Just like a physical wallet which is used to store physical cash currencies, a Bitcoin wallet is used to store bitcoins. Not just bitcoins, as they are cannot be seen, but the collection of bitcoin addresses and each address has a private key attached to it.
Each private key is controlled by the person who owns the wallet hence it is vital that a strong password is used to protect it from being leaked to a third-party.
There are 4 main types of wallets: desktop, mobile, web, and hardware.
- Desktop Wallet: Desktop wallets are installed on a physical computer and give the owner of the wallet full control and responsibility for their wallet. The private keys associated with that wallet are stored on the hard drive of the computer on which the wallet was installed.
The funds in a desktop wallet can only be accessed from the desktop on which it was installed. Hence, if the hard drive should get corrupted and no backup is available, the bitcoins stored on the wallet will be lost forever. The use of a strong password is advised.
- Mobile Wallet: A mobile wallet is an improvement of the desktop wallet which is limited because it is restricted to one location. A mobile wallet has the same function as the desktop but it can be used on the go.
A mobile wallet can be accessed from anywhere and payments can be made from anywhere including physical stores by scanning QR codes.
- Web Wallet: Web wallets allow you to use your bitcoin from any browser or mobile device. It is different from the mobile wallet because you can send or receive funds from your browser and your private key security are typically managed by a service provider.
You do not have to worry about mistakenly deleting your bitcoin wallet as it is not stored on any physical device. Serious security measures should be taken in securing private keys because they are being stored online.
- Hardware Wallet: A hardware wallet is a type of physical device that is made specifically for the storage of bitcoins. They are one of the safest types of wallets because they need the minimum amount of software to be able to store bitcoins hence they are not prone to attacks from malicious users.