If you are looking to start using or accepting bitcoins, then you will need to understand how they work and how to keep them. Because bitcoins are an online currency, there are various online methods that you can use to store them. The important thing to remember is that you need to make sure where you keep them is safe and secure. Here are some tips on the best ways to store your bitcoins.
Bitcoin-QT Wallet
The bitcoin QT wallet is a wallet that was developed by the original bitcoin core developers. It has been designed to be kept on a desktop or a laptop, and also acts as a node on the bitcoin network. The wallet will store the private keys that you use when trading bitcoins in a file on your computer. The wallet can send and receive coins, save a list of the sending and receiving addresses, and offers a high level of encryption. With encryption, it’s important that you keep a back-up of your private key because if you lose your password, you lose your currency.
Web Wallet
Web wallets are the same as the wallet you store on your computer, but they are hosted on other external providers instead. They can store your private keys and also give you a front-end that you can use to send coins. These types of wallet are great for novices as they can be used on a laptop, and some also have a mobile app for mobile payments. Although these types of wallet are generally safe, there is always the risk of the provider being hacked and your coins being stolen.
Multi-Sig Online Wallet
One way that you can improve the security of your online wallet is to use a company that uses multiple keys. Typically, most use three keys, one that is held by the external provider, one that is used as a shared key between you and the provider, and one that is for you only. When you want to withdraw bitcoins, you log in and enter your passphrase to access the account. If you forget your passphrase, you can use your ‘user’ key to access your account. With this type of system, you are also protected from the company becoming insolvent or the provider being hacked.
Hardware Wallets
If you aren’t comfortable using online wallets, or you are worried about the security, then you can use hardware wallets instead. There are a few types, with varying degrees of security, but in general, they all use USB to connect to your computer. When you buy bitcoin, you can store them on the hardware wallet which uses PIN numbers and passwords to add security. Although you have to carry it around with you, they are generally considered safer than online wallets.
Bitcoins are becoming more mainstream all the time. If you are running a business and want to keep up with new payment alternatives, then it might be a good way to offer your customers a greater choice.
