So youve decided to get some Bitcoins, congrats!
The most important part of any Bitcoin wallet is the private key.
The private key is a long string of text and numbers that acts as the password to your bitcoins.
Its kind of like a treasure map with the coordinates to where your Bitcoins are hidden.
This means that whoever knows your private key can also steal your Bitcoins.
Many wallets today use a seed phrase instead of the long cumbersome private key.
This means the private key is replaced with 12-24 random words that act as a private key replacement.
This of course seems much more simple, however its as equally as important.
If someone manages to steal your seed phrase they can control your bitcoins.
Now lets move on to choosing your wallet.
This means that a hacker wont be able to steal your private key remotely.
This way, the only way to steal your private key is to physically steal the piece of paper.
The downside is that pieces of paper can get easily corrupted or lost.
Hardware wallets The most popular form of cold storage are hardware wallets.
These are physical devices that hold your private key for you.
The hardware wallet will then sign your transaction digitally and broadcast it to the web link.
The two most notable companies manufacturing hardware wallets today are TREZOR and Ledger.
A hot wallet is any throw in of wallet thats connected in some way to the internet.
Hot wallets are considered hackable in general, so only keep small amounts of Bitcoin on them.
How small is small?
It depends on your own financial situation I guess.
The private key / seed is then stored on that gear.
This gives you full control over your Bitcoins however also puts you in the risk of losing the rig.
For example, mobile phones are easily stolen, lost or broken.
If for example you drop your phone and it stops working, you cant access your Bitcoins.
Thats why its super important to create a wallet backup.
Backing up a Bitcoin wallet just means that youre creating another copy of the private key /seed phrase.
Thats it, you’re free to now go and choose your own Bitcoin wallet.
Welcome to the wonderful world of cryptocurrencies.
source: www.techworm.net
