If you are thinking about getting on the bitcoin bandwagon, bitcoin wallets are very important. After all, once you mine something of value it must be securely stored. Wallet services solve this issue and also provide you with a medium for transferring and receiving funds. Here is a closer look at some of the more common wallet applications available today.
Some people choose to install wallet programs on their computers. However, the security of your personal computer is important, as it protects your investment. Also, your wallet program is specific to one certain computer, and that is why online wallets are so popular.
Online wallet programs provide many advantages over computer programs. Your online wallet is stored in a virtual environment. This lets you keep purchasing information, user names, and passwords, bank and charge card details, in one location. You are not limited to any one computer, and no matter where you go, you can access this information.
Many types of wallet programs are open source. This means that they can be altered and improved by users. These programs are available for free and some ask for donations. This helps to insure that quality software will be available to everyone in the future.
Some online bitcoin wallets providers require that you sign up for the service. This is not always necessary as you can find providers that allow you to remain anonymous. You still have identification information specific to you and your computer, but your information like name and address is not available to others.
When you check out online wallet programs remember to see what kind of security is offered. Just like US bank accounts have FDIC insurance, some wallet providers insure your bitcoins. After all, should something like hardware or software failure occur, you could lose all of your currency in one swift motion.
Look closely to see if your online wallet provider uses a service that is centralized. This means that you must be online in order to use it, or you may need to subscribe to a Web service. This is opposed to peer to peer applications that can be used to pay others directly.
Some wallet services make it easier for you to make international transactions. They offer an easy currency conversion from one country to another. Also, many applications are specific to smart phone operating systems and not Windows.
Your account should have some kind of reliable backup system. This is one of the most important things to check into. If you cannot find any information on how a service backs up their data, you should consider another service.
When you check into online wallet services, you may come across some new types that are known as “hybrids”. A hybrid is something that utilizes two technologies into one “new and improved” one. Hybrid services add an extra security feature to your wallet, also. They work in a similar manner to other wallet systems. Yet, with a hybrid system you must use a special key before you send money, and that key is encrypted by your Internet browser before it reaches the wallet server. Encrypting info before the wallet service gets it makes it nearly impossible to be intercepted. Bitcoins cannot be taken from the wallet service, because they cannot access them directly. The data they store is encrypted, so only you can access it.
Perhaps one of the best ways to backup online bitcoin wallets is by doing this yourself. Some services allow you to download your wallet to your computer for backup. This gives you the best of both worlds, the Internet and your own pc.
No discussion of bitcoin wallets would be complete without mentioning paper wallets, as that is perhaps the most common method for storage. This is excellent insurance against loss or theft. Your currency is secured by using a number generator program to create a special secure code. This creates a file you place on your pc and currency can be printed out or saved to an external device, as the entire process is done offline it is 100 percent secure.
When you check out wallet systems, you have many advantages with online services. Some Internet based bitcoin wallets allow you to use them online and offline. Do your homework and use a service with the best security and “ease of use” functions, to make life simpler.