Bitcoin is a modern cash analogue and, each passing day, the number of companies which takes bitcoin as payment grows. We already know how they are created and what is the basis for how they work, but how can we store them? We keep cash in a wallet, and with bitcoin it works similarly, except that bitcoin-wallet is normaly digital.
To pay by bitcoin you need to know 2 keys. the first key is a long string expression, for example:
2GN87dnht3Y9VJds5T2d4iUQpEvVHuFvwx. This is the number of your wallet, you need to know it for transfer bitcoin. That number corresponds to more long expression (secret key), for example:
Z1fuehB3ojHs7Rlk237fBhFKdn39tLcnfyhst5y793hdnb7y. This key only you know and it need to make a payment. Such complexity of the key is needed to guarantee that there is no way to hack it.
It should be stored somewhere. So there are several types of wallets for storing keys:
The best way of security is to install special software on your computer. You don’t worry about the file access keys, because it is stored locally.
Wallet downloads all the blocks and verify their authenticity. We recommend you to make a backup copy of the file which hold the keys. So you have to understand the advantages and disadvantages of the programs-wallets. Some people keep the entire transaction log (blockchain) on the computer, others, to conserve resources, store these data on a remote server. You should also pay attention to the level of protection.
If you are not at home and you need to pay for something by bitcoin you will not be able to use the wallet installed on your computer. So mobile wallet installs and runs as an application on your smartphone. Mobile wallet can store secret keys, and allows you to pay directly from your phone.
Technology for use NFC ( function smartphone to pay for kesaniemi smartphone) is being developed now.
Web wallet stores your secret keys in the Internet – on the server which is managed by some company. If it’s necessary to make a payment from a specific device this server replicates the key to pay on the device.
With this option there is no need to download and store volume software on your device and you can access your bitcoins from anywhere.
Also online services provide additional services such as transfers between users, address book, notifications, and much more.
The main disadvantage of this option is low security, especially the security in this case doesn’t depend on you but on your chosen service. But until you learn how to protect your bitcoins, storing them on a dedicated server will be more secure. We recommend you to use such services for small amounts.
Hardware wallet is a special device with the function of the secure storage of private keys and payment.
Gavin Andrese, the lead developer of the Bitcoin digital currency project, working upon secure: “Hardware devices like the TREZOR which cannot be infected by malware will make holding bitcoins as easy and secure as holding paper money. They are an exciting step in the evolution of Bitcoin from an experiment for geeks to a payment system anybody can use.”
IT IS IMPORTANT Bitcoin is different from what you know and use every day. Before you start using Bitcoin for any serious transaction, be sure to read what you need to know and take appropriate steps to secure your wallet. Always remember that it is your responsibility to choose your wallet carefully and adopt good practices in order to protect your money.
- Don’t tell your password to anyone.
- Use different passwords for all wallets.
- Immediately change the password if you suspect that it was identified by someone.
- Make sure that your computer is protected with a good reliable anti-virus.
For reliability, you can store bitcoin on your computer offline or on a special device called a bitcoin-purse hardware. This mode is called cold storage. The keys are stored offline, so they can’t be stolen by anyone else on the Internet.