There are some websites that accept cryptocurrency payments, however, Bitcoin is largely being used for speculative investing at the moment. You might want to store only a small amount of Bitcoin in a wallet you carry with you-for example, on your phone-and leave a larger amount of Bitcoin in a more secure location, similar to how you don’t carry your life savings in cash in your physical wallet. If Bitcoin was being widely used for payments, a Bitcoin wallet is the program you’d use to send and receive Bitcoin for day-to-day transactions, too. That’s why it’s important to have backup copies of your Bitcoin wallet, too-just like you’d have backup copies of any important data. If you lose the wallet and your private keys, you’ll also lose access to all your Bitcoin. That’s why it’s very important to store your Bitcoin wallet and its private keys securely.Īttackers aren’t the only concern. Your Bitcoin would then be stored in their wallet and would be secured by their own private keys, to which you wouldn’t have access. For example, they could use your private keys to send your Bitcoin to their own Bitcoin address. If someone steals your private keys-say, if they had malware running on your computer-they could spend your Bitcoin. The blockchain is a record of all these transactions. Think of these private keys as secret codes that allow you to spend that Bitcoin. These private keys are the mathematical proof that you indeed own a certain amount of Bitcoin. RELATED: What Is Bitcoin, and How Does it Work?Ī Bitcoin wallet actually contains one or more private keys that allow you to sign transactions. To understand what a Bitcoin wallet is, it’s important to understand what Bitcoin is and how it works. Bitcoins are never really “stored” anywhere.
While true, it’s drastic oversimplification. So, we mentioned before that a Bitcoin wallet is a software program in which you store Bitcoin.
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