Choosing a Bitcoin Wallet

Choosing a Bitcoin Wallet

If you’re going to be buying and using Bitcoin, you will need a wallet to store them in. Bitcoin wallets come in a number of different varieties, and before you sign up for one and start using it, it’s very important that you know what the different types are, what their functions and utilities are, and whether or not they fit your goals for Bitcoin usage.

Let’s break it down quickly and give an overview of what each of the major types of wallet is, and what they can do for you.

Mobile Wallet

The mobile wallet is perhaps the most prevalent type of Bitcoin wallet out there. They can be downloaded right onto your smartphone, and they do have a lot of cool features. These are really good for small transactions, but much like your normal wallet, you don’t want to have too much in your mobile wallet at any one time. These are considered to be low security wallets, and they are much easier to hack than other types of wallets. Think of it like being pickpocketed, but from a digital thief. They’re great for going places and paying for things on the go, but not great for storing more than a hundred bucks or so at a time.

Bitcoin Bank

A Bitcoin bank is a really easy place to store bitcoins and they give you fast access if you wish to buy, sell, or spend BTC. The downside is that you do not gain access to private keys. Instead, these are stored within the bank, encrypted. For some people, that’s not an issue, but for others it is. Most experienced Bitcoin traders treat these as a transition tool, but don’t find any real utility from Bitcoin banks.

Hardware Wallet

A hardware wallet is the safest when it comes to security, but they offer no mobile benefits. Think of this as a computer, but without any internet connection. You can go into the hardware and place or retrieve your BTC, but it must be done in person, usually through a USB port. For storage of coins that you want to keep off the grid, this is a perfect solution. Starting prices for these are usually around $60 USD.

High Privacy Wallet

A high privacy wallet is a good choice for those who want to stay as far off the grid as possible. Many of these even have offline storage, which is great for those that value safety and privacy. There are many different variations of these, and some have more flexibility than others. Some allow you to join coin mixing groups, too. This can be a good long term solution for storage, but it’s certainly not the only choice.

Full Wallet

A full wallet allows you to copy the blockchain and you can act as a peer to peer “node” for the Bitcoin community. This is a type of Bitcoin mining, and over the long run, many Bitcoin enthusiasts have found this to be a profitable venture. There are a few different full wallets out there, with slightly different policies.

Paper Wallet

Storing your BTC in a paper fashion seems odd for some because this is a techno-currency, but it is possible to print out the information that you want through a paper wallet generator. This is a safe way to store your Bitcoins long term (you can’t hack paper!), but as you can imagine, if the paper is destroyed, you lose what you’ve stored. If you go with this option, be sure to keep your papers in a fireproof and very safe place. If you wish to buy BTC and hold it for a few years, this can be a great choice.

Finally, don’t forget that you can have more than one wallet. In fact, that’s becoming more and more of a trend these days. Many Bitcoin users have their mobile wallet right on their cell phone, and then have a more secure wallet (often a hard drive) at home. Any combination that helps you to do what you need to do, and stay safe in the process, is completely acceptable.

And don’t forget to familiarize yourself with all of the rules and regulation specific to the wallet(s) that you decide to go with. Being aware of the rules, and the timeframes for which transfers and transactions will take place will help make your Bitcoin experience a much smoother one.

What is Bitcoin Mining?

What is Bitcoin Mining?

Bitcoin mining has received a lot of attention thanks to a few recent controversies, but if you’re a beginning Bitcoin trader, you might not even know what this hot topic is. Before we dig into how to gain Bitcoin in this manner or whether or not it’s something that you should be pursuing, we first need to go over exactly what this process is and how it works.

If you’re new to Bitcoin trading, this is a must read article.

The Basics

On a very basic level, Bitcoin mining occurs through software that processes Bitcoin transactions. As Bitcoin changes hands, it’s important that the processes be verified so that merchants and individuals can be assured that no fraudulent activity is taking place.

To be a Bitcoin miner, you would need to have special software running that helps these transactions take place. As a reward of using your computer space, a tiny proportion of the number of blocks—a unit of measurement for Bitcoin (kind of like a euro or dollar denomination)—is credited to your account. Think of it as the transaction fee, but instead of something like PayPal, Skrill, or your bank processing the transaction, your computer is doing the work.

Bitcoin mining occurs so that the process can stay safe for all users. Bitcoin transactions are meant to be anonymous, and to ensure that this occurs, a lot of encryption is needed. The downfall here is that as Bitcoin ages, this process gets more and more complex, and that means that it is tougher for computers to do. It makes sense, though. Cyber security is an always growing field, and to keep your BTC safe, developers need to keep making their security policies tougher. This will be an ongoing process in all cryptocurrency coins on the market.

The cost of mining to produce a 1 BTC profit today is much higher than it was five years ago. This has made Bitcoin mining a lot harder to do. We’ll look at some of those repercussions below.

Bitcoin Mining Has Changed

You’ve probably seen on other sites or in the news some of the drama that has arisen in regards to Bitcoin mining. We’re going to assume for the sake of simplicity that the mining software that you use, your wallet, and anything else you might need are not only completely legitimate, but completely safe and secure, too. These are concerns, however, and you should always check out any product that you plan on using thoroughly before you begin using it.

Even with all of those safeguards in place, the process of Bitcoin mining has changed. For one, it’s a lot harder to do now than it was four or five years ago. The amount of computer power needed to successfully and profitably be a Bitcoin miner has increased significantly. In many cases, you will end up losing money as a Bitcoin miner thanks to the accrual of costs that will occur.

That doesn’t mean that everyone should stay away from Bitcoin mining. In fact, for some, it can be quite profitable. We will talk about that on another page. But for now, it’s important that beginners know that Bitcoin mining is not as easy as it once was and it’s not for everyone. Be sure that you know the basics before you begin, but also be sure that you are familiar with the cost and the risks involved so that you can figure out if this is something that’s good for you personally.

Bitcoin Mining Pools

Because of the changes, it’s a lot harder to get started in Bitcoin mining today than it was several years ago. To combat this issue, many miners have joined together in mining pools. This helps individuals to share the costs associated with running this software. When you enter the pool, you agree to split the profits with the others in the pool. This is one of the bigger trends emerging in the field of Bitcoin mining, and it is worth taking a look at if you are a beginner in this field. Be aware that different pools have different rules, costs, and profit sharing policies.