The first bitcoin wallets

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07.12.2021 04:20
The first bitcoin wallets

    Bitcoin and other cryptocurrencies are becoming more and more popular every year. And even people who used to consider digital assets as something meaningless and useless are starting to buy their first coins. But buying bitcoins is only half the battle. After all, you also need somewhere to store them. Special bitcoin wallets are used for this purpose. They differ in the way they can be used, in their convenience and reliability.

    In this article we will analyze what the first bitcoin wallet was like, what a novice user needs to know about storing cryptocurrencies, and how to organize safe storage of digital coins without any difficulties.

    How bitcoin blockchain works

        Before you deal with the principles of bitcoin wallets, you need to understand how the technology on which the cryptocurrency operates. It is called blockchain. Here are its main features:

    • The functioning of the network is provided by a huge number of computers located in different parts of the world. Blockchain technology connects them to each other.
    • The network (blockchain) itself consists of many blocks. Moreover, they are connected sequentially. That is, you cannot remove a block from the network, because that would break the structure of the whole chain following it.
    • Each block contains all transactions performed or partially performed during its formation. A new block appears every 10 minutes. When filled, it takes its place in the general chain of blocks and will never be changed again. New transactions will be written into the next block.

    Thus, blockchain is a sequential chain of blocks. And each block is related to the previous block, as well as transactions within the block itself.

    Types of bitcoin wallets

     To use cryptocurrency, you need to have your own bitcoin wallet. However, you will also have to choose its type:

    1. ‘Cold’ wallet. Designed to work offline, it provides reliable storage of digital coins without an Internet connection. Of course, to send or receive a transaction, you can't do without connecting to the network. However, if the task is only storage, cold wallets are the best option.

    2. ‘Hot’ wallet. It is characterized by convenience, because it is constantly connected to the Internet, and allows you to make transactions very quickly. Hot wallets include, for example, apps for storing cryptocurrency on a smartphone and browser extensions.

    Types of desktop wallets

    Wallets can also be divided into two categories of wallets designed for use on a PC. Some are a simplified version that uses a small amount of computer resources. They are like a banking application - you can use them to receive and send transactions, check your balance, but you are not involved in the blockchain in any way.

    But full-fledged desktop wallets work in a completely different way. They turn your computer into a node, which is the name given to every device that participates in the blockchain. These wallets require you to download the entire chain of bitcoin blocks to your computer over time.  And it weighs a lot – it is already over 350 GB, and growing all the time.

    Such applications are mainly used by people who consider it their duty to support the functioning of the bitcoin network. But the average user does not need such programs. Not only will they take much space on your hard drive, but they will constantly use PC resources, slowing down all other processes.

    Hardware wallets

    Separate attention can be paid to hardware wallets. This is the name of the special devices designed exclusively for storing cryptocurrency, and not permanently connected to the Internet. Outwardly, they usually look like a simple USB flash drive. In fact, they represent a much more secure and reliable device.

    It is believed that hardware wallets are the best solution for long-term storage of bitcoins and other cryptocurrencies. After all, it does not have a permanent connection to the Internet, and it can be connected to any computer when you need access. However, hardware wallets need to be purchased from the companies that create them, while all other types of wallets can be used for free.

    The first-ever bitcoin wallet

    Satoshi Nakamoto, the mysterious and still undisclosed creator of bitcoin, understood that in addition to blockchain, it was necessary to develop an application for making transactions and storing currency. That is why he created a protocol called Bitcoin-Qt, which became the very first bitcoin wallet.

        It was a full-fledged desktop client. To use it, it was necessary to download the entire blockchain to a computer. However, crypto-enthusiasts had no other options at the time. But the blockchain also weighed less, which meant that using such a wallet was easier.

        Later, Bitcoin-Qt was renamed Bitcoin Core. This wallet is still used by many today. But as stated above, for the average user, it is of little interest.

        The rest of the first bitcoin wallets worked on the same principle. This This continued until 2014, when a solution called Trezor appeared in the market. It was the first hardware wallet for storing bitcoins. The developers regularly publish every new version of the source code of the program on the basis of which the device functions. This gives each user an opportunity to independently verify that his/her wallet is safe.

        Other hardware wallets were later developed on the basis of the Trezor code. For example, now one of the most popular solutions is Ledger Nano S. This is a more advanced hardware wallet, which, although it stores cryptocurrencies autonomously, allows you to connect to it from a computer or smartphone, if necessary, through special applications.

    How cryptocurrency is stored now

    Of course, the first bitcoin wallets are interesting in themselves because they are part of history. But now the average user who wants to invest in cryptocurrencies does not need them. So, let's look at popular solutions that are actually used by a large number of people around the world.

    Paper Wallet

    It may seem strange, but such a thing as a ‘paper wallet’ really exists. The matter is that it is possible to turn the access keys to your bitcoins into a QR code and then print this code. Afterwards the only thing to do is to keep a sheet of paper somewhere safe, which is the way of access to the digital assets.

    It turns out that nobody will be able to hack the wallet, because without the generated QR code at hand, it will be impossible to transfer bitcoins to another address. The convenience of the method lies in the fact that no appis needed for storage - neither on a computer, nor on a smartphone.

    And while paper wallets do get used by people who don't really trust modern technology (but have invested in bitcoins), they do have drawbacks:

    • Unreliability. Access keys printed on a piece of paper can get erased, lost, burned, and so on.
    • Lack of versatility. This method of storage is suitable only for those people who are sure that they will not sell their bitcoins for many years, because they will have to perform a lot of complicated actions to make a deal.
    • Lack of encryption. When storing digital assets in applications, you can additionally protect them with various passwords. In case all the access keys are printed out on a piece of paper, anyone who gets their hands on that sheet can do anything with the bitcoins.

    By the way, some users can do without QR codes and print out long text passwords. But it is even less convenient, because when access to bitcoins is required, all data will have to be entered manually.

    Mobile wallets

    Mobile wallets are apps for smartphones and tablets. They allow you to conveniently store, send, and receive cryptocurrencies. They usually support a large number of digital assets, so a user can get by with just one app for all currencies. The most popular mobile wallet is called Trust Wallet. It allows you to store bitcoins and many other cryptocurrencies and tokens.

    However, classic mobile wallets have disadvantages. The main one is lack of reliability. If a virus gets into your device, or if someone else can access it, your funds could be stolen. There will be no one to complain, because when using a mobile wallet, the user is responsible for storing cryptocurrencies.

    Browser Wallets

    Browser wallets are very similar to mobile wallets. Only those are installed on smartphones, but these are installed directly in the browser on a PC. The most popular solution of this type is MetaMask.

    Browser Wallet is convenient due to the fact that it does not require the installation of a separate application at all. All you need to do is to download an extension to your browser, create a wallet there, and everything is ready to go right away.

    The advantage of browser wallets is the ability to access your cryptocurrency from any computer connected to the Internet. After all, you can install the extension on any PC, and then, with a personal password, access your personal wallet created from another device.

    The main disadvantage of browser wallets is the same as that of mobile wallets - insufficient reliability. They are great for one-time transactions, but they are not recommended for continuous trading or long-term storage.

    Desktop (desktop) wallets

    Desktop applications, which at one time were not only the first bitcoin wallets, but also the only ones, are still in use today. Popular solutions of this type are Electrum, Exodus, and Wasabi. Such wallets are suitable for people who want cryptocurrencies to be stored specifically on their computer.

    Using such an application, the user is responsible for the safety of the funds. If the computer's hard drive fails and no backup was created for the wallet, or if the PC is hacked by fraudsters, there is no way to get the cryptocurrency back. Therefore, it is not recommended for novice users to use desktop wallets. Due to inexperience, it is easy to make a mistake that will lead to the loss of bitcoins.

    Broex custodial wallet

    The Broex Wallet is the optimal solution for most users. It is a custodial wallet. It means that Broex is responsible for storing cryptocurrencies. Using this wallet, you will get rid of any worries. You won't have to think about how to organize secure bitcoin storage. Even if you lose your wallet password, you can restore it through tech support.

    Other benefits of Broex Wallet:

    • Website + app. You will be able to enter the wallet from both your computer and phone - as you prefer.
    • User-friendly interface. Even if you have never bought bitcoins before, you can easily master the app or website. They are made in such a way, that even a novice user does not face any difficulties.
    • Russian language. This applies to both the interface and technical support. If there is a question or a problem, you can easily solve it with the help of an operator.

    You can use Broex not only as a wallet, but also as an exchanger. In this respect, the platform also has many advantages:

    • the minimum deposit is only 1500 rubles, so you will be able to buy bitcoins even for a small amount;
    • Broex commissions are either absent or minimal - 0.1% or lower;
    • you can deposit money instantly;
    • you can replenish your account from a bank card, or via many other methods like ADV cash.

    Broex is a company officially registered in Estonia and licensed to provide cryptocurrency storage services to its users. So, by using its wallet, you can be 100% sure that nothing will happen to your bitcoins, and they can be easily and quickly sold if needed.

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