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Bitcoin Wallets: How to Store Bitcoin (for Beginners)

By Mohamed Saber Farrag - Dec 03, 3:00 PM

Bitcoin wallets are electronic wallets that have a private key or password. Users store their Bitcoin in their electronic wallets using a wallet app. The app automatically uses the password to sign outgoing transactions and generates the wallet addresses.

Bitcoin wallets are available in different forms. Each type caters to different needs and varies in accessibility, security, convenience, and other features.

Types of Bitcoin Wallets

One of the most-used wallets is the Full-node wallet. These provide decentralization and offer support for the Bitcoin network. Other types of Bitcoin wallets include:

Mobile Wallet

This wallet type is ideal for users who use Bitcoin daily to pay for shopping and making trades physically. A mobile crypto wallet is a very important tool that runs on a mobile app. It stores the private keys to allow users to carry out their transactions unhindered and securely.

Mobile wallets use simplified payment verification. They rely on trusted nodes in the Bitcoin network to make sure there is correct information flowing across the network. Moreover, there is a two-factor authentication protocol to prevent hack attacks.

Web Wallets or Exchange Wallets (E-wallets)

Web wallets are always online and a third-party e.g., crypto exchanges control them. Different service providers use different features that can replicate the users' addresses across their devices and link the mobile and desktop wallets. E-wallets operate on crypto exchanges. In some cases, e-wallets offer protection against losses of funds in the form of insurance. However, there is the risk of the third party taking off with the crypto assets stored on the e-wallets.

Desktop Wallets

These are wallets downloaded and installed on the computer. They are connected to the internet and are a great solution for storing small amounts of Bitcoin.

Paper Wallet

This is a physical document that contains a public address for receiving Bitcoins and the users' private-key. This document allows users to transfer and spend Bitcoins stored in that address. Paper wallets are QR-codes that are easy to scan and use instantly. However, there is a risk of someone stealing or using the document to access your wallet. Therefore, it is important to keep it secure.

Physical Bitcoin

These are primarily collector items. The first type of such wallet was Bitbill - a credit card. Recent versions are round medals shaped. In 2011, Mike Cadwell created the first Casascius physical Bitcoin. However, a physical coin makes transacting using cryptocurrency less easy.

Bank Accounts

Some banks are custodians of Bitcoin, referred to as regulated cryptocurrency banks. They offer bank-grade security to crypto accounts and monitor any suspicious activity to keep the assets of their customers safe. These services are essentially long-term. Users are often subject to withdrawal limits, the surveillance is strict, and Know Your Customer requirements are mandatory. Only a handful of banks are regulating cryptocurrencies.

If you have any questions or concerns before beginning your cryptocurrency trading journey through Rain, feel free to contact support. We are only a message away to assist you.

Rain is licensed by the Central Bank of Bahrain as a Category 3 Crypto-Asset Services Provider. We are headquartered in the Kingdom of Bahrain

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