Ways to store your bitcoins

Last Updated on: 21st November 2023, 10:06 pm

Since the time of its introduction, the bitcoin technology has shown an exceptional rise in its popularity and use. Bitcoin is a cryptocurrency that is decentralized which means that it does not come under the control of the government or the bank. This gives the bitcoin users good control over the transactions they make, as now they are not required to take approvals from external agencies. Moreover, when these transactions are recorded in the form of blocks which are then added to the blockchain technology, the identity of the users tend to remain anonymous. 

Although the bitcoin users enjoy control over their transactions and are not answerable to anyone, while remaining anonymous at the same time, they however have to face many issues relating to the safety of the technology. With no banks or the government body involved, the bitcoin technology suffers the disadvantage of not being very secure. Along with the popularity bitcoins have also attracted many hackers and online thieves who are good at stealing the online funds. Users who have recently joined this network are unaware of these security issues, and therefore fall prey to the scams of the online hackers.

Therefore bitcoin users are encouraged to remain alert about their transactions and the bitcoins they own. There are many ways to keep your bitcoins secure and just like we store our cash in wallets, similarly we can save up our bitcoins in digital wallets too.

Digital wallets can be internet based in which the bitcoins are saved in online wallets which can then be accessed by downloading the respective apps on the user’s phone or personal computer. On the contrary there are wallets that do not need the internet to store bitcoins. In such cases, the wallet is accessed using a private key that can be printed down on a paper and kept under the security of lockers or the bank.

What is a private key?

A private key is a form of cryptography that is used to encrypt or decrypt codes and thus enable bitcoin users to get access to their wallet. Without this security code, the bitcoin users cannot access their wallet or the bitcoins stored in them. Therefore, the users run the risk of losing their private key and ultimately lose their bitcoins too. Users can also lose their wallets if their computer or the hardware breaks down or even worse losing the computer or getting hacked.  In order to find out more about this technology of bitcoin and its trading system open bitqz in new window.

Let’s look at some of the safest ways to store your bitcoins.

Hot Wallets: 

Hot wallets are basically online wallets that can be made accessible using the internet. Since internet services are required for this wallet, devices such as computers and smartphones are needed to set up this wallet. With the easy access of such devices and the speed at which the internet allows transactions to be made most users find hot wallets to be very convenient in use. However, despite its convenience hot wallets run the risk of being less secure as hackers can easily hack into the wallet since everything is internet based. 

Since these wallets are not highly secured, therefore it is more reasonable to use this wallet for small quantities of bitcoins. This is because, if in any case the wallet is hacked then the users lose all of their bitcoins and their access to the wallet too.

Cold wallet

A safer option to store your bitcoins is by using a cold wallet. Unlike the hot wallet which is mostly dependent on the internet, a cold wallet has whatsoever no connection with the internet. A cold wallet is therefore spared from the risk of being hacked by an online hacker and is considered to be more secure. These wallets function by securing the address of the user and the private key of their account in a way that is not connected to the internet.

The most common form of a cold wallet is a paper wallet in which the public and private keys can be printed out and kept as a hardcopy. The users then store this paper in a secured bank safe. 

Besides cold and hot wallets, users are now given the opportunity of buying physical bitcoins, although they might have to pay slightly more while purchasing the coins owing to the cost of their manufacture.

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