What Is A Bitcoin Wallet?

Bitcoin wallet

are the devices either hardware or software used to store or bank your Bitcoin.

There are 4 main categories of Bitcoin wallets:

  • Hot
  • Cold
  • Custodial
  • Non-Custodial

Hot bitcoin wallets are connected to the internet in some way either in the form of an app on your phone, a server, or on the hard drive of a computer with internet access. Bitgo is an example of a hot wallet, hot wallets are useful for short-term storage when making frequent Bitcoin trades. However, because they are connected to the internet they can be susceptible to attacks from hackers.

Cold bitcoin wallets, on the other hand, are stored offline. Typically on a disconnected hard drive, thumb drive, or other electronic storage devices that do not have access to the internet. Cold wallets are the preferred method of storage if you’re not making frequent trades and plan to hodl for long periods of time.

All cold wallets will be non-custodial. You own and control the key to non-custodial wallets, giving you sole access and authority over the flow of Bitcoin in and out of your wallet. Having a non-custodial wallet is paramount for the safety and security of your Bitcoin. It is always recommended regardless of your intended use of Bitcoin.

Custodial wallets like those controlled by the big online exchanges such as coinbase and poloniex do not give you control or ownership of the wallet. Not having ownership of your wallet means they’re able to freeze your accounts and prevent you from transferring Bitcoin in and out of your account.