You wouldn’t just leave all of your money lying around the house, would you? You depend on a wallet to organize your coins and cash and keep your earnings safe.
You should take the same approach with your Bitcoin investments. Digital cryptocurrency wallets help safeguard your coins so you’re the only one who’s allowed to access them.
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Not sure where to begin? Today, we’re sharing the ultimate guide on how to set up a Bitcoin wallet so you can get started right away!
What Is a Bitcoin Wallet?
Before we dive into how to create your own, let’s answer a basic question: What is a Bitcoin wallet and why do you need one? Put simply, Bitcoin is a form of digital currency.
As such, you can’t exactly store it in a traditional wallet as you would dollar bills. Rather, you need a dedicated online space reserved just for your crypto. A Bitcoin wallet is an electronic app that works like an online wallet, and you can only access it by using a private key.
You can use your Bitcoin wallet to send and receive Bitcoin. Within it, you’ll find all of the cryptographic data that your computer needs to process a crypto transaction. While some Bitcoin wallets are set up to only work with Bitcoin, you can find others that will accept other forms of cryptocurrency.
The Basics Behind Private Keys
Private keys keep your wallet safe. They’re unique codes that you must be able to enter if you want to transfer any amount of Bitcoin to someone else’s wallet.
If you’re sending Bitcoin, both parties are required to use private keys and they must be kept hidden. If you’re receiving Bitcoin, you’ll use public keys.
As soon as you create your Bitcoin wallet, you’ll generate what’s known as a seed. These are mnemonic phrases used to represent a series of numbers, usually consisting of around 12 to 14 words each. When it’s time to receive Bitcoin, your app will automatically create a fresh public key.
To secure your privacy, it’s best to use a new public key each time. Otherwise, someone could easily track your transaction history across the blockchain by following the same key for each transaction.
Doing so just requires refreshing your wallet each time you want to send or receive cryptocurrency. Once you do so and enter your seed combination, you should be able to access a fresh public key for your activity.
Note that this key isn’t stored in the Bitcoin themselves. Those coins are located on the blockchain. Rather, the wallet app that you use will store your private key, accessing it as necessary to complete a transaction.
Ready to download your wallet and start using it right away? Let’s take a look at the steps required to do so.
1. Choose Your Wallet
There are many different types of Bitcoin wallets on the market, and each has its pros and cons. Here are the most common ones to know.
If you use Bitcoin and your smartphone regularly, it’s smart to start with a mobile wallet. These are apps that store your private keys right on your mobile device, so you can access them at any time.
While these are convenient for conducting Bitcoin transactions on the go, they’re easier to hack than other alternatives. As soon as someone takes your phone, they’ll have access to all of your crypto data, especially if your app doesn’t enable two-factor authentication.
Byte Wallet is one of the top-performing Bitcoin wallets in this space, so check it out today if mobile accessibility is a top consideration for you.
With a desktop wallet, you’ll download and save your private keys on your computer. You can either save them on a hard drive or use a solid-state drive (SSD).
While these aren’t quite as convenient as mobile wallets, they’re more secure and harder to hack. If you’re used to logging into your computer to give and receive Bitcoin, this setup may be ideal.
Exchange wallets are also called hot wallets. With these, your private keys live on an online server. You don’t have direct access to them, but they’re expertly maintained by a third-party company.
As long as you’re using a device that connects to the internet, you should be able to access your exchange wallet. The issue here is data security. The third party has access to your funds, and anyone who hacks into their system only needs your email address and password to get the same information.
If you don’t mind giving up this level of control, it can be helpful to allow an expert to handle the fine-print details of each transaction for you.
Hardware wallets are considered the most secure and safest bitcoin cash wallet solutions, primarily because they aren’t connected to the internet. Instead, they store your private keys on a separate physical device, such as a USB stick.
When required, you can disconnect the USB from your device. You can also take it off of the internet.
Most of the time, these wallets run on open-source software. They’re designed to prevent your funds from transferring out of your wallet via plain text. You can also find models that use screens to amplify your privacy and confirm your identity.
For instance, some hardware wallets will create a unique recovery phrase that you’ll need to enter to confirm your Bitcoin transaction details. Only by adding that phrase on the screen can you move forward.
2. Install the Software
Once you know the type of Bitcoin wallet you want to use, your next step is to install it on your device. For example, you’ll add the Bitcoin wallet app to your smartphone if you’re using a mobile wallet. If you’re using a desktop wallet, you’ll add the software to your machine.
Most of these programs are free. All you need to do is follow the on-screen instructions to create your account and get started. During this time, you’ll set up the aforementioned “seed” phrase. You’ll need this to recover your wallet if you ever lose access to it.
Each provider will have its process to follow, but all of the steps should be simple. If your wallet doesn’t have an app, you should be able to set it up as an extension on your internet browser. This way, you can access it any time by entering a keyboard command.
3. Sending Bitcoin via Private Keys
Once your wallet is all set up and ready to use, the next step is to fill it up with Bitcoin! If you currently have cryptocurrency on an exchange or in a stock trading account, it’s best to go ahead and initiate a transfer. Unless you plan to sell your Bitcoin immediately, you should never leave them hanging out on an exchange.
Again, each system will have its protocols for this, so let’s use the mobile wallet as an example.
To deposit Bitcoin into your mobile wallet, you’ll begin by tapping on the app’s logo on your home screen. This opens the program and allows you to access your Bitcoin holdings. From there, you can look for a “Send” button or something similar.
Then, follow the instructions to send Bitcoin, including the prompts to enter your private key. Before you start sending recklessly, keep in mind that each transaction has an associated fee. Check with your provider if you plan to buy or swap one type of cryptocurrency for another directly within your wallet.
4. Receiving Bitcoin via Wallet Address
What if you want to receive Bitcoin, not send it? In that case, you’ll need to know your unique wallet address. This is a string of about 25 to 30 different characters, and you’ll have a different one for each type of cryptocurrency you have. This means your Bitcoin address will be different than your Ethereum address, which will be different than your Dogecoin address.
Find the “Receive” button in your crypto wallet. When you click it, you should be able to see your full collection of wallet addresses. You can use these to allow someone to send you Bitcoin, or to transfer Bitcoin into your wallet from another account.
Set Up a Bitcoin Wallet Today
Your last step is to keep your Bitcoin wallet secure! Some people choose to create a separate burner wallet for this purpose. This is a wallet used only for one transaction.
When you use it, the only funds at risk are those in that wallet. If you’re concerned about crypto security, you may prefer this more secure alternative. Now that you know how to set up a Bitcoin wallet, you’ll be ready to actively participate across the blockchain.
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