Bitcoin wallet how to use?

Bitcoin is an electronic payment system based on working with the cryptocurrency of the same name - Bitcoin.

In this article we will examine the process of working with Bitcoin as EPS, namely: the choice and creation of the wallet, the main advantages and disadvantages, protection system, registration, and more.

Bitcoin: an overview of the electronic payment system

As you know, Bitcoin combines two inseparably linked concepts:

• 1. Bitcoin (Bitcoin) - a decentralized electronic financial settlement system in the network.
• 2. BTC, Bitcoin is a countable monetary unit.

In this article, we consider Bitcoin as an open electronic payment system, with the help of which transactions with the same currency are made, which is described in more detail in our article here.

The idea of ​​creating Bitcoin belongs to an anonymous developer who in 2008 published a scientific article under the name of a certain Satoshi Nakamoto, describing in it the theoretical foundations of the system based on cryptography and programming.

Bitcoin as an EPS is no different in how it works from all other EPS: just like using the well-known PayPal system, you make transactions in US dollars, and you use the Bitcoin system in the same way, making transactions in BTC.

Bitcoin wallets

In order to freely and fully dispose of the Bitcoin system, it is necessary to create a special functional client - a bitcoin wallet.

There is a common misconception that a bitcoin wallet is a long string of Latin letters and numbers (for example, 159TFgyRhrSsddZaL6PGXZgyzh6gxuSc7k). In fact, this is the public address of your Bitcoin wallet, and there can be as many such addresses as you like.

The wallet itself (in the basic sense) is a regular file, which stores information about all your addresses. This file is managed by a special program. Hence the conclusion: a Bitcoin wallet is a file and the program it manages.

The choice of a bitcoin wallet is a very important task, which must be approached judiciously and seriously. A good and reliable wallet must satisfy two mandatory criteria:

• The wallet must provide proof of ownership of bitcoins. For this item, the so-called. private key that is created by the program and corresponds to the public address. It is the secure storage of private keys that ensures the safety and reliability of your funds.
• The wallet should allow you to freely manage your money at any time.

Now consider the types of wallets. At the moment, only 5 species are known:

• Web wallets (online wallets);
• Mobile;
• Local (desktop, offline wallets);
• Hardware;
• Paper.

Each type of wallet is characterized by its own characteristics, but we will talk about the advantages and disadvantages of the two most used types: onaylan and offylan-wallets.

Online wallet: advantages and disadvantages

The advantages include:

• Speed ​​and intuitiveness of work with the service;
• Accessibility from anywhere in the world where there is Internet;
• Cross-platform: access from any device that has Internet access via a browser;
• Convenience when traveling and shopping online;
• The best option for beginners and for operations with small amounts of military-technical cooperation.

The disadvantages include:

• Wallet security depends on a third-party resource;
• Wallets are loaded from a remote server;
• Many online wallets can fully control your bitcoins, since the keys are stored on the servers of the service.

Famous and most used online wallets:

1.Blockchain.info 

The Blockchain platform was founded in London on August 30, 2011, standing almost at the origin of the Bitcoin network. At the moment, the service is the most popular and leading online wallet: the system has about 13 million wallets and serves more than 7 million users from around the world.

The main features of Blockchain.info:

• Quick and easy wallet registration. To increase the security of the transfer, you can make wallets for one-time transactions;
• There are several internal and external monitoring systems aimed at monitoring the correct functioning of the source code;
• The ability to create backup copies of the wallet with their automatic sending by e-mail;
• The service has been translated into 25 languages;
• Platform transparency: display all transactions in real time;
• Dynamic commissions.

It is important to understand that Blockchain.info is a regular commercial project, which is not an official bitcoin wallet, as many mistakenly believe; Yes, and with the technology blockchain also has nothing to do. The developers simply chose this name for their wallet.

2. Coinbase

Coinbase was founded by Brian Armstrong in 2012 in San Francisco and is currently the second most popular online bitcoin wallet after Blockchain.info.

• It has its own internal exchange: the possibility of exchanging bitcoins for dollars or euros and vice versa; using the Instant Exchange technology, it is possible to automatically convert bitcoins into the traditional currency;
• The ability to bind a wallet to Google ID;
• Multisig technology: for a transaction it is necessary to use several digital keys stored in different places and different forms;
• CoinBase is the most deanonymized platform, as it often requires personal data.

3. Xapo

Xapo is a Swiss company, founded in 2013 by Argentine entrepreneur Vences Casares. The platform has already managed to get the location in the Bitcoin community and is only gaining popularity.

The main features of Xapo

• Cold storage service (storing bitcoins without access to the Internet) through the Vault service (storage);
• The ability to order a plastic card Xapo, similar to bank debit cards;
• You can create wallets not only for Bitcoin, but for almost any currency;
• Private keys are not available to users;
• No commissions.

By the way, an interesting fact. Of these examples, only Blockchain.info is a real Bitcoin wallet (in the strict sense). Xapo and CoinBase are the usual bitcoin banks, which simply re-named the currency trading system. Among all the online wallets, generally speaking, it is difficult to find a clean Bitcoin wallet now, as it is more convenient for services to store keys on their servers.

Offline wallet: advantages and disadvantages

In general, for offline line wallets, the following advantages can be distinguished:

• Full control over your bitcoins without the involvement of third parties;
• The best option for advanced users and for long-term storage of large amounts of military-technical cooperation.

Further, depending on your goals, you can choose which particular wallet you should use: thick (heavy) or thin.

The advantages of thick wallets include:

• Maximum level of anonymity and reliability;
• The guarantor of control of originality;
• Wide functionality.

The disadvantages of thick wallets include:

• Requires download and storage of the entire blockchain, which occupies a significant space on the hard disk;
• High-speed internet connection and high computer specifications are required.

Known and most used thick wallets:

1. Bitcoin Core (Bitcoin-Qt)

Bitcoin-Qt is undoubtedly the most well-known client of a fat wallet. This wallet is considered the very first program developed by the mysterious Bitcoin creator Satoshi Nakamoto. At the moment, the wallet is supported by a group of developers led by Gavin Andresen.

Despite the fact that Bitcoin-Qt was created for a long time, it is constantly updated and has a large customer base. Also, the client can be installed on any popular operating system, which additionally guarantees convenience for use.

The main features of Bitcoin-Qt:

• Reference stability, high security and level of confidentiality;
• Resource intensity;
• The file wallet.dat stores all your public addresses and private keys to them;
• File encryption is proposed using a password;
• Import and export keys.

If you have good computer technical data, then it is recommended to start serious work with cryptocurrency with Bitcoin-Qt.

2. Armory

Armory is a Bitcoin-Qt extension client. Since the wallet works on top of Bitcoin-Qt, therefore, it will require an installed official Bitcoin-Qt client with a synchronized blockchain.

Key features of Armory:

• Reference security level;
• The ability to make transactions even without connecting to the network via a USB key;
• Ability to manage multiple wallets;
• Several functional modes to provide the necessary settings and information;
• High requirements for RAM.

Armory is ideal for those who want to have everything under control.

Now look at the thin wallets. The advantages of thin wallets include:

• No need to download and store blockchain;
• Ease of management and high speed of transactions;
• The best option for working on a laptop, netbook or tablet.

The disadvantages of thin wallets include:

• All checks are carried out by a third party.

The well-known and most used thin wallet is the Electrum.

The main features of Electrum:

• Balance between functionality and style;
• The minimum resource consumption, the client can be kept even on USB-carriers;
• There are full and portable versions;
• Generation of seed codes, instead of creating backup copies;
• There is an application on Android.

Electrum: a simple and convenient Bitcoin client that consumes few system resources. The task of this application is to speed up the work with the Bitcoin network.

The advantages and disadvantages of working with Bitcoin in general

The main advantages (in the face of principles) of working with the Bitcoin network:

• Decentralization. Bitcoin is not controlled by anyone, companies or states. All transactions are peering, that is, independent of the central server, character.
• Anonymity. There is no personal data in the Bitcoin system. Here a lot depends on the choice of the wallet, as in some cases partial or full confirmation of the identity is required. However, most wallets try to guarantee the confidentiality of personal data.
• Reliability and safety. The likelihood that Bitcoin will be subject to hacker attacks is almost zero. Withdrawal of money from the wallet or its blocking system in Bitcoin impossible.
• Low fees. Commissions were introduced to rank transactions by priority. Generally speaking, most transactions can be made without commission - this is voluntary, but then the priority of processing such transactions will be the lowest.
• The transparency of the calculations. Details of all transactions are publicly available and are stored in a special database - the blockchain. They can not be deleted, and knowing only one Bitcoin address, you can find out all transactions received or sent from it.
• 24/7/365. Bitcoin is open 24 hours, seven days a week and 365 days a year without weekends and holidays. If you wanted to make a transfer on January 1 at 5 am, then it will be so.
• Lack of boundaries. Bitcoin works anywhere in the world where there is Internet access (and sometimes even it is not required).
• The division into coins. This allows you to make microtransactions, even thousandths of a dollar is not a problem.

The main disadvantages of working with the Bitcoin network:

• Lack of chargebacks. Bitcoin does not support its customers. Therefore, if you make a mistake when entering the address, enter the wrong amount, lose access to the wallet or you have a hard time breaking money, you will lose Bitcoins completely and you will have nowhere to turn for help. Everything else, the transaction can not be canceled.
• Direct dependence on BTC. The Bitcoin network is completely dependent on the currency itself: if suddenly Bitcoin depreciates, the network will lose its relevance and become meaningless.
• Transaction delay Transactions are not as fast as we would like, but to increase the priority you have to pay.

Ways to Protect Bitcoin Wallets

• Encryption - users can encrypt their data using a special program or the function Encrypt Wallet. Encryption reduces the likelihood of a wallet being hacked, but does not provide an absolute guarantee.
• Backup is one of the best ways to protect. Always make backup copies of the wallet and store them on different media (flash drives, portable disks). This will not only protect you from computer system errors, but also help to restore the wallet, if for any reason it has been lost.
• Complex passwords and two-factor identification. Passwords on Bitcoin wallets must include at least 8-10 characters (letters with numbers). Two-factor identification will provide additional protection for such wallets.
• Cold Storage. You can keep most of your money offline, without access to the network. At the moment, this is the best way to protect against hacker attacks.

Instructions for registration, replenishment and exchange of Bitcoins

1. In order to use Bitcoins, you must first have a Bitcoin wallet. To do this, go to the website Blockchain.info. Next, in the header of the site, find the wallet section and click on it.

Scroll down the page that opens and click "Create your wallet".

2. Enter all requested data in the registration form. Try to come up with the most reliable password, a security indicator will appear below the fill box, which will tell you how secure the password you have specified. After filling in the fields, accept the terms of the user agreement and click "Continue."

3. If you entered the data correctly, a message appears on the screen about the successful completion of registration, click "Start"

4. In your account, you will be able to carry out transactions with Bitcoins - send and receive them.

5. A unique ID of the wallet will be sent to the e-mail address specified during registration, which you will use for the subsequent login.

6. If you need bitcoins, then you can purchase them through cryptocurrency exchanges or exchange them via an exchanger with fiat funds on one of the payment systems. For exchanging bitcoins for other currencies and vice versa it is convenient to use the service Bestchange.ru. Here you can find out the most favorable rate among the verified exchangers and perform the operation with the most acceptable conditions for you. Simply select the exchange direction and the service will give you a rating of exchangers:

Bitcoin reviews, my personal experience

From the considered features, it can be concluded that today Bitcoin has very good development prospects, and Bitcoin wallets are a very profitable alternative to traditional bank accounts. You yourself ensure the protection of your money, not relying on the services of financial organizations, and, therefore, not becoming dependent on them. However, unlike all other EPS, working with Bitcoin is the most difficult, therefore, to fully use the network, you must have a certain level of knowledge.

In the period from May 2016 to March 2017, the BTC exchange rate against the dollar rose from $ 500 to $ 1,200. The upward trend is likely to continue due to the wide demand for cryptocurrency among speculators, traders and various investors. Therefore, Bitcoin will be in demand as long as the cryptocurrency itself is in demand.