Bitcoin Wallet

DEFINITION of 'Bitcoin Wallet'

A Bitcoin wallet is a software program where Bitcoins are stored. To be technically accurate, Bitcoins are not stored anywhere; there is a private key (secret number) for every Bitcoin address that is saved in the Bitcoin wallet of the person who owns the balance. Bitcoin wallets facilitate sending and receiving Bitcoins and gives ownership of the Bitcoin balance to the user.  The Bitcoin wallet comes in many forms; desktop, mobile, web and hardware are the four main types of wallets.

BREAKING DOWN 'Bitcoin Wallet'

A Bitcoin wallet is also referred to as a digital Wallet. Establishing such a wallet is an important step in the process of obtaining Bitcoins. Just as Bitcoins are the digital equivalent of cash, a Bitcoin wallet is analogous to a physical wallet. But instead of storing Bitcoins literally, what is stored is a lot of relevant information like the secure private key used to access Bitcoin addresses and carry out transactions. The four main types of wallet are desktop, mobile, web and hardware.

Desktop wallets are installed on a desktop computer and provide the user with complete control over the wallet. Desktop wallets enable the user to create a Bitcoin address for sending and receiving the Bitcoins. They also allow the user to store a private key. A few known desktop wallets are Bitcoin Core, MultiBit, Armory, Hive OS X, Electrum, etc.

Mobile wallets overcome the handicap of desktop wallets, as the latter are fixed in one place. Once you run the app on your smartphone, the wallet can carry out the same functions as a desktop wallet, and help you pay directly from your mobile from anywhere. Thus a mobile wallet facilitates in making payments in physical stores by using "touch-to-pay" via NFC scanning a QR code. Bitcoin Wallet, Hive Android and Mycelium Bitcoin Wallet are few of the mobile wallets. 

As for web wallets, they allow you to use Bitcoins from anywhere, on any browser or mobile. The selection of your web wallet must be done carefully since it stores your private keys online. Coinbase and Blockchain are popular web wallet providers.

The number of hardware wallets is currently very limited. These devices can hold private keys electronically and facilitate payments but are still in the development phase. 

Keeping your Bitcoin wallet safe is very crucial. Some safeguards include: encrypting the wallet with a strong password, and choosing the cold storage option i.e. storing it offline. 

 

RELATED TERMS
  1. Paper Wallet

    A paper wallet is an offline mechanism for storing Bitcoins. ...
  2. Trade Hill Exchange

    A Bitcoin exchange launched in June of 2011. Trade Hill Exchange ...
  3. Share Of Wallet - SOW

    A marketing term referring to the amount of the customer's total ...
  4. Mt. Gox

    One of the world's leading Bitcoin exchanges, launched in July ...
  5. Britcoin

    A U.K.-based Bitcoin exchange. Britcoin was the first Bitcoin ...
  6. Double-Spending

    The risk that a digital currency can be spent twice. Double-spending ...
Related Articles
  1. Trading

    Best Ways To Protect Your Bitcoins

    Just like any other valuable asset, its important to keep your bitcoins safe. Here are few ways to protect bitcoins from threats like computer failures, loss of passwords, and hackers.
  2. Insights

    How Bitcoin Can Change The World

    Bitcoin has the potential to not only create savings for consumer, but also to transform global transactions.
  3. Trading

    Beware of these Five Bitcoin Scams

    We look at five bitcoin scams and how to protect yourself from fraud.
  4. Trading

    Ways To Earn Bitcoins

    There are many ways to earn and own Bitcoins other than just buying them on a Bitcoin exchange.
  5. Trading

    The Strange New World Of The Bitcoin Exchange Futures Market

    We explain the basics of the Bitcoin exchange and futures market.
  6. ETFs & Mutual Funds

    Bitcoin ETFs: How Do They Work?

    ETFs offer a cost-effective, safe and hassle-free way to invest and trade bitcoins as stocks, without worrying about the security of digital wallets.
  7. Insights

    When Will Bitcoin Soar?

    We look at what determines the value of Bitcoin, the digital currency, and when it might take off.
  8. Investing

    Ways To Earn Bitcoins

    The most popular way to obtain Bitcoins is to buy them on a Bitcoin exchange. But that’s not the only way.
  9. Trading

    Benefits & Risks of Trading Forex with Bitcoin

    Want to trade forex using bitcoins? Don’t jump on the bandwagon until you compare the risks to the benefits.
  10. Trading

    How To Trade Forex With Bitcoin (XOM, EXPE)

    We look at ways to trade forex with bitcoin and the pitfalls in doing so.
RELATED FAQS
  1. How does a block chain prevent double-spending of Bitcoins?

    Find out how double-spending is prevented in the Bitcoin server and how transactions are posted and verified on the Bitcoin ... Read Answer >>
  2. How did Larry Page amass his wealth? (GOOG)

    Learn how Larry Page made his fortune by turning a college project into what would become one of the most recognizable companies ... Read Answer >>
  3. How do investors interpret the same store sales ratio when analyzing retail stocks?

    Examine the importance of the same-store sales ratio as a key equity evaluation metric utilized by investors interested in ... Read Answer >>
  4. How do I use an online security token?

    Learn about the most popular kinds of authentication tokens, what differentiates them and how to use them to protect your ... Read Answer >>
  5. What are the benefits of financial netting?

    Learn about the benefits of financial netting, including a reduction in settlement risks between counterparties with multiple ... Read Answer >>
  6. Why would someone change their Social Security number?

    Learn the reasons a person might choose to change his Social Security number, including identity theft and abuse, and discover ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center