Bitcoin Hard and Soft Wallets

Hard Wallets

Hard Wallets are a really important part of the blockchain system. These wallets provide both security and utility when they interact with the blockchain. Here are the reasons why you should utilize a Bitcoin wallet in case you do not already use one. Some really good hardware wallets for Bitcoin are Ledger, KeepKey, NGRAVE ZERO, Nano X, Trezor Model T and BitBox.

1. Super Secure

Even when the computer you are using is not secure, you may keep your assets safe. Hard wallets give you another safe layer of security to protect your assets against malware, phishing sites and most importantly cyber attacks.

2. One Location for Many Assets

A hard wallet is able to work with more than one blockchain ecosystem simultaneously. This fact lets you manage a lot of crypto currencies alongside Bitcoin. For example, you can have Bitcoin, Ethereum and Alt. Coins, Lumens and a bunch of other crypto currencies all on the same device. Another good thing about this is that you are able to easily back up all of your cryptocurrencies with a single recovery phrase.

3. Convenience

A hard wallet, usually a small plug-in device, is basically a portable key to access all of your crypto assets from anywhere actually. With a hard wallet you will have the ability to log on to a lot of dApps (Decentralized Applications) without needing to create multiple new accounts. You may even use these wallets for logging in to regular apps such as Facebook or Google.

4. Wallet to Wallet Trading

Such platforms as Radar Relay, let you trade straight from your hard wallet. This is by far the safest method to trade digital assets as you still keep hold of all your tokens at all times. Being able to trade crypto assets directly from the ease of your wallet rather than having to deposit them to an exchange wallet is quite beneficial. It saves you a lot of time by simply bypassing the process of deposits and its delays and also skipping the fees from withdrawal limits.

How do hard wallets work?

Cryptocurrencies are never kept within the hard wallet itself. Instead they are always living on the blockchain. Now the hard wallet only keeps your private key. The said private key is able to open the lock of your address on the blockchain. This address is where your assets actually live. Because the blockchain is actually everywhere, you only need to have your hard wallet in order to be able to interact with the tokens in your possession.

Hard wallets are dual purpose

They will protect your private keys: hard wallets are usually considered as cold storage because they separate your private keys from the Internet. This way the risk of compromising your assets during an online attack will be minimized.

They allow you to sign and / or confirm transactions on the blockchain: when a blockchain transaction is made by you, you are in fact signing a particular special message. Your signature actually proves your ownership for the private key. It is not possible to actually forge the signature without owning the key so you can breathe easily because no one is able to create a blockchain transaction on your behalf without having it.

Soft Wallets

A soft wallet is basically a bitcoin app that is installed on your computer’s hard drive and offers you great security and complete control, since every bitcoin that you hold can only be accessed on your own computer system. This app is called Bitcoin Core which is developed and also supported by the Bitcoin Foundation. When your soft wallet is installed, it makes a file for the wallet with .dat format. This file stores all the data which is related to your personal Bitcoin wallet.

Soft(ware) wallets are available in three different forms with each one having some unique characteristics:

1. Desktop Wallets:

These are some computer programs which have the ability to store crypto assets on a personal computer so the information cannot be accessed to anyone else but the users themselves whose private keys are stored on the desktop only. Examples of desktop wallets are Exodus, Ledger, Trezor and Electrum.

2. Mobile Wallets:

These types are in the form of an application on a smartphone. The users can access their mobile wallet at any time, knowing that not a lot of people would leave their homes without their phone. But it is worth mentioning that mobile wallets are only as strong as your smartphone’s security allows. Because of this, these wallets are highly vulnerable to attacks and malware. Some good mobile wallets are Mycelium, Apple Pay, Google Pay, Samsung Pay, Venmo and PayPal.

3. Online Wallets:

The last type is basically a web page. This makes online wallets, the most easily accessible wallet among the three. You can access them at any time or place. You only need an Internet connection and a device that is able to connect to it. Unlike the other two, in this wallet, the private keys are not kept locally. Instead, they are stored by the website owners. Coinbase is the best overall online wallet.

Sync Your Wallet

To make sure that the soft wallet is offering you the most updated information regarding your account, you need to sync it on a day to day basis. Different systems (computers and / or tablets) may perform this sync by themselves in their own way; so, make sure that you check out the process of how to sync on your device before doing so.

Secure Your Wallet

The Bitcoin Core client lets you encrypt a password. We suggest that you definitely do this because with this encryption, in case someone gets their hands on your hard drive for some reason, then they need to acquire the password first in order to access your data and crypto assets – aka bitcoins. Now if you have set a really strong and hard to guess password, the possibility of someone gaining access to your account is almost impossible so you can be sure that your bitcoins are safe.

Back Up Your Wallet

When you make your Bitcoin wallet first, please make sure that you back it up within the software. You may put the backup files in an external hard drive or a USB flash drive, and with encrypting it, you will be safe that you are able to access your bitcoins again in case something bad and unwanted were to happen to your device.

Last Words

When using a Bitcoin wallet, there won’t be any cost (though only if you are using the wallet as a simple storage); however, if a transaction is created and completed, the owner of the exchange and the device housing your wallet is going to charge you depending on what you are trying to do. Also purchasing a wallet will probably cost you something from $0 to $200 or even more. If you use the wallet for exchanging, then you either have to pay a percentage of the total transaction value or just a flat fee of a few dollars.