A “Bitcoin Wallet” is a program, app, or other electronic service that manages one’s Bitcoin supply. It keeps one’s Bitcoins safe and allows one to easily send, spend, and receive Bitcoins from others. It also allows for bookkeeping including the ability to backup one’s Bitcoin data.
A wallet program generates and stores private keys, and communicates with peers on the Bitcoin network. The first wallet program, called Bitcoin-Qt, was released in 2009 by Satoshi Nakamoto. It similar in concept to an online bank account but even simpler to use. When someone sends you money your wallet serves as the address they need to send it to you. Sending and receiving Bitcoins is as easy as sending and receiving emails.
There are a number of types of Bitcoin wallets.
- A local wallet which is installed on your computer
- An online wallet (the largest provider of online wallets are from Blockchain .info, but they are also provided by a Bitcoin exchange or marketplace such as Cryptsy or Coinbase or through )
- Offline wallet, either on paper or on an offline disk storage device
- Wallets on one’s smartphone or other mobile device. (One can exchange/pay bitcoins in stores by scanning a QR code or using NFC “tap to pay”)
Arguably the most important bitcoin wallets are those for mobile apps as they provide users the most flexibility in terms of easily sending and receiving Bitcoins as well as ability to make Payments at brick and mortar stores. However, as they are portable, and if stolen a user would lose all their Bitcoins, it is advised to only hold smaller amounts of money on a mobile wallets.
Computers too, can be hacked which makes them vulnerable to having wallets stolen. Users of Bitcoin wallets on their computers are advised to encrypt wallet files to prevent thieves from accessing the Bitcoins.
Learn more about bitcoins and other digital currencies on the DC Magnates resource portal
