By Contributing Author
Without question, Bitcoin is one of the most popular cryptocurrencies worldwide. Bitcoin is not backed by physical material or by the government and doesn’t require a bank or third-party involvement. Bitcoin is a first-generation blockchain in the cryptocurrency community.
Bitcoin is a digital currency that you can buy, sell and exchange on the peer-to-peer network. It is a decentralized currency powered by cryptography and the network of individuals who use it. Bitcoin is money that is virtual and removes third-party involvement in financial transactions and can be purchased on several exchange platforms.
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Who can use Bitcoin?
Anyone can use Bitcoin as it has been made accessible to everyone on a public ledger. It is advisable to first check the laws and regulations of your country regarding the use of cryptocurrencies. For example, Germany is regarded as one of the most crypto-friendly countries. It allows the utilization of crypto investment, supported by its zero tax policy on long-term capital gains from crypto.
How do you store Bitcoin?
When you own cryptocurrency one of the most important things to consider is how to store it. Bitcoin does not require the use of banks, so the owners or users are in control of storing Bitcoin themselves. It is stored in digital wallets — a type of computer software that connects to the Bitcoin network. Most automated cryptocurrency tools have built in digital wallets to keep your cryptocurrency safe. According to CoinDesk, “an easy way to understand public and private keys is to think of your public key like your home address. Anyone can see it and use it to send deliveries to your house, or in this case, transactions. Your private key is like the key to your front door. It is something that only you want to be in possession of, and it is what keeps other people from being able to access the contents of your digital wallet.” Bitcoin has two main categories, namely hot wallets and cold wallets.
Hot wallets: these types of wallets are connected to the internet, and available online. Hot wallets are most popular because of their convenience, as they are already connected to the internet so investors can access and exchange funds quickly. These wallets mostly store small or medium amounts of Bitcoin for spending and to have digital money available at all times through their mobile phones or laptops.
Cold wallets: also referred to as hardware wallets, these types of wallets are completely offline and are the safest option when it comes to storing Bitcoin. These are offline wallets not connected to the internet. Hardware wallets are small devices that connect to the computer to store Bitcoin and they connect to the internet when sending or receiving Bitcoin but other than that they keep your funds offline. Some popular examples in this category include desktop folders, USB sticks, CDs, and fireproof safes.
It is highly advisable that you keep your private key as protected as possible and also make sure that you double-check your public key while making transactions. If you forget your private key or make any error while doing a transaction your Bitcoin will be lost indefinitely. Avoid sharing too much information as it can lead to hackers gaining access to your information, cracking your private key, and stealing your credentials and investments. Always use a secure network and try to avoid public WiFi networks when accessing your Bitcoin via the internet.
Bitcoin gives one the independence of staying off the grid as it does not associate with financial institutions or the government, and this also comes with the responsibility of securely storing Bitcoin yourself. With the few steps mentioned above you can protect your Bitcoin and keep your funds safe.