WHAT IS A BITCOIN WALLET

“What is a Bitcoin Wallet?”
How to get started with your first Bitcoin wallet in the Philippines?(this is also applicable anywhere else in the world)

I’m getting this question a lot on all those people who want to start with Bitcoins in the Philippines but have no clue where to begin.

Below would be my simplest explanation as if I’m talking to a Five-year-old, if you want a more academic explanation just google the rest on the internet.

Let’s get started,

What is a Bitcoin Wallet?
It is basically a storage of Bitcoins

Where can I create one?
There are several types, Hot Wallet, Software Wallet, Cold Storage Wallet, Exchange Wallet and Hardware Wallets.

Each type of wallet has a specific purpose.

Exchange wallet is the temporary wallet issued to you by exchange sites selling bitcoins. An example of exchange wallets are Abra, Coins.ph, Localbitcoins, Bitfinex and all other sites that buy and sell bitcoins.

Pro tip: Do not leave your bitcoins on exchanges, always transfer them to a Hardware or Software wallet but not on exchange wallets.

Software Wallets are wallets that can be downloaded and installed on your Smartphone and Desktop PC (most of them are free).
The most popular software wallets are Electrum, Jaxx and Exodus.

Hardware Wallets are like cold storage wallet that has external buttons preventing your Bitcoin storage from online malicious hacks and access.
The most popular Hardware wallets on the market are Ledger Wallet and Trezor.

You may check on Lazada, I was able to buy one for P6,000 at the time of this writing

Ledger Nano S Hardware Wallet

Cold Storage Wallets are for those paranoid Bitcoin holders, this includes me hahaha, Cold storage wallet is just a software wallet but installed on an offline computer which guarantees the owner that the wallet is free from any possible lurking virus, malware or any form of hack that may be residing on a computer that is being used daily on the internet.

With this type of method, the private keys are generated securely offline and the Bitcoins can be accessed only through an external USB that will be used to sign keys back and forth between offline and online computers.

Having a Cold Storage is a bit cumbersome and is not advised if you are regularly sending Bitcoins back and forth to different people, it would also require that you have a spare computer at home that you would never connect to the internet.

The simplified and more convenient version of a cold storage wallet is the hardware wallet, private keys are generated away from the computer and your Bitcoin funds can never be accessed by malicious bugs or malwares since sending any Bitcoins would require a password using the physical buttons on the device.

So what do I personally use?

Exchange Wallet just to temporarily store Bitcoins after purchasing.

Hardware Wallet to secure my bitcoins for day to day trades, if you don’t have the budget to buy a hardware wallet, use a software wallet that has private keys.

My personal suggestion is to use the Electrum software wallet, it is very secured if you will just focus on Bitcoins and can be easily installed on your smart phone or desktop computer.

Finally I use Electrum Cold Storage for my Bitcoin long term holdings, Electrum is free andopen source and considered to be the most secured and robust wallet available for Bitcoins. The Bitcoins I plan to keep for the long-term, I just send them to this wallet and don’t bother in accessing them until I really want to sell them in the far future.

Pro tip: If you are running an electrum cold storage wallet you can still view your Bitcoin account from your smart phone on a view only mode using the xpub address which you need to get from the offline cold storage wallet.

A properly created Bitcoin wallet can guarantee you a safe and secure storage that is even more secure than centralized servers of the biggest banks in the world. The only weakness here is if you lose your private keys.

Pro tip:

1. Never ever let your private keys touch anything that has internet on it
2. Write down your private keys on a piece of paper and place in a beach waterproof cellphone case, just in case there might be floods in your area.
3. Make a duplicate copy and place in a vault at home, bank safety deposit box or maybe in your sock drawer, just keep it in a safe place at home.

Does website exchanges like coins.ph or localbitcoins.com offer private keys to your wallet?
No, they are just creating sub-wallets on their main bitcoin wallet that has a private key that is their own.

Which wallets have Private Keys that can be generated?
Software Wallets such as Electrum and Jaxx
All Hardware Wallets
Cold Storage Wallets

How secure are bitcoin hardware or cold storage wallets?
It is mathematically estimated that if you take the most powerful computer in existence today it would take 0.65 billion billion years to hack your private key and we are only talking about one bitcoin wallet.

I know it is starting to get confusing and the more I type the more terminologies and concepts I get to add. Just start with electrum or jaxx wallet and make sure to start practicing the habit of putting your passwords and private keys on a piece of paper.

Let me leave you with my personal philosophies on how I secure my Bitcoins.

“Even for a small amount, start the habit of securing your bitcoins as if they are worth millions already”

“There is no sense of dreaming that Bitcoins will be worth Millions of dollars in the future if you will just lose it”

“You are your own bank and there’s no one in the entire universe that can retrieve your private keys if you lose it”

“It is normal to be insanely paranoid when you are securing Bitcoins”

“You don’t own your Bitcoins if you don’t control the private keys to your wallet”

It took me almost 3 months to learn how to properly store and secure bitcoins the best possible way, I know it is intimidating at the start, but if you believe in Bitcoins and the opportunity it presents, your very first investment should not be money but on learning how to secure it.

If you want to know more about Bitcoin private keys and how to properly secure Bitcoins with your private keys please check my other article.
https://medium.com/@ianmadrid/how-would-you-know-you-have-the-real-bitcoins-d4d509fd2481

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Where to buy bitcoins in the Philippines?
We are selling bitcoins in the safest, cheapest and fastest way possible and that is through meetups.

Check out our website at
bitcoinsmeetup.com
fb.com/bitcoinsmeetup.com

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