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Understanding Bitcoin-How To Store Your Bitcoins-Lesson 9

Invest In Bitcoin And Other Types Of Crypto Currency And Crypto Coins By Joining The BitClub Network

· Bitcoin,BitClub Network,Crypto Currency,Cryptocoins,Cryptocurrency

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Author : Bitconnect
 

How to store your bitcoins? There are many ways of bitcoin storage and many different types of wallet software. Storing bitcoins does not involve storage of actual bitcoins per se, but involves the safe storage of the private key to the wallet addresses. How To Store Your Bitcoins? This article is going to discuss the many ways of storing your bitcoin. There are many ways of bitcoin storage and many different types of wallet software. Storing bitcoins does not involve storage of actual bitcoins per se, but involves the safe storage of the private key to the wallet addresses. Bitcoin works based on public/private key pairs, the public key being the public address for receiving payments, the private key is used to sign the transaction to send coins from that address. Storage of the private key is stored in a ‘wallet’ and there are many different ways in which to do it, each with varying levels of security. The first wallet to be discussed is the bitcoin QT wallet at https://bitcoin.org/en/download which is also the reference wallet from the bitcoin core developers. Bitcoin QT Wallet. The bitcoin QT wallet, at https://bitcoin.org/en/download or bitcoin core is the reference at http://bitcoin.org/ client. This wallet is the original wallet, created by the bitcoin core developers. This wallet is designed for use on desktop and laptop computers and stores the private keys in a file on your machine. It has many features, as well as being a wallet is acts as a node on the bitcoin network.
 

As a result, it must store a full copy of the blockchain at https://en.wikipedia.org/wiki/Blockchain_(database). It can send/receive coins, save lists of sending and receiving addresses that are known, and also offers wallet encryption. This scrambles the private keys with a password which must be used when you want to send coins. Loss of the password means the coins are forever lost unless you have a backup of the private keys. The next section will discuss the advantages and disadvantages of the bitcoin QT wallet. Advantages. Easy to use and intuitive. Supported by the bitcoin core developers. Reliable software. Disadvantages. Must store a full copy of the blockchain. This is 60+GB in size as of August 2016. Risk of coin theft if computer is infected with malware. Even if the wallet is encrypted due to loading of private keys in system memory. Lacking Multi-Signature at https://en.wikipedia.org/wiki/Multisignature support. Must wait for blockchain to synchronize which can take hours or days before using the wallet. Summary. The bitcoin QT wallet and other desktop wallets are good wallets for starters, but a good specification of machine is needed to use it and it must download the entire blockchain. For limited bandwidth internet connections and machines with a small hard drive this is not a good option. It should not be used to store large amounts of funds due to the security implications, and backups of the wallet file should be taken. Web Wallet.
 

Another way to store bitcoins is on a Web Wallet at https://bitcoin.org/en/choose-your-wallet This is a wallet which is hosted by an external provider who also stores the private keys and has a web front-end for you to send coins. An example of this is blockchain.info. at https://blockchain.info/. They are designed for ease of use and convenience in mind. This section includes exchange wallets. Web wallets are easy to use and many allow import of your own private keys. This is handy for novice users and some also have mobile applications to allow mobile payments. There are security implications, some of which can be negated, but others are a serious risk. Theft of your login details through hacking can be negated by enabling 2FA or two-factor Authentication at https://en.wikipedia.org/wiki/Multi-factor_authentication. This is where an SMS is sent to your mobile phone or similar, requiring the compromising of two devices. However, a good rule of thumb is to assume you are not in ownership of even your own coins if you do not exclusively control the private keys. The wallet provider could steal your coins, or be compromised which can result in coin theft as shown here at http://www.coindesk.com/hackers-steal-bitcoins-inputs-io-wallet-service/. There is however an exception to this rule, which will be discussed in the next section. Advantages. Easy to use, with plenty of choice of providers. Good for small amounts of coins and everyday transaction. Accessible from anywhere with an internet connection. Secure partially against malware on the user’s system if 2FA is enabled.
 

Read more about Bitcoin and The BitClub Network.

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