A bitcoin wallet is a piece of software that allows you to store, send and receive bitcoin. The most renowned bitcoin wallet is the bitcoin core wallet. There are many other wallets that are more user friendly and do not require the user to download the entire bitcoin blockchain (this can take days). There are also wallets that can store multiple cryptocurrencies, such as Exodus and Jaxx.
Bitcoin wallets give users a public key and private key (these are long strings of letters and numbers which are almost randomly generated). The public key is an address where you can receive and send bitcoin from (similar to an email address). The private key is used to gain access to the wallet (similar to your email account password). You should never share your private key and it should be stored safely – if you lose it, you lose access to your bitcoin wallet and your bitcoin is lost forever!
Bitcoin wallets do not actual store any cryptocurrency in them. The bitcoin blockchain works by keeping track of which wallet has ownership of what amount of bitcoin, and therefore has the ability to send that amount of bitcoin elsewhere. Therefore, a bitcoin wallet can simply be reduced to the public and private key being written down on paper, or even memorised.
One of the safest and user-friendly ways to store your bitcoin and other cryptocurrencies is using a hardware wallet, such as a Ledger or Trezor wallet. They are fairly inexpensive and provide a decent amount of security and privacy for the average bitcoin user.
For companies or high net worth individuals, you may want to consider multi-signatory (multi-sig) wallets that require private keys from a number of holders in order to move funds. This provides an additional layer of security as it can help to prevent “$5 wrench attacks”.
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