By Lumai Mubanga. email@example.com
There are different types of Bitcoin users, from the very basic user to the most advanced users. It is very important for users to understand at what level they are involved in the cryptocurrency space in order to derive the most benefits from the system. It’s all about knowing how the system works and how you want to use it. Just like a smartphone, how well it is utilized depends on how the user is familiar with the different apps.
The most common bitcoin user does not have the entire blockchain downloaded and does not need a lot of fancy functionalities. Instead, the most basic bitcoin user will only need a wallet to help manage keys, send and receive bitcoins or any type of cryptocurrency with the rest of the network. These wallets can come in different types and sizes. They can be hosted on the web, your personal computer, digital or physical.
Bitcoin is all about granting real-world entities virtual identities. These virtual identities are used to authenticate ownership and send bitcoins between network users. Private Key is what unlocks a virtual identity. It is also what gives access to a bitcoin address. But how are these private keys protected and shielded from identity theft?
This is where a Wallet comes in. The primary function of a wallet is to track your identity. Unlike physical wallets that store our money, the digital bitcoin wallet doesn’t actually store bitcoins. Instead, the bitcoin wallet is simply a way to store and access your private keys which then, allows you to spend the corresponding bitcoins. Additionally, most wallets are designed to store, send receive and generate a list of all transactions for the user. Note that, it is easy for software to do this than a human. No wonder, there is so much a big difference between the two wallets.
For the most basic user, a wallet will be enough to be involved in transactions. There are two different distinctions of bitcoin wallets. These are hot and cold wallets. The distinction is based on their connectivity to the internet.
Basically, hot wallets are connected to the Internet and Cold wallets are not. Among the hot wallets are smartphone apps, which are mobile and gives a lot of advantages. Other is the Mycelium and AirBitz.
For the online web wallets, there is the blockchain.info and coinbase.com wallets.
Then comes the cold wallets which include paper wallets and hardware wallets. Paper wallets include bitcoinpaperwallet.com and bitaddress.org. Hardware wallets include Ledger, Trezor, Case and KeepKey.
Lastly, there is also what is known as the Brain wallet. These will be discussed in details in the next article.