A Bitcoin wallet contains your public address and private key, allowing you to buy, sell, exchange, and trade Bitcoins. You can think of a Bitcoin wallet like an email account: it stores information (bitcoin) and allows you to send and receive information (bitcoin). Continuing with the email analogy your public address would be the equivalent of your email address. A “wallet” is basically the Bitcoin equivalent of a bank account. It allows you to receive bitcoins, store them, and then send them to others. There are two main types of wallets. A software wallet is one that you install on your own computer or mobile device. You are in complete control over the security of your coins, but they can sometimes be tricky to install and maintain. A web wallet or hosted wallet is one that is hosted by a third party. They are often much easier to use, but you have to trust the provider to maintain high levels of security to protect your coins. There are four main wallets that we recommend for beginners.
Your choice of Bitcoin wallet will determine how safe and secure your coins are. It may determine how much you pay in transaction fees and whether you get any choice in the matter (you can actually submit transactions with no fee at all, it’s just that they will take ages to get processed by miners and may even be ignored forever in extreme circumstances). It will determine whether you can access your coins from anywhere or just your home computer. Because your wallet is the place you go to whenever you want to use Bitcoin, it will also be the biggest factor in your day-today experience – whether using Bitcoin is easy or hard, fun or unpleasant. And of course there are also many wallets which will offer you extra bonuses for Bitcoin games and advanced features which you won’t get elsewhere. As a result, getting the best wallet – or more accurately the right wallet for you – should almost certainly be your highest priority once you’ve decided to start using Bitcoin.
In contrast with the Software wallet, Web wallets allow you to access your bitcoins through internet with the fact that there will be less effort for you to protect your wallet. Take note that when you store your bitcoins in this type of wallet, you are giving the website the power to protect your bitcoins from theft be it internal or external. Hence, you must choose a web wallet that has already gained reputation and offers both convenience as well as security. Bitcoin sites that offer web wallets are BlockChain, Coinbase, and Electrum.
There are also several things you must learn and understand to keep your bitcoins secure in the virtual wallet. First is you must be careful with online wallets and exchanges as you have less control over your bitcoins’ security there. You must also backup and encrypt your wallet as well as use offline wallet for savings as it provides the highest level of security.
We also recommend a few other wallets, but not for the beginning Bitcoin user. If you are up for more of a challenge, Armory is a good choice for those requiring the highest possible security, and the original Bitcoin-Qt client is also trusted and worth learning how to use.