If you’re going to invest in Bitcoin one of the first things you’ll need to learn is how to set up a Bitcoin (BTC) wallet. Here’s why that’s so important.
Why you need a BTC wallet
When push comes to shove, we actually have very little control of our government-issued money. A governmental agency can get a court order and seize the money in your bank account. Or your bank can freeze your account for almost any reason. Credit cards can also be frozen, and so can your debit card so that you can’t withdraw cash from the ATM.
In terms of money that you actually control… There’s really only cash, gold and Bitcoin. Of the three, Bitcoin is arguably the most secure. However, that’s only the case if you’re keeping your Bitcoin in your own BTC wallet.
If you keep Bitcoin on an exchange, it’s not really yours. It’s the same as keeping your cash in the bank. Some digits on a screen can tell you how much you have, but the powers that be can take that money away from you at any time.
The whole point of Bitcoin is to be your own bank and control your own money. That’s where a Bitcoin wallet comes in.
How a BTC wallet works
A Bitcoin wallet is designed to be as user-friendly as possible. Although Bitcoin is secured by a lot of complex code and math, the average user will never need to know about any of that. There are just a few parts of the BTC wallet that are important to understand.
The BTC receiving address (also called the public address) is the address that you send BTC to. If you’ve bought Bitcoin on an exchange and you want to send it to your Bitcoin wallet, you’ll send it to the public address.
In terms of privacy, a public Bitcoin address is similar to an email address. If you post your email address in a public place you’ll receive a lot of spam. Nobody can hack into your email account with just your address, but that doesn’t mean you should post your address on your back bumper.
The same is true for your Bitcoin wallet public address. You could post your public address on a billboard in Times Square and nobody could steal your Bitcoin. However, if someone knows it, then they can track all of your transactions. They can also see how much Bitcoin you own. Neither of these two outcomes are very good, so you should practice discretion when it comes to sharing your public address. Only give it out as needed and never post it to a public forum like Reddit.
If you want to know how to set up a Bitcoin wallet for public donations, you should create a separate account from your main Bitcoin account. Anytime you share a public Bitocin address you have to assume that the person you’re sharing the address with can use it to trace your transactions and BTC balance.
Some Bitcoin wallets allow you to use a freshly-generated BTC address for every transaction, and this is a useful tool.
How do I receive or send bitcoin?
Sending Bitcoin is really simple. Here’s how to do it in five easy steps.
- Copy the public BTC address of the person (or exchange) that you want to send Bitcoin to
- Open your BTC wallet. In the next section we’ll explain how to set up Bitcoin wallet
- Paste the public address into the send field. Double-check that you’ve copied and pasted the public address correctly
- Enter the amount of BTC you want to send
- Click the send button
Once you know how your Bitcoin wallet works, sending BTC is no more complicated than sending an email.
Receiving Bitcoin is even easier. All you need to do is give someone your public address and wait for them to send you the coins. A Bitcoin transaction may appear a few seconds after someone sends the BTC but it can take up to an hour for the transaction to fully confirm.
How to create a bitcoin wallet backup
When you create a new Bitcoin wallet the application will give you a seed phrase, typically 12 or 24 words. You should write these words down on a piece of paper and make copies by hand. Never take a picture of the seed phrase or store the seed phrase as a digital file on your computer. If a hacker gained access to your files he could steal all of your cryptocurrency.
It’s a good idea to keep a few copies of this seed phrase in different physical locations. For example, if a fire or flood can destroy your laptop and all copies of your seed phrase, you don’t have enough protection.
If you break your laptop or otherwise lose access to your Bitcoin wallet, you can use the seed phrase to restore access.
If you need any more reason to be cautious, you may have heard of the story of the man who accidentally threw away a hard drive which contained 7,500 Bitcoin. He is now appealing to his local council for permission to search and dig in the landfill site where it was disposed of, with the hope of recovering his fortune, which is worth $510 million at today’s prices. If only he had written down his recovery phrase on paper!
How to create a multicryptocurrency wallet app
There are two types of cryptocurrency wallets: multicrypto wallets and single-crypto wallets. Electrum is a popular Bitcoin-only wallet and Exodus is a popular multi-cryptocurrency wallet.
If you want to know how to create a Bitcoin wallet that supports multiple cryptocurrencies all you have to do is download a multicrypto wallet.
Here’s how to set up the Exodus multi-cryptocurrency wallet app for PC:
Download the Exodus Wallet
You can download the Exodus Bitcoin wallet for free on your computer or phone. Even though Exodus is free, it still has lots of cool features:
- Supports the most popular cryptos - not just Bitcoin
- 24/7 Customer support
- Buy Bitcoin and other cryptos within the app with your bank account, credit card, Apple Pay, or Google Pay
- Swap between Bitcoin and other cryptocurrencies
- Trezor hardware wallet support for maximum security
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.