Any Bitcoin that you purchase will be stored in a Bitcoin wallet. This is software that allows you to send, receive, and store Bitcoin. There are many wallets to choose from and deciding which wallet you will use is an important part of becoming an investor in cryptocurrencies.
Buying Bitcoin for the First Time
When you buy Bitcoin, you will want to quickly move it from the exchange to your wallet. The wallet is simply more secure and you have more control over your Bitcoin than when it is in the exchange. However, before you can move Bitcoin from the exchange to your wallet, you will need to find out which wallet is right for you.
Hot Wallets Vs. Cold Wallets
You will need to decide whether you need a hot or a cold wallet. A hot wallet is one that is always connected to the Internet. A cold wallet is one that relies on the hardware on your computer and will be stored in a particular location until you are ready to use it.
A cold wallet still connects to the Internet when it is time to use your Bitcoin. However, because your Bitcoin is not stored online, there is less of a risk that you will end up being hacked.
A Bitcoin wallet should require you to enter a PIN each time you attempt to use it. Otherwise, there is a risk that another user might gain unauthorized access to your wallet. Alternatively, some wallets can be unlocked using a fingerprint or face scan for added convenience.
Whether or not you have full control over your Bitcoin depends on whether you have access to your private keys. The key is a series of randomly generated passphrases. If you do not have this passphrase, you will still have a claim to your Bitcoin, but someone else is in control of it.
Not having control over your Bitcoin can cause security concerns because you need to trust the other party to be a custodian of your coin. Also, if you need to use the coin, you will have to ask for permission. However, if you would rather take a more hands-off approach to invest in Bitcoin, you might prefer this arrangement. Regardless of what you choose, as long as you are informed about the characteristics of your Bitcoin wallet, you'll be able to make a decision that's right for you.
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