The Bitcoin revolution paved the way for the blockchain-enabled Cryptocurrencies, known as altcoins. During its journey so far, Bitcoin has experienced several peaks and valleys. For example, in May 2016, a bitcoin (BTC) value was $500, while it rose to as high as $23,000 in August 2022.

Industry analysts opine that the Bitcoin price could rise higher with the increased applications of blockchain and Cryptocurrency that are becoming a vital part of people’s daily lives.

In November 2021, after touching an all-time high mark of $69,000, the BTC price plummeted to $17,708 in June 2022. This event brought into light the extremely uncertain and volatile nature of Bitcoin, making investors alert.

However, despite the ebbs and flows, Bitcoin remains to be the top performer among all Cryptocurrencies on the leaderboard, even today.

In this article, we delve into what Bitcoin is, how it works, how to buy it, what wallets are, the best bitcoin wallets, how to create a bitcoin wallet, and more. Let’s get started.

What is Bitcoin?

Bitcoin is a decentralized digital currency that helps transfer funds between parties without involving intermediaries. Bitcoin is underpinned by blockchain technology. Let’s understand. Say there are 100 computers in a Bitcoin blockchain network. To be a part of the blockchain network, you need to install software on your computer, and all you need is a good internet connection.

How does Bitcoin work?

Let’s dive deeper to understand how Bitcoin works. These computers in the network are called nodes. For example, say node A sends 10 BTC to node B, and node C receives 40 BTC from node E, then all these transactions are recorded in a public digital ledger, and a copy of it is maintained at each node. That means it is highly secure, tamper-proof, and transparent.

No node can edit or alter any stored records in the ledger without the other nodes knowing about it. And all this is controlled by blockchain software; no central authority like a bank, etc., is needed to act as a middleman.

Diving deeper, any transaction by a node must be validated and confirmed by a majority of the other nodes in the network. Only then a block, which is the group of validated transactions, is appended to the blocks (similar groups of validated transactions) preceding it. Likewise, each block gets tagged to the previous one in a chronological sequence, forming a chain – the blockchain.

Now, if A sends 10 BTC to B, this transaction is either added to a group or waits in a queue. The nodes are presented with a highly complex mathematical problem based on cryptography. The node which solves the problem first and correctly gets the chance to validate the group of transactions.

Once validated, the output appears on all nodes, and they vote for confirmation. If the majority votes support the answer, it is added to the previous block. And the node that validated the block receives a reward as bitcoin.

This process of solving complex mathematical equations to receive bitcoins is known as mining, and it consumes a huge amount of electricity. The nodes performing the mining are known as miners. That’s why Bitcoin is sometimes referred to as ‘digital gold.

Where to buy Bitcoin?

To buy Bitcoin or any Crypto, you need a crypto exchange where buyers and sellers meet to transact in coins. There are several exchanges like Binance, Gemini, eToro, Coinbase, and more.

How to buy Bitcoin?

Once you choose the Crypto exchange, you have to fund your account to invest in Bitcoin. First, check if your exchange has an in-built wallet; else, you have to create a bitcoin wallet. Once your account is funded, you can get started by placing the order to purchase the Bitcoin.

What is the first step in owning or purchasing a Bitcoin?

Now that you know what Bitcoin is and you plan to buy some, let’s familiarize you with the first and most vital step.

Just like your leather wallets help you store cash; Crypto or digital wallets are used to store crypto funds securely. So, what are Crypto wallets?

What is a Bitcoin wallet?

A Bitcoin wallet is any Crypto wallet that stores Bitcoins or any Cryptocurrencies. It is a digital wallet that gives you access to your Crypto holdings by providing two addresses. Similar to your email address which you share with others so they can send you messages, wallets have a public address you must share with someone you wish to transact with in Cryptos.

Additionally, like your email password, which only you know (unless you tell someone deliberately), and you use it to access your email inbox, etc. Crypto wallets have a private address or key that is only known to you. And this helps you to access the Cryptos in your account.

Types of Crypto Wallets

There are two types of Crypto wallets: software wallets and hardware wallets. Software wallets, in turn, come in 3 types – web wallets, mobile wallets, and desktop wallets.

Web-based wallets: These are easy-to-use wallets hosted on an exchange where you can buy and sell Cryptos. In these, security keys are stored and managed by the wallet provider, offering a hassle-free experience. The only concern is the risk of the exchange getting hacked, raising security challenges. Otherwise, these wallets provide the best ways to manage your cryptos.

Mobile-based wallets: Mobile wallets are software programs on your smartphone. While some of these are hosted, for others, you are responsible for managing and storing your private keys to access your Cryptos. Examples are Trust wallet, Mycelium, etc.

Desktop wallets: Desktop wallets are similar to mobile wallets. They are software that runs on a PC. Some examples are Exodus, Electrum, and Metamask.

Hardware wallets: Hardware wallets offer the greatest security, as your Cryptos are stored on an offline hardware device. A USB or similar device connects the wallet to your computer, allowing transfers and transactions. These are the best bitcoin wallets. However, you must remember your private keys. Examples of these wallets are Ledger and Trezor.

How to create a Bitcoin wallet?

To create a bitcoin wallet, all you need to do is install the app on your desktop or Laptop. After that, the wallet is automatically created. You can immediately start receiving Bitcoins, store them and use them as you wish.

Recommended Top 3 Best Bitcoin Wallets/Exchanges

Binance

Founded in 2017 in Hong Kong, Binance is a leading Crypto exchange that offers a strong focus on altcoin trading. Binance supports Crypto trading in over 600 cryptocurrencies and tokens, including Bitcoin (BTC), Dogecoin (DOGE), Ether(ETH), and its own Binance coin (BNB).

Binance provides Crypto wallets to its traders for storing their Crypto assets. Check out some of the best benefits of using Binance Crypto wallets as your Personal Bitcoin wallet:

– Binance wallet gives you the dual advantage of wallet and exchange, leading you to 1000+ markets, including cryptocurrencies of large caps and DeFi tokens. – The wallet app allows you to buy and sell Cryptos at a commission of just 0.1%.

– The wallet app implements IP address and device whitelisting, making it highly secure and preventing any unauthorized access.

– You can download the app free of cost on both iOS and Android platforms, and it directs you to Binance’s main account.

eToro

Founded in 2007 in Tel Aviv, eToro is an Israeli multinational trading and diversified asset investment company specializing in Crypto and Forex services. Headquartered in London, eToro provides services to 17 million users across 100+ countries. In 2018, eToro was launched in the United States to cater to only the Cryptocurrency segment.

Some of the advantages of using eToro wallets as your Personal Bitcoin Wallet:

– As eToro operates in a regulated environment governed by GFSC, you can rest assured your Crypto assets are safely stored.

– Unfortunately, if you lose your private keys, you can regain access from the eToro support team. – It offers an excellent wallet interface to trade, with a minimum trade size of $10.

– If you want to trade any of your Cryptos for another token, it’s easy as eToro supports over 500 pairs. – It offers a social trading platform allowing you to copy the buy and sell positions of expert investors through its special copy trading tools.

Gemini

Launched in 2014 in New York, Gemini is one of the popular Crypto exchanges among U.S. residents, supporting 20 Cryptocurrencies and 25 fiat currencies. In addition, Gemini is highly secure as your cryptos are kept in cold storage and insured under FDIC. Some of the reasons why Gemini wallets are recommended as your Personal Bitcoin Wallet:

– Gemini supports over 80 Cryptocurrencies, including the primary ones like Bitcoin (BTC), Ether(ETH), Dogecoin (DOGE), Shiba Inu (SHIB), and more.

– Claims to be the most insured wallets, with insurance against unauthorized withdrawals due to hacking, fraudulent activity, or employee theft. – It offers a web portal and an easy-to-use app to buy and sell coins on iOS and Android platforms.

Closing thoughts

Cryptocurrencies are here to stay. Invest in them wisely and only as much as you can afford to lose. The content on wallets discussed here should help you choose the perfect one to store your Crypto holdings. So select the best bitcoin wallet and get started!