Welcome to City Tax Direct. We're a small team of London based Tax Accountants who are here to help your business thrive. We take the headache out of your tax returns allowing you to do what you do best. Business.
Contact us now!

What is a Bitcoin Wallet?

Well to start with anyone who thought that they could purchase a bitcoin wallet among the leather goods in your favorite department store certainly hasn’t been keeping up to date with the news, especially in the financial sector where at the same time as Bitcoins hit a record of $19,000 for each coin, eminent authorities were warning that this is the riskiest investment that anyone can make.  

Nonetheless no one wants to compound the risk of a Bitcoin investment by taking chances with their storage and security which brings us to the Bitcoin wallet.   Now of course strictly speaking a Bitcoin wallet is like no other wallet you are ever likely to own!  It is sufficiently unromantic in reality – a software program where Bitcoins are stored. This can’t be just anywhere. Bitcoin wallets allow you to send and receive Bitcoins and establish title (ownership) of the Bitcoin balance to the user. There are principally four kinds of Bitcoin wallets, namely desktop, mobile, web and hardware.

Another name for a Bitcoin wallet is a digital wallet. You need to set up such a wallet if you wish to own and/or trade in Bitcoins.   Bitcoins are thus the digital equivalent of cash and the Bitcoin wallet in its various formats can be compared to a conventional wallet. However you don’t find Bitcoins bursting out of the pockets of these wallets – what you will find instead is a lot of valuable information including the private key which is used to access Bitcoin addresses and execute transactions.

You will find desktop wallets, not surprisingly, on desktop computers which give the user all the control that is required. From there you can create a Bitcoin address to send and receive Bitcoins and to store a private key.

A desktop computer, as the name implies, sits in one place and for the man or woman on the go, this may not be an ideal situation. Using a mobile wallets avoids this difficulty with everything being run by the app on your smartphone. Once the app is running, all the functions of a desktop wallet can be literally carried around with you and of course payment can be made directly from your mobile wherever in the world you may be. Mobile wallets permits making payments by “touch to pay” through NFC scanning a QR code.

Web wallets are also highly flexible allowing you to use Bitcoins from absolutely anywhere you like – on any browser or mobile phone. However caution is advised on your selection of a web wallet as it will be storing your private keys online and thus conceivably lay your investment open to theft by hackers.

There are comparatively few hardware wallets (which are able to hold private keys electronically and allow payments) at the moment as this type of Bitcoin wallet is in the developmental stage.

A final word to all our readers – we cannot stress the value of security as theft and fraud in the Bitcoin world is frequent. Encrypt your wallet with a strong password and store it offline, safe from hackers.

Leave a Reply

Your email address will not be published. Required fields are marked *