Just like your regular wallet holds cash and bank cards, your bitcoin wallet holds bitcoin, and your Ethereum wallet holds Ether. If you plan on purchasing bitcoin, Ether, or any other cryptocurrency, you must create a wallet. This wallet will give you ownership over bitcoin addresses, which you can use to send, receive, and hold bitcoin.
A wallet address will look something like this:
Please note, this is a sample wallet address. Every wallet address is unique.
Please be aware that Bit Trade does not create a wallet for you.
This ensures you are the one in control of your assets, including bitcoin and Ether. It’s a big part of our mission to empower people to have control and ownership over their money, finances, and investments. Controlling your wallet is a core part of this. But, if you get stuck on creating a wallet, you can reach out to our friendly support team at [email protected] who will be happy to guide you. Alternatively, watch this simple explainer video below:
A quick caution about wallets: Remember, wallets are the sole storage place of your bitcoin or Ether. If your wallet is compromised or lost, there is usually no way to recover access. We do not endorse one wallet provider over another, nor do we provide wallets for our customers. We suggest you conduct a little research, and choose a wallet provider that suits your individual needs.
Bitcoin and Ethereum users can choose from a variety of wallet types. All bitcoin and Ether wallets are compatible with Bit Trade. So, whatever wallet you choose, you can buy and sell with us.
Here are the most common types of cryptocurrency wallets.
Also referred to as “Browser-based wallets” or “eWallets”, web wallets are the easiest type of wallet to create and protect.
You do, however, need to choose your web wallet service provider carefully, as they will host and hold your bitcoin. You can view a comprehensive list of web wallet providers on the bitcoin wiki.
Here are a couple of example web wallet providers:
Unlike web wallets, desktop wallets are installed on your computer. While they do give you complete control over your wallet, you are responsible for backing-up and protecting your bitcoin.
Here are a couple of example desktop wallet providers:
Mobile wallets allow you to store bitcoin on your mobile device. In-person bitcoin exchange and bitcoin payments in physical stores are fast and easy with mobile wallets - simply scan your QR code, or use the ‘tap to pay’ function.
Most web wallet providers offer a mobile app.
Hardware wallets are physical devices used to store cryptocurrency. Hardware wallets are known to be very secure; private keys are usually stored in a protected area and cannot be transferred as plain text. What’s more, most are immune to computer viruses that target wallet information.
The Ledger Nano S is one of our favourite hardware wallets on the market.
As we mentioned above, your bitcoin wallet is the only place your bitcoin is stored. If your wallet is lost, compromised, or you have forgotten your password, there is usually no way to regain access. Keep your bitcoin wallet secure by following the tips listed below.
Passwords can be exposed by brute force. An attacker can run special software that attempts to crack your password by trying different combinations of letters, words, and numbers.
A strong password is the best defence. Think of it this way: an attacker is looking for a needle in a haystack, and the stronger your password is, the bigger your haystack.
Strong passwords have higher entropy. We suggest creating a password out of a mnemonic sequence of words. These are both random and memorable.
Multi-factor authentication protects your wallet with an additional layer of security, so take the time to activate this feature.
In addition to your password, a multi-factor login process will require you to answer a secret question, or enter a random pin number sent to your smartphone.
Your secret question could be something like ‘you are’ with answer, ‘human.’ Much like a Captcha, you can understand the question but computers can’t.
Private keys can be stored in plain text, but that means anyone with access to your wallet’s file can send your bitcoin to another wallet address. To combat this, encrypt your private keys - create a key for your key. Luckily, this is the default with many bitcoin wallets.
(Did you know, you should keep your house keys hidden from plain sight, too. It’s possible for attackers to covertly duplicate your keys by taking a photograph of them.)
Open source software allows anyone to review the source code at any time. Security flaws are flagged and resolved faster than on closed source software. And, with so many people accessing the code, open source software is much more secure.
For these reasons, so much of the world’s financial system runs on Linux, an open source operating system.
Backup the private keys to your bitcoin in at least three different locations - two of which should be geographically separate. If you have just one copy of your bitcoin wallet, when your hard drive dies (which it inevitably will), you will not be able to recover your bitcoin.
Here’s some perspective. Let’s say you fail to backup your private keys, and your hard drive has a one in 500 chance of failing over a one-year period. That’s a one in 500 chance of losing your bitcoin for good. With a second backup, the risk is reduced to one in 250,000. A third, and the risk is reduced even more.
As for your password, don’t rely on your memory. Write it down on a piece of paper, and store it in a secure place.
Cloudwards provides a good guide on how to backup your bitcoin wallet you can view here
One of the key advantages of bitcoin, Ethereum, and other cryptocurrencies is their independence from third-party services. If you do engage with third-party service providers, proceed with caution. Do thorough research, and understand that it’s your responsibility to protect your bitcoin.
Bitcoin does not come with a friendly customer service representative that will transfer your bitcoin to your loved ones after you die.
Unless you share your wallet details and passwords with a trusted individual, no one will be able to recover your bitcoin. In that case, your bitcoin will be lost for good, and everyone who owns bitcoin will benefit from deflation.
To ensure your bitcoin remains in safe hands, engage in a little planning and forethought.