HOW DO YOU STORE YOUR BITCOINS

 

Before you own bitcoin, you need to have a place to store it. This place is called a "wallet."

 Instead of holding your bitcoin, it holds the private key that allows you to access your bitcoin 

address (which is also your public key). If the portfolio software is well designed, it will give the

 impression that your bitcoins are actually there, making using bitcoins more convenient and intuitive.

In fact, a portfolio usually contains several private keys, and many bitcoin investors have multiple

 portfolios.

Wallets can live either on your computer and/or mobile device, or on a physical storage gadget, 

or even on paper. Here we will briefly look at the different types of portfolios.

 Electro-wallet

Electronic wallets can be downloaded as software or hosted in the cloud. The first is simply a 

formatted file that lives on your computer or device, and that facilitates transactions. Hosted 

wallets (in the cloud) usually have a more user-friendly interface, but you'll entrust your private 

keys to a third party.

Software portfolio

Installing a wallet directly on your computer gives you the security to control your keys. Most are 

relatively easy to set up and are free. The downside is that they require more maintenance in the

 form of backups. If your computer is stolen or corrupted and your private keys are not also stored

 elsewhere, you lose your bitcoin.

They also require more important safety precautions. If your computer is hacked and the thief takes 

your wallet or private keys, they will also take your coins.

The original software portfolio is the Bitcoin Core protocol, the program that runs the bitcoin network.

 You can download it here (this doesn't mean you have to become a fully operational node), but you 

also need to download the register of all transactions since the dawn of bitcoin time (2009). As you

 can guess, it takes a lot of memory - at the time of writing, more than 145GB.

Most of the portfolios used today are "light" portfolios, or SPV (Simplified Payment Verification) 

portfolios, which do not download the entire ledger but synchronize with reality. Electrum is a 

well-known bitcoin desktop SPV portfolio that also offers a "cold room" (a totally offline option for 

extra security). Exodus can track multiple assets with a sophisticated user interface. Some (such as

 Jaxx) may contain a wide range of digital resources, and others (such as Copay) offer the ability to

 share accounts.

Online wallet

Online (or cloud) wallets offer increased comfort - you can usually access your bitcoin from any

 device if you have the right passwords. They are all easy to set up, have desktop and mobile 

apps that make spending and receiving bitcoins easy, and most are free.

The downside is the low security. With your private keys stored in the cloud, you need to trust

 the host's security measures, and that it won't disappear with your money, or will not close or

 deny you access.

Some large online portfolios are tied to exchanges (such as Coinbase and Blockchain). Some offer 

additional security features such as offline storage (Coinbase and Xapo).

Mobile wallets

Mobile wallets are available as apps for your smartphone, especially useful if you want to pay for

 something in bitcoin in a store, or if you want to buy, sell or send on the go. All of the online

 portfolios and most of the office portfolios mentioned above have mobile versions, while others 

- such as Abra, Airbitz and Bread - were created with mobile in mind.

Hardware portfolios

Hardware wallets are small devices that occasionally connect to the web to conduct bitcoin 

transactions. They are extremely safe because they are usually offline and therefore not hackable.

 However, they can be stolen or lost, as well as bitcoins that belong to stored private keys. Some

 large investors keep their hardware portfolios in safe places, such as bank vaults. Trezor, Keepkey

 and Ledger and Case are notable examples.

Paper wallets

Perhaps the simplest of all wallets are pieces of paper on which are printed the private and 

public keys of a bitcoin address. Ideal for long-term storage of coins (away from fire and water, 

of course), or to offer coins as gifts, these wallets are safer because they are not connected to a 

network. However, they are easier to lose.

With services such as WalletGenerator, you can easily create a new address and print the 

wallet on your printer. Fold, hide and go. Send coins to this address, then store them safely 

or give them away. (See our tutorial on paper wallets here.)

Are bitcoin wallets safe

It depends on the version and format you've chosen, and how you use them.

The safest option is an electronic wallet that you keep offline, in a safe place. This way, there

 is no risk that your account will be hacked, your keys will be stolen and your coins will be

 taken away. But if you lose the wallet, your coins disappear, unless you have created a clone 

and/or kept reliable backup copies of the keys.

The least secure option is the online wallet, as the keys are held by a third party. It's also the 

easiest to set up and use, as it offers you an all-too-familiar choice: convenience or security.

Many serious bitcoin investors use a hybrid approach: they hold a long-term base amount of 

bitcoins offline, while having a "expense balance" for cash on a mobile account. Your choice 

will depend on your bitcoin strategy and your willingness to obtain "technical" information.

Whichever option you choose, be careful. Save everything, and only tell your loved ones where

 your backups are stored.