Not your keys, not your coins
A Bitcoin wallet is a just like your real wallet, it’s a method of storing value. The main difference with a Bitcoin wallet is that it doesn’t actually store bitcoin inside, bitcoins exist solely on the distributed ledger (blockchain). A bitcoin wallet stores the keys required sign the transactions that send bitcoin. When you sign a transaction with your wallet, you show proof that you have the right to spend those coins. This proof can be checked by anyone running a node which stops anyone cheating the system.
There goes a famous saying amongst Bitcoiners, ‘not your keys, not your coins’. The phrase is aimed to drive home the fact that, if you are not the custodian of your wallet’s private keys, you essentially have no bitcoin. A good example of this is buying bitcoin on an exchange and leaving it there. You may have a claim to x amount of bitcoin, but the exchange is actually in control of the private keys. What you actually have is an IOU that can be taken from you, for various reasons, at any moment. By taking control of your bitcoin in a non custodial wallet, you remove this risk.
For feature consideration in this guide, a wallet must meet these base criteria.
When choosing which type of wallet you want to use, there are a few things you should consider. Here are some questions to answer before making an informed decision. You will find your the answer to almost all of these somewhere on this site.
Regardless of the type of wallet(s) you use, always ensure you have a physical seed backup.
Bitcoin wallets can come in many forms. Below are the four main categories they fit into and the external links to the projects covered on this site.
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