In recent years, numerous persons have joined the crypto business due to the popularity and growth in the value of Bitcoin. Despite the ease of usability, locating the same wallet that suits your need takes a lot of work for beginners. As a result, we will be discussing how to set up a BTC wallet using several hardware and software methods.
What is a BTC Wallet?
A BTC wallet is an application that enables users to store and access their Bitcoin. To obtain a BTC wallet, either download an app on the web or purchase a hardware wallet. The encryption allows you to access the money stored on your BTC address.
Aside from attaching funds to every bitcoin address, a unique private key is also allocated. This key contains a combination of numbers and letters given at the time of the Bitcoin address creation.
To have a BTC wallet that can transfer money to any other address, the software needs verification by the private key.
The private key is obtained from a seed phrase, a 256-bit combination of characters. This phrase consists of 2048 terminologies and 12-24 words. The seed phrase performs the same function as the private key. Hence, it should be safeguarded. Sending the phrase to another BTC wallet can grant you access to a lost one.
Kinds of BTC Wallet
Before setting up a BTC wallet, it would be best to consider what you want to do with Bitcoin. Do you need something you can use for daily expenses? Do you have an interest in saving for the long term? Or perhaps you want to start active trading using bitcoin? Understanding your reason for using bitcoin will determine what kind of wallet will fit your need.
Several Methods of Keeping Bitcoin
Categorizing a bitcoin wallet as either hot or cold storage depends on the relationship between the wallet and the BTC blockchain.
Wallets that are present on devices connected to the web or the internet are called hot wallets. Although the software option has features that protect your private key (often kept in a wallet.dat file), when you keep BTC this way, it is still open to risk.
Hence, the hot wallet method is less secure for keeping a significant amount of bitcoin for a long time due to exposure to viruses, hacking attempts, malicious software, and keyloggers.
Majorly, paper and hardware wallets are found in cold storage wallets. Because they are mostly hardware USB devices, you can only connect them to the internet when you want to use your private key to sign transactions.
Therefore, cold storage is simply having an alternative of the seed phrase or private key somewhere other than accessing the internet or any other parties.
Cryptocurrency Wallet Software
You can download the software wallet charges for free on your mobile device or PC. Regardless of the mobile platforms it was created for, be it IOS, Android, laptop, or desktop, your interaction with the blockchain will be different on the computer.
However, no need to worry: no matter the type you intend to use, we will give you a detailed explanation of creating a BTC wallet.
Online Wallet
You must purchase bitcoin from a web-based crypto exchange before you can add any amount to your wallet. Most times, it is necessary for you first register before you can use these exchanges in the KYC (know your customer) process. Your ID, a copy of your passport, or a driver’s license are all needed.
In addition to creating an account for a BTC wallet, other Cryptos are offered by these crypto exchanges. As a result, it is easy to invest and trade in other cryptos, as most have a direct connection with BTC.
Also, it is easy to transact and trade as crypto exchanges offer mobile and web apps. Nevertheless, these wallets differ significantly from other software methods. You do not get a private key when you create BTC wallets using a Crypto exchange; therefore, you lack total control over your money.
Due to this, restrain from keeping your money on Cryptocurrency exchanges because hackers mainly target them. Also, it won’t be good to save your money there, due to their lack of proper management. Although it is unlikely that a well-known crypto exchange won’t go the way of Mt. Gox, why take the risk?
Computer Wallet
We can show you how to have a BTC wallet on your laptop or desktop. It is not different from how it is done on an app or program. After you are done with the installation, the software will produce a seed phrase and new address, which must be securely stored. Once you have backed up the 12, 18, or 24-word phrase, the app is set for use.
Also, you can access a list of all past transactions as a desktop wallet functions as a BTC node that keeps the entire blockchain.
Beyond increasing the security, creating a BTC wallet that also functions as a node requires you to heighten the security of your transaction and the entire BTC network. You can access the most recent transaction information on the network using a complete node.
Phone Wallet
An android or IOS phone BTC wallet app is the best way to spend a little of your money while you keep the majority for rainy days. Like a computer wallet, you can download the application from Apple’s AppStore or google play store.
During your first use of the bitcoin wallet app, there is a high tendency you will need to back up the seed phrase in a particular way before you can access the program.
It offers new users suitable preventive measures and the ability to know more about an account’s security. The user interface of a mobile wallet is usually straightforward and friendly. All you need to do to transfer or receive bitcoin is pass a BTC wallet address or scan QR codes.
Hardware Wallets
Most software wallets’ weaknesses can be avoided using hardware methods, which are the most suitable option for long-term storage of significant BTC.
Aside from storing BTC, a hardware wallet, which looks like a flash drive, can also serve as storage for other cryptos. You must know how to create a bitcoin cold storage using a hardware wallet to protect your money from malware, phishing websites, cyber-attacks, and crypto frauds.
Even though your private key is linked to your public BTC address, a hardware wallet reduces the chances that it will be compromised, as it hides and protects it from the web. In addition, a hardware wallet provides more security layers like PINs or passwords.
It is impossible to retrieve the private key from a device as a standard text because it is kept in a separate microcontroller. Also, do not be bothered about protecting your BTC wallet from viruses.
Unlike software, computer viruses can not affect hardware wallets. Although it can be used to sign bitcoin transactions, any private key stored in a hardware wallet cannot be affected by malicious software, even if it is a hacked PC.
Paper Wallet
When setting up your BTC account, you will generate a seed phrase, a public address, and a private key that will assist you in restoring or creating a BTC wallet. A paper wallet is a written form of all these details. Nowadays, a key or printed QR code is seen as old-fashioned. Although archaic, people who do not have enough trust in technology still use it.
Wallet Features
BTC is a project that is constantly evolving, and its community participates in deciding its growth and advancement. Therefore, you must research before you create a BTC wallet to know if your intended app uses part of the characteristics of the advanced network.
Legacy Addresses
Due to the various improvements on the BTC network, the app is required to support a variety of public addresses. Segwit now provides multiple bitcoin addresses, and you must have a wallet that accepts it before you can receive BTC from anyone.
Simplified Payment Verification (SPV)
This enables a BTC wallet app to function even if it does not have a complete node.
Lightning Network
Beyond setting up a BTC account, the ability to discover one that enables fast payment is excellent. Hence, a lightning network serves as a payment protocol layer on BTC, and users can now make a cost-free prompt payment using the lightning network.
Transparency
Bitcoin owners can trust and use a peer-reviewed app without worrying about their money. Therefore, check whether the app is created with trustworthy and open-source code before you set up a BTC account and produce the first address.
Privacy
With the public distributed ledger, anyone can see BTC transactions. Hence, some wallet options that can improve transactions must be made available. To stop people from linking your public Bitcoin address to your IP, you must use applications that support ‘the onion router’ (TOR).
Fee
BTC wallet features that allow you to modify transaction fees are the best. As a result, if you must fasten up your transactions or avoid hanging transactions, go for applications that accept ‘child pay for parent’ (CPFP) and ‘Replace-by-fee’ (RBF).
How to Securely Keep Your BTC
The significance of bitcoin security cannot be over-emphasized. The following are ways to increase the security of your Bitcoin wallets and funds.
Seed Phrase
Keeping your seed phrase on your mobile phone, PC, or even the cloud is not secure. Hence, you can write it out and keep it in a safe place.
Password
Mostly, it would be best if you had a password or PIN to login into your BTC wallet, and you must ensure you use a unique and safe password.
Two-step Authentication
Two-factor verification requires that you input another code asides from your login details. Therefore, whenever you find it in a wallet feature, use it. It provides an additional layer of protection to your BTC wallet; an example is Google authenticator.
FAQ
Which is the most suitable and secured BTC wallet?
You must research before you download any BTC wallet. The safest app for BTC wallets is the phone wallet with peer reviews and open-source codes. A hardware wallet is the most secure method to keep BTCs because it is not always online and is, therefore, not vulnerable to hackers and malware.
Also, other than bitcoin, it can store other cryptocurrencies. Phone wallets are great for daily use and support additional security layers like 2FA, PINs, and passwords. And with a QR code, you can have instant payment.
Can a BTC wallet be created at no cost?
You can set up a BTC account free of charge. Although, if you must have bitcoin, you must purchase it through a crypto exchange and send it to your BTC address.
How can I set up a BTC wallet?
Creating a BTC wallet is simple; you only need to download the right app on your phone or PC. Although, getting the correct private key requires thorough thinking on the user’s part. If you misplace your phone or your PC breaks down, using your BTC’s seed phrase can help you restore your wallet. Nevertheless, safely store your private encryption at all times.
