The first step in using Bitcoins for your online purchases is to create a Bitcoin wallet. A Bitcoin wallet is the only way to access your coins. Similar to other encrypted documents, Bitcoin wallets are opened using private and public keys.
In the language of Bitcoins, a private key is a password only you know that is used to secure your Bitcoin wallet. A private key is used when you want to send Bitcoins to make a purchase. A public key is a published key within the Bitcoin network that is used to receive Bitcoins, like in the case of a sale.
Things to Consider When Choosing a Bitcoin Wallet
Consider your Operating System.
Select the type of wallet that is compatible with the operating system that your PC or smart phone is running on. Some wallets are selective while some can run across all platforms.
Consider your needs.
Wallet features vary and answer different needs. There are two general categories of Bitcoin wallets: the hot wallet and the cold wallet. Hot wallets are maintained online. Cold wallets are stored offline in devices similar to a USB. A hot wallet is good for everyday personal use because you would only keep only a few bitcoins to purchase goods and services. A cold wallet is best used as a back-up wallet to keep offline to store your Bitcoin savings and bigger funds. Other kinds of wallets within these two sub-categories are:
- Software wallets: hot wallets that are downloaded from the web for use on your PC or smartphone
- Web wallets: hot wallets that you can access from any device with an internet connection hosted by a third-party service provider
- Hardware wallets: cold wallets that are stored offline in a USB-type of device
- Paper wallets: cold wallets that are printed on paper for safe storage in a safe deposit box
Consider the security features of the wallet.
Here are other features to look into when deciding what kind of Bitcoin wallet to maintain:
- Security protocol: web wallets with HTTPS have stricter security protocols
- Reputable: transparency of provider operations and provisions for user anonymity are some factors that can sway your decision to which Bitcoin wallet to choose
There are now a variety of Bitcoin wallets for you to choose from. Check forums for user experiences and feedback before you decide which Bitcoin wallet to set up.