How to Store Bitcoins
What is a Digital Wallet?
A Digital Wallet is:
– Your personally controlled interface to the Bitcoin network
– equivalent to a bank account or leather wallet
– generates your private keys and public coin addresses.
– stores your private keys and addresses, not your actual coins
– allows you to spend your coins privately
– allows you to provide a public address so you can receive coins
– optionally, keeps track of your spending and depositing
– has a secure backup that can recreate your wallet on almost any other Bitcoin wallet software
Why Do I Need a Digital Wallet?
You need a digital wallet to safely store your Bitcoins.
What Kinds Of Digital Wallets Are There?
Where to Get a Digital Wallet?
There are almost too many digital wallets out there to list.
These are the digital wallets I use and trust.
Electrum is my desktop wallet. Electrum is an open source wallet and has been peer-reviewed many time. It is also an SPV wallet and does not contribute to Bitcoin network security nor does it validate my own transactions like a Bitcoin Full Node would
I do have a Full Node Wallet to improve Bitcoin Network security but I don’t send and receive many Bitcoins from that wallet.
I use a Ledger Nano S for my hardware wallet.
I encourage you to DYOR and select the digital wallet that best meets your needs.
OK, Now What?
You don’t really need a wallet for small amounts of Bitcoin that you purchase and keep on a reputable exchange.
What is a small amount? I don’t know – that’s up to you. If an exchange were hacked, how much would you be OK losing? Are you willing to pay the fees to move your Bitcoins from the exchange to your digital wallet?
You do need a digital wallet if you want to spend your Bitcoins privately. Spending your Bitcoins directly from an exchange leaves a KYC/AML trail. Spending you Bitcoins directly from your digital wallet does not leave this trail. Your Bitcoins transaction will still be publicly visible on the blockchain but requires a great deal of computational power to backtrack Bitcoin transactions. Even then, relating a Bitcoin address to your location or personal identity is not guaranteed unless you’ve published your wallet address.
You do need a digital wallet when you start to worry about your Bitcoins on an exchange.
You need a hardware wallet when you start to worry about your Bitcoins on your computer.
The Rules of Bitcoin
- Always talk about Bitcoin.
- Never talk about Your Bitcoins.
Mastering Bitcoin – Andreas Antonopolous
Curated Bitcoin Resources by Jameson Lopp
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