What is a wallet and why you need one
A bitcoin wallet is a piece of software that contains the “keys” and the address that allows you to send and receive bitcoins.
In the same way that Paypal uses an email address, the bitcoin protocol uses an address like 1JArS6jzE3AJ9sZ3aFij1BmTcpFGgN86hA extracted from the public keys stored in your wallet.
In this section we’ll talk about the main types of wallets and how to create one step by step with blockchain.info.
Types of Bitcoin Wallet
Generally speaking, there are four types of bitcoin wallet:
The most used and the easiest to set up.
It’s accessible through your web browser and it’s stored in the servers of the service provider.
It works in the same way as typical email clients, like Gmail or Hotmail.
They are installed on your computer and allow you to fully control the wallet because private keys are stored locally.
There are two types:
Full Clients, which download the entire blockchain and Lightweight Clients, that store the private keys locally but they don’t download the entire blockchain, accessing to it through proxy servers.
They can work as Full Clients, Lightweight Clients or Web Clients.
Some of them are cross-platform, linked with web or desktop clients, sharing the same source of bitcoins.
As pendrives, paper wallets or some other device types.
How to Create a Bitcoin Wallet with Blockchain
The easiest and fastest way to get started in the bitcoin world is by creating a web wallet. There are several well proven providers such as Coinbase or Blockchain.
The first thing to do when receiving bitcoins in your wallet is to know which what your address is.
You can see it in the control panel of your wallet as a QR or as an alphanumeric code. Share it with the people you want receive bitcoins from.
To send bitcoins you must add an recipient address for which you want your bitcoins to be sent to, then select the amount before verifying and confirming the transaction.
About commissions, confirmations and thieves
Although compared to the traditional banking system operations bitcoins are much cheaper, faster and safer, that does not make them free, instant or impossible to intercept.
When sending bitcoins you will see that the amount received is slightly smaller than the amount sent.
These fees are the incentive for miners to provide computing power to the bitcoin network and keep the system running.
You can adjust the commission when sending bitcoins, but keep in mind if the commission set is very low, the transaction will take longer to be confirmed by the network.
To avoid fraud, transactions in the bitcoin protocol must be confirmed by the network. The system is designed so that each block of transactions is mined every 10 minutes.
Both the bitcoin protocol and the majority of wallets are equipped with security layers that prevent your money is accessible to “foreign users” with ease.
Other ways to store your bitcoins
You don’t usually carry $ 3.000 in your pocket, right? The same applies to bitcoin. You shouldn’t store all your bitcoins in the same place.
There are several ways to do this and most of them free or at a low cost.
Two of the most common are:
Cold Storage: Cold storage refers to you keeping your bitcoins offline. This can be done in different ways, as in servers disconnected from the network, USB flash drives or paper wallets.
Creating other wallets: You can create as many wallets as you want and store in them the bitcoins you have. A common practice is to deposit a certain amount in the wallet more used to operate and leave the bulk of your bitcoins in another.