How to create a bitcoin wallet: Instructions on how to open and choose a wallet for storing cryptocurrency Bitcoin (BTC)
A Bitcoin wallet is needed to manage cryptocurrency assets – receive them, transfer them, track the balance. It can also include additional features such as a trading exchange. In any case, a wallet is software, without which interaction with cryptocurrency is impossible.
Today, the editorial staff of Btcnewsweb.com offers to learn how to create a Bitcoin wallet – how to choose and protect it so that assets are always in maximum safety.
What is bitcoin wallet
A Bitcoin wallet is software that provides communication with the blockchain (the network within which the cryptocurrency operates). Allows you to send and receive transactions by entering information about them into the blockchain.
The peculiarity of such a wallet is that it does not store the actual coins, but the keys and transaction history. A balance is formed based on the history of all incoming and outgoing transactions. Keys are cryptographically encrypted and come in two flavors:
✅Closed. It is needed to access funds and sign transactions at the time of their sending, so that the blockchain “understands” that the funds being sent really belong to you. Such keys in base58 encoding begin with the Latin letters “K” or “L” and are 52 characters long. For example, Kx8QFo1KbkvexdgQqeMVcWLgjvrhSkzY5xz7dxWsD5bizThNKueP.
✅ Open. Needed in order to receive transactions. It is formed on the basis of a private key. And on the basis of the public key, addresses are generated – those alphanumeric codes that you tell users who want to transfer funds to you.
There are three types of bitcoin addresses currently in use:
- Legacy addresses start with “1”. Example: 14b2J8kpyioXoo4xRATNhiZnDQFTKm37nc.
- P2SH addresses start with “3”. Example: 37i25d7VrD5AnJCsojzxHTdjji2mi1RexJ.
- Segwit addresses start with “bc1”. Example, bc1Dtc8f72ze4nd80cv6yslm3m1ywhqqt450vlhyzk.
You cannot tell the private key to anyone, but the public key can be, because the private key cannot be restored from it in the opposite direction.
What are Bitcoin wallets
Bitcoin wallets come in many different types. The varieties are fundamentally different from each other in external form, functionality and control methods, although the essence is always the same: this is the storage of a pair of keys. Let’s take a closer look at all the varieties of BTC wallet available today with their positive and negative sides.
To create such a wallet, you need to download the application to your computer / laptop. Belongs to the category of “hot” wallets, that is, it is constantly connected to the Internet while working. Therefore, experts do not recommend storing large amounts on them in order to avoid financial losses from an external attack. But for small operations, this is quite a comfortable option.
Computer wallets can be divided into two subtypes – “thin” (light) and “thick”. “Thick” ones differ in that to use them, you need to download the entire blockchain to your hard drive. This increases the level of security, but is fraught with inconveniences – for example, you have to allocate several hundred gigabytes of hard disk space and wait for a long synchronization. Thin ones are downloaded and installed instantly, but for each operation they turn to the Internet, which increases the risk of attacks.
Examples of desktop bitcoin wallets:
- Bitcoin Core. This is a full-node wallet, that is, when you download it, you download the entire blockchain (over 200 GB). It takes a long time. We can say that Bitcoin Core is suitable either for those who are very concerned about security issues, or for those who, for the sake of interest, want to learn more about how the blockchain works. For the rest, it is wiser to choose one of the light wallets, and to use hardware wallets to store large amounts of funds (about them below).
- Exodus. An easy-to-use wallet with an intuitive interface, suitable for those who are just getting started. The disadvantages include the closed source code of the project – despite its good reputation, theoretically there is a risk that developers will inject malicious code without the knowledge of users. However, if you do not take risks and keep only small amounts in it, then there is no problem. Apart from Bitcoin, Exodus supports a number of popular altcoins.
- Electrum. Unfortunately, it has a not very user-friendly interface and is unlikely to be suitable for completely newbies. Yet it is one of the oldest and most reliable wallets (also open source). One of the few applications that allows you to change the commission of an already sent transaction in order to speed up its confirmation.
Online wallets for Bitcoin are extremely easy to create and use. To do this, you need to register on the website of the service provider, and in the future, simply launch it in the browser like any other website. The danger is that the private keys from the wallet are usually stored on the server, not the user. If a successful attack is made, the attacker will be able to gain access to the keys and, accordingly, to the users’ funds.
However, today it is one of the most popular BTC wallet options for newbies. The point is, it’s convenient. You can log into your account and manage it from any convenient device – accept and send transactions. Access is protected with a password or PIN.
Examples of online wallets for Bitcoin:
- Blockchain Wallet. It has been successfully operating since 2011 and is considered the most widely known wallet for cryptocurrencies (both bitcoin and some altcoins and stablecoins). It makes it easy to make transactions, and also provides additional functionality, for example, a built-in trading exchange for quick currency exchange.
- Cryptonator. A wallet that allows you to make quick and easy transactions in BTC, LTC, ETH, etc., as well as instantly exchange cryptocurrencies within your personal account. Provides a fairly high level of security and anonymity. There is a Russian interface language.
- Guarda. A secure and confidential online wallet that does not store any critical customer information, including private keys. When the user closes the wallet, the private key is automatically deleted. You do not need verification (passing KYC) to work.
Most online wallets are also available as mobile apps.
To create a bitcoin wallet right on your Android or iOS mobile device, you can choose the right application. Like previous types of wallets, mobile wallets allow you to send and receive payments and are of the “hot” type, that is, they cannot function without the Internet.
Using a mobile wallet is very convenient as you are not tied to a computer. However, the vulnerabilities to attacks can be higher. Although the developers of modern wallets have already taken into account most of the mistakes that were encountered before. And now mobile options are distinguished by a good level of security, but they are still not suitable for large amounts.
Examples of mobile bitcoin wallets:
- Coinomi. An easy-to-use cross-platform wallet focused primarily on the security of clients’ funds and their confidential information. Supports a large number of cryptocurrencies. This makes Coinomi one of the most popular crypto wallets among Bitcoin users.
- Trust Wallet. Multifunctional crypto wallet from the Binance exchange. It allows you not only to store bitcoin, cryptocurrencies, tokens, but also to make money on this through staking. The wallet provides exchange, purchase and sale of crypto coins.
- Edge. The application allows you not only to conveniently and safely store bitcoins, but also to perform a lot of additional actions with them: you can open an interest account for passive earnings, buy or sell cryptocurrency through connected payment services. It is noteworthy that the developers do not hide the source code of the project.
- BRD. An extremely easy to use open source wallet. To work with it, no registration is required – just install the application and immediately start sending or receiving BTC. Another feature is decentralization – BRD works directly with the blockchain without the need to trust the keys to third parties.
Hardware wallets are small USB devices. Their design is very simple, designed only for storing encrypted keys, but not for connecting to the Internet or running any applications. This is “cold” storage of keys – without the Internet, they are not afraid of any hacker attack.
Even if you lose the device, the finder will still not be able to use it without knowing the pin code. In the meantime, you can restore access to funds for yourself using a seed phrase (these are 12 words that you must write down when you open a bitcoin wallet and store it in a safe place.
Examples of hardware wallets:
- Ledger Nano X. Flagship among peers, supports hundreds of cryptocurrencies. Compatible with a special mobile application through which you can control the balance (using Bluetooth technology). The price of the device is 119 euros.
- Trezor Model T. Equipped with a large touch screen for entering a PIN or seed phrase. A universal repository for many digital assets. Store passwords securely with Trezor Password Manager software. The price of the device is 164 euros.
- KeepKey. It is similar in functionality to the previous options, but it is almost twice as large in size, so it is less convenient to carry it with you. There is a large display allowing you to monitor and confirm your transactions. The price of the device is 79 euros.
To open a paper bitcoin wallet, you will need to print the private and public keys on a regular sheet of paper, which make it possible to manage funds, and store this paper in a safe place (preferably in laminated form). Thus, the keys are offline and are not afraid of any attacks from the Internet.
The easiest way to create such a wallet is using the bitaddress.org website. The resource generates a random code and offers printable versions of keys (with QR codes for more convenient use in the future). At the same time, it does not store them and does not have access to this confidential information at all, which is confirmed by the open source code of the project itself.
How to choose which bitcoin wallet to open
You should not choose such an important thing in some random way – this is the wrong attitude to saving. Also, you cannot always trust the experience of your friends – they may have completely different goals and, accordingly, different requirements for the wallet. Better understand the variety of wallets yourself and choose the option that suits you perfectly.
Criteria to consider when choosing a Bitcoin wallet:
- The wallet is cold or hot.
- Do you have control over your keys using it.
- What are the features for backup and security.
- Is the platform on which you intend to use the wallet supported, be it Windows or iOS.
- Open source or closed source.
- Ease of use, intuitive interface.
- Is KYC verification required.
Further, the purpose for which you are going to use the wallet plays an important role, for example: daily sending of transactions, trading operations, short-term or long-term hodl.
For example, your goal is to hold some amount of cryptocurrency for two to three months. In this case, a desktop wallet or its combination with a hardware wallet will be a good option. It is reasonable to use online wallets or exchanges for daily cryptocurrency trading, but it is undesirable to store assets there for more than a few days.
How to protect wallets from hacking
No matter how reliable the chosen Bitcoin wallet is, a significant part of the responsibility for the safety of assets still lies with the user. Here are some security tips that significantly reduce the likelihood of being hacked and losing funds:
✅Keep the private key or seed not only on your phone or computer, but simply written down on paper. This will help in the event of force majeure with a technique to quickly restore access to the wallet.
✅ Use high-quality anti-virus software and keep track of the daily database updates.
✅ Use only a secure internet connection and never conduct cryptocurrency transactions on public networks such as Wi-Fi in a subway or cafe.
✅ Don’t open suspicious links, they can be phishing.
✅ Keep a separate convenient wallet for daily transactions, and move all long-term investments to a hardware wallet.
✅ Do not give the secret key to anyone. Some fraudulent services may ask to provide them under some pretext.
✅ Activate two-factor authentication for online wallets. This is one of the simplest and most effective security measures. Also set strong passwords that are difficult to crack.
If possible, create a backup copy of the wallet – in a situation if the device fails or you lose it, a copy will allow you to access the data.
The cryptocurrency industry is constantly evolving and wallets are becoming more functional and secure. The main thing is to carefully study all available options before opening a bitcoin wallet. And then its use will be comfortable and will not entail financial losses.