. Although this password is not an ultimate protection against hackers, it makes it much more difficult for hackers to break into your wallet and access your private keys. Another alternative of enhancing security is through a cold storage. Cold storage is storing your private keys in the real world. A real world implies that hackers and malware are unable to get access to them online. This is the most preferred storage method by many Bitcoin users who have the majority of balances. They only transfer a small amount online when required.