Bitcoin has the largest market share among virtual currencies and is already being used on a daily basis across the world. Since it is a virtual currency, there are no bills or coins, but it is possible to buy and sell products using smartphones, computers, tablet devices and more.
Since there are many advantages which include cheaper remittance fees and the ability to use fiat currencies overseas without changing fiat currencies, the places where you can use them in your daily life are expanding. It may not be long before we can use Bitcoin much like we do cash. Bitcoin, which has an increasing presence as ‘money,’ is expected to become more popular to “use, send and invest”.
Bitcoin is Not Electronic Money
Bitcoin is often confused with electronic money because there are no bills or coins, but it is completely different in nature.
To use electronic money, it is necessary to charge a card in advance. By doing so, the amount of money deposited can be used for shopping and other purchases and exchanges. The mechanism of electronic money is that you do not have to physically pay out money from a physical wallet. Although points may be added at the point of payment, this is a service unique to the company that issues electronic money and is not included in the “yen” frame.
Bitcoin, on the other hand, is the same currency as “yen,” “dollar,” “pound” and “euro,” even if there are no banknotes or coins. Therefore, there is also a currency unit called “BTC,” and the market price fluctuates daily. However, unlike yen and dollar, bitcoin is not controlled by any organisation such as a country or a bank. You can send money to anyone in the world via the Internet and the fees are much lower.
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What are Wallets and How do They Work?
Bitcoin wallets, Ethereum and others are routinely used to securely deposit the cryptocurrencies that you have accumulated from mining, or that you have purchased on the market through an exchange.
Just as physical wallets have compartments where you can insert banknotes of different denominations; coins and cards, the same applies to cryptocurrency wallets. In these cases, the compartments are definitive Coin Address: each coin address hosts a different cryptocurrency. In fact, each cryptocurrency to be deposited and withdrawn has a different coin address.
Each coin address therefore, is comparable to an IBAN which only accepts a single cryptocurrency. To deposit cryptocurrencies in the wallet, you will need a coin address. Each currency you intend to insert into the wallet must have its own coin address and if you accidentally send Bitcoins to Ethereum’s Coin Address, you will lose your Bitcoins forever.
Each Wallet is also equipped with a PRIVATE KEY, which consists of a secret password that must never be disclosed and useful for accessing one’s wallet and / or carrying out cryptocurrency transactions with other wallets.
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How Many Types of Bitcoin Wallets Are There?
Generally speaking, there are three types of digital wallets.
- Paper Wallet
- Hardware Wallet
- Wallet software
Bear in mind that a Paper Wallet is the easiest way to hold on to your wallet data: Coin Address and Private Key could in theory be written and stored on a simple sheet of paper, but it would need to be protected in some way and losing that would be akin to losing your wallet.
