What is a Bitcoin wallet?

Bitcoin.comSimilar to a traditional wallet you may carry in your pocket, a bitcoin wallet is used to store money. The difference is that instead of storing a collection of bills and cards, a bitcoin wallet stores a collection of bitcoin private keys. Typically a wallet is encrypted with a password or otherwise protected from unauthorized access.

Unlike the Bitcoin network, a Bitcoin wallet is controlled only by its owner (it's not distributed and shared like the blockchain). It's important to keep your bitcoin wallet safe by either setting a strong password or otherwise keeping it out of reach of malicious individuals.

Types of Wallets

There are many different bitcoin wallets to choose from, each providing different features. All bitcoin wallets must conform to the established Bitcoin protocol so they can all be used to send and receive funds regardless of their specific implementation. This is similar to email where you have many choices of email providers but they all "speak the same language" and are able to send messages to each other.

There are several main categories of Bitcoin wallets:

Web Wallets

Web wallets allow you to send, receive, and store bitcoin all through your web browser. They are typically hosted by a provider that manages the security of the private keys associated with your account, although some types of web wallets provide ways for you to remain in control your private keys. Web wallets are generally more convenient than other types of wallets since you don't have to worry about accidentally deleting a wallet from your computer (and losing your bitcoins).

The main criticism of most web wallets is that you relinquish some control since web wallets usually manage private keys on your behalf. This means that security must be taken very seriously by the wallet provider. Like any other online account, it's also important for customers to take some security precautions.

There are technologies available that allow users to retain full control of their funds yet take advantage of the convenience of web wallets such as Coinbase's multisig vault.

Mobile Wallets

Mobile wallets are simply bitcoin wallets designed for a mobile device. This means they can easily scan QR codes, are easy to navigate with a touch screen, and are accessible while on the move. The Coinbase mobile wallet for iOSand Android allows you to access your Coinbase account to send, receive, buy, and sell bitcoin.

Mobile wallets are almost always "light" clients in that they do not store a full copy of the blockchain.