Bitcoin is the oldest and most popular of existing cryptocurrencies. Bitcoin serves as a form of digital money protected with cryptographic hashes and distributed on a decentralized network. Within the blockchain, the Bitcoin blocks are distributed among different accounts, which are called addresses. If you want to learn more about Bitcoin and the way it works, feel free to check our dedicated guide.
What is a Bitcoin Wallet?
A Bitcoin wallet, as the name suggests, is a software used for Bitcoin storage. Although to be precise, Bitcoins are not really stored anywhere: there is a private key (secret number) for every Bitcoin address, and it is saved in the Bitcoin wallet of the person who owns the balance. The function of a Bitcoin wallet is to facilitate sending and receiving Bitcoins and provide ownership of the Bitcoin balance to the user. Bitcoin wallets may come in many forms; the main four types are desktop, web, mobile, and hardware wallets.
Basically, a wallet is the main user interface through which a person interacts with the cryptocurrency system. Bitcoin wallets allow both storage and management of one's assets: with this software, one can buy, send, receive, and exchange BTC. The bitcoin wallet contains private keys and public addresses and gives you full access to your funds. If you want to learn more about cryptocurrency wallets, check this detailed guide. Atomic is a desktop and mobile wallet, available for all major OS: Windows, macOS, Linux, Android, and iOS.
Bitcoin Wallet Features
Now that you know what the main purpose of a Bitcoin wallet is, why not look at a specific example of a user-friendly multifunctional cryptocurrency wallet!
Atomic is a decentralized multi-currency wallet. It supports more than 300 cryptocurrencies, has built-in Cryptocurrency Exchange, Staking, Buy Crypto feature, and 24/7 live support.
The wallet is famous for its simplicity, convenience, excellent user-friendly interface, and security. The latter is ensured by the fact that your crypto is entirely under your control, as your seed phrase is stored only on your device. This provides full control over one'sone's assets.
The primary purpose of the Atomic Wallet is not just to store cryptocurrency but to create a healthy multifunctional ecosystem that, in many ways, resembles a decentralized exchange. Atomic Wallet has an internal token - AWC (short for Atomic Wallet Token), which has many use cases in the ecosystem, such as dividends for holders and cashback program. Furthermore, it also serves as a marketing tool for bounty and airdrop campaigns.
A big advantage of decentralized wallets, in general, is the opportunity to manage cryptocurrency from any device, but one needs to pay attention to how one stores the backup phrase since that is the primary access to one's funds. With Atomic, your Bitcoin wallet is protected as long as you keep your seed, or private key, in a safe and secure place.
Bitcoin Transaction Fees
In classical blockchains, any cryptocurrency transaction requires a fee in order to be added as a block in the blockchain. Depending on the architecture of a given blockchain, the fee can be distributed in different ways:
- The current situation in the system - basically, how loaded the network is. During hype times, when a lot of people put transaction orders at the same time, the fees can get really high.
- The number of inputs on your address (the inputs being your incoming deposits). The input number indicates the volume of the information that has to be processed by the miner. Logically, the larger the volume (more Bytes) – the more resources the miner needs to spend on processing your transaction. As a consequence, the network fee will be higher in this situation. For example, 1 BTC can occupy either 1485 bytes or 384 bytes - depending on whether it is composed of 10 small inputs or two bigger ones.
Recently, a new generation of blockchains has emerged that transcends the classical notion of the network fee. For instance, with NEO, one of the Top-20 cryptocurrencies in terms of market capitalization, there is no need for a network due to a different protocol and the network rules.
Thus, the network fee payment conditions depend on a given blockchain technology. Another example is the EOS blockchain, which utilizes the RAM resource as a network fee.
However, in the case of Bitcoin, a network fee is actually required, so let's examine that in a little more detail. The network fee is usually paid to miners for their effort to include the transaction onto the blockchain. Mining works in such a way that a lot of computing power and electricity has to be put in order to add a block to the blockchain. Basically, the network fee is a reward for the job performed by the miners; this is why it is literally called "block reward." So it is plain to see that, the more you wish to pay as a network fee, the faster your transaction will be taken and confirmed by miners.
It is important to understand that Atomic Wallet doesn't incur any fees for sending/receiving operations. The network fees within the wallet are set in such a way as to ensure your transaction to be added to the blockchain in a fast and secure way.
For Bitcoin, the network fees are measured in Satoshis per byte. In Atomic Wallet, the network fee is always visible right away. A unique feature of Atomic Wallet is the possibility to adjust the fee for BTC, ETH, and LTC. A custom fee can significantly speed up the transaction since miners are more likely to notice the tasks with higher rewards first.
However, network fees are not calculated in the same way for all cryptocurrency assets. Bitcoin is made up of blocks that represent the encrypted transactions; those are currently restricted to 1,000,000 bytes. The system also works in such a way that, on average, only one block per ~10 minutes can be created. Miners can pick a transaction they want to include to the blockchain and get a reward for each of the mined blocks.
Therefore, the higher the network fee is set, the bigger the reward and = higher the priority of the transaction among miners. Naturally, miners are interested in the transaction size, because they can create only blocks up to 1,000,000 bytes. The fee per byte is what interests the miners.
As Bitcoin blockchain works on a UTXO principle (an abbreviation of "Unspent Transaction Output"), the more inputs you have, the larger will be the fees for you to send Bitcoins. In Atomic, you can always choose which way you want to send the BTC: faster or cheaper, and adjust the network fee accordingly. Whichever you choose, it is important to remember that Atomic Wallet does not incur any internal fees, and the network fee comes solely from the Bitcoin blockchain itself.
How to Use a Bitcoin wallet
In order to enjoy the functionality of Atomic Wallet, one first needs to go through a simple process to create a wallet. Download the installation file for your operating system from the official website and install the app. Run Atomic, click "CREATE WALLET," enter a secure password, and click SET PASSWORD. You will now see a 12-word seed phrase that can be used to restore access to the wallet. Be sure to keep in a safe and secret place! Then click "START USING ATOMIC."
You will then be taken to the wallet interface. In the first tab "WALLET," you will see the balance of all available coins and generated wallet addresses of different currencies. If you wish, you can sort the assets by volume, or hide negative balances. A remarkable feature of Atomic is the possibility to add any custom ERC20 (Ethereum-based) tokens to the wallet.
The "EXCHANGE" tab provides an opportunity to exchange tokens through partner exchanges - ChangeNOW, Changelly, and ShapeShift.
The "SETTINGS" tab allows you to change your password, get private keys that are securely stored in the encrypted form, as well as import an external wallet into Atomic Swaps Wallet (for this, you must enter a private key).
Now, in case you're wondering what the fuss is about the public and private keys, let's examine those in a little more detail.
What is a Private key?
A private key is a randomly generated 256-bit number that serves as a personal wallet ID within the network. It is a sequence composed of 16 different digits and characters, for example: E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA33262.
On the other hand, public key is generated from the private key of the wallet by solving a special cryptographic formula (elliptic equation). The key is 512 bits long and is also composed of sixteen different letters and digits, for instance: 0499B4B0FB28848277DCF15C5EB78B80D9E560D55770EA897CFBEC7E85B8B62C8F8685F4211DF935A5DE20664A7F596358ED25D74FB95E53B3FAE6F49F6700DB3B. Public key always starts with the byte "04".
How Bitcoin Wallet Address is generated?
The address is created from the public key by hashing (converting an array of data into a string of characters of a certain length) – this is the code that the user of the bitcoin network sees on the screen. Usually, the address is between 27-34 characters and is composed of both digits and letters of the Latin alphabet, for example: 14qViLJfdGaP4EeHnDyJbEGQysnCpwn1gz. The address is generated only if there is a private key – the reverse sequence can not be solved.
Thus, the anonymity of the Bitcoin wallet is achieved. It is impossible to crack it unless the owner personally provides all the data to the attackers.
Now you are familiar with the essentials of Bitcoin wallets and are ready to set up your personal Bitcoin wallet using Atomic. If you happen to have any more questions, our 24/7 support is always ready to help you - feel free to contact us through the live chat on the website, or just send us an email!