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That’s why when you start buying Bitcoin, you’ll also need to begin using a Bitcoin wallet.
Bitcoin wallets not only hold your digital coins, but they also secure them with a unique private key that ensures that only you, and anyone you give the code to, can open your Bitcoin wallet.
Some just support basic transactions while others include additional features, like built-in access to blockchain-based decentralized applications commonly known as dapps.
Because Bitcoin operates on a secure digital ledger called blockchain, using a Bitcoin wallet isn’t as simple as opening a leather flap.
To send an email, you must use your password to log into your account, input a recipient’s address and then hit send.
That’s because many cryptocurrency wallets are decentralized and cryptographically secured, meaning there’s no central customer support number for you to call to prove your ownership and identity and reset your password.
“While they are great for portability and convenience, they are also the least secure.” Not only can the crypto wallet itself get hacked, but if someone steals your device they could also take your coins.
You can gain access to your coins and make transactions through any device that lets you connect to the internet.
While convenient, web-based wallets still hold many of the same risks as mobile wallets, namely that because they’re connected to the internet, they can be hacked.
Desktop wallets, like Atomic Wallet, Electrum and Exodus, are programs you can download onto a computer to store coins on your hard drive.
There is typically another password involved to make the connection, which increases security but also raises the risk you may lock yourself out of your crypto if you lose the password.
“Paper wallets are rarely used anymore as they probably pose the highest risk in terms of destruction, loss or theft of private key,” notes Kech.
You aren’t tied to any particular type forever; you can have multiple Bitcoin wallets.
For someone who frequently trades and spends tokens, the best crypto wallet might be a more convenient mobile or web option connected directly to an exchange, whereas someone who holds a lot of crypto as a long-term investment may be better off using a cold storage wallet.
Pay attention if a wallet has ever been hacked and avoid those that have faced serious breaches in the past.
If you plan on owning a lot of crypto, you may prioritize wallets that allow you to thoroughly back up your data.
Different wallets have different setups for who is in charge of maintaining private keys, which has big implications for you, notes Shtylman.
In these cases, it may be impossible for you to regain access to a wallet whose key you lose.
If you’re concerned about getting locked out of your Bitcoin wallet, you may focus on those providers who retain custody of your key.
Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight.