Bitcoin (BTC) wallet

A Bitcoin Wallet: Safekeeping Your Future

As inflation hits, many look to gold as the infamous hedge. That's evolving as cryptocurrencies evolve and gain popularity, especially Bitcoin. Bitcoin is becoming less volatile and more established, leading some countries, like El Salvador, to adopt it as a second official currency or even an inflation hedge. Countries are turning to crypto as they adjust quantitative easing efforts to salvage the fiat currency model.

Bitcoin, unlike fiat, is a finite token system that can work as a currency or as a store of value. Many investors are diversifying their portfolios with the inclusion of Bitcoin to hedge the risk associated with fiat and money printing. That said, you'll need a Bitcoin Wallet to store and transact your Bitcoin holdings.

That's why we produced this helpful guide to teach you everything you need to know about getting a Bitcoin Wallet and storing your digital gold. You'll also benefit from a detailed guide on a specific wallet, Atomic Wallet, which offers you useful features like sending and receiving, staking, and exchange.

Let's start by getting to know more about the first-ever cryptocurrency, Bitcoin.

What Is Bitcoin?

Bitcoin is the first-ever cryptocurrency created in 2009 by Satoshi Nakamoto. Cryptocurrency gets its name from the cryptographic equations miners solve before validating a block of transactions.

It's built on blockchain technology, and the digital money is secured through cryptographic hashing over a distributed decentralized network. Each transaction block is distributed over multiple wallet addresses that act as an account number. Bitcoin's primary and only function is to be a store of value that users with Bitcoin wallets can send and receive. Other cryptocurrencies, like Ethereum, can execute smart contracts.

Blockchain Technology

Bitcoin is the first digital currency that operates on blockchain technology. A blockchain is a series of blocks containing all the transactions that occurred in the past 10 minutes. New blocks are generated every 10 minutes.

Before creating a new block, the current block must be verified. Once it's verified and all the transactions in that block are confirmed, it can never be overwritten. This is called an immutable distributed ledger, a transparent list of transactions anyone can explore. The transactions don't display any usernames, only wallet addresses.

Now, you might be wondering: how does a wallet work?

How Does a Bitcoin Wallet Work?

A Bitcoin wallet is essentially a software program that generates an address, stores Bitcoin tokens, and allows you to send and receive Bitcoin. Simple, right? Well, that's the concept's bare bones. In reality, though, wallets have much, much more to them.

Almost every cryptocurrency has its own wallet. That said, a basic Bitcoin wallet doesn't support other cryptocurrencies. It also doesn't have staking options or an exchange to buy, sell, and trade Bitcoin. You also can't buy cryptocurrency directly with fiat.

Unlike the basic wallet, Atomic Wallet encompasses all the above features and more!

You have millions of Bitcoin wallets out there to choose from, though not all wallets are the same. Some wallets are basic, just for storing, sending, and receiving while others may have a built-in exchange. You should choose a wallet to suit your needs.

Another fun fact: you can have more than one wallet! I'm sure you have more than one physical wallet at home, right? You can do the same with cryptocurrency wallets, too!

Did you get a wallet yet? No? Download the Atomic Wallet here.

Now that you have your wallet, you probably have many questions about it. Let's get technical here and try to answer some questions.

First, let's take a look at Atomic Wallet and how to get started with it.

Atomic Wallet

Atomic Wallet is a desktop or mobile app wallet that can store more than 300 different cryptocurrencies. It allows you to buy, sell, trade, stake, send, and receive. As a reward, you'll receive a 1% cash back for your transactions in the form of Atomic Wallet's token AWC.

Follow these 5 simple steps to get started with your Atomic Wallet:

1. Download the installation file for your operating system from the official website and install the app

2. Run Atomic, click Create Password

3. Enter a secure password, and click Set Password

4. Save your 12-word seed phrase in a secret place, you'll need it to restore access to the wallet

5. Click Start Using Atomic, and you're done

Now let's check what the tabs are for.

Wallet

The app will take you to the wallet interface. In the first tab, Wallet, you can see the balance of all available coins and generated wallet addresses for different currencies. If you want, you can also sort the assets by volume, or hide negative balances. Atomic Wallet gives you the possibility to add any custom ERC20 (Ethereum-based) tokens to the wallet. That's a remarkable feature!

Exchange

The Exchange tab allows you to exchange tokens through partner exchanges–ChangeNOW, Changelly, and ShapeShift.

Settings

In the Settings tab, you can change your password and get private keys securely stored in encrypted form. You can also import an external wallet into the Atomic Swaps Wallet, but you have to enter a private key.

Let's now take a more detailed look at your Bitcoin wallet's features. That way, you'll be familiar with the ins and outs that allow you to use your wallet more efficiently and securely.

Atomic Wallet Features

Atomic Wallet has many features and we'll discuss 4 of the main features and how to use them next.

1. What Is a Bitcoin Wallet Address?

It's like your mailing address; you give it to anyone who wants to send you some Bitcoin! The most pressing question you can ask is: where's my address and how do I use it? You'll find it on Atomic Wallet's main screen.

1. Go to Bitcoin and open it

2. Find send and receive at the bottom

3. Click on receive and you'll see your wallet's address

A wallet address is usually between 27 and 34 alphanumeric characters. Bitcoin addresses begin with only 3 different alphanumeric characters 1, 3, or bc1. An example of a Bitcoin address is: 1BvBMZAUstWetqTFn5Au8m4GFh7xJaNPM2

Unlike regular mailboxes, you won't get a call that your mail reached another person by mistake. Always make sure you're sending your Bitcoins to a Bitcoin address, or else it could be lost forever, without any way to get it back. This applies to all cryptocurrencies, not just Bitcoin.

We can't emphasize this enough, always double-check your addresses!

2. Seed Phrases

When you create a wallet, you need to create a seed phrase. It usually consists of 12 random words in a particular order. Write it down and save it somewhere safe. This is your only opportunity to set up your passphrase. We'll get to passphrases next but for now, hold on to your seed phrase.

This phrase allows you to access your wallet if you get locked out or get a new phone, and you need to re-download your wallet. You also need it to reactivate your wallet on your new phone. Still, you should make sure to delete your wallet from your old phone and wipe the data off once it's all migrated to your new device.

If you're using a wallet on a desktop computer, make sure you migrate it to a new machine before throwing out the old one. Otherwise, you might spend the rest of your life sifting through a landfill to find it. We're not joking! That's a true story you can read more about here.

3. Passphrases

You should have a seed phrase to recreate your wallet on another device. What's more, you should secure your wallet with a passphrase, too. That's just another level of security to protect your crypto. You wouldn't just leave your cash lying about your house, and you wouldn't do it with crypto, either. You'll want to keep it as secure as possible.

A passphrase is like two-factor authentication, but the questions are about things you know, not something you are/have. Many traditional security questions ask things like: what street did you grow up on, what was your mother's maiden name, what was your first pet's name, etc. Normally, only you could answer these questions. Still, anyone cunning enough could find out this information and figure out how to steal your wallet.

4. Private and Public Keys

You've probably heard the terms private and public keys when talking about encryption. What are they, though? A private key is just that: it's your key to your wallet. Your wallet must have a private key to generate a public key. Essentially, the private key identifies your wallet on the network. You also need to store it in a safe place like your seed phrase. Learn how to store it properly in our blog post.

The public key is a hashed version of your private key. That way, it can only be decrypted one way, not decrypted in reverse. In other words, if you send Bitcoin to an address (public key), it can only be decrypted one time, in one direction. That's why we say, make sure you're sending to the correct address!

The public key is decrypted to show the private key and send funds to the correct address. This one-way encryption is called hashing, and it's the most prevalent form of encryption in the cryptocurrency world.

Now, to get your Bitcoin from one wallet to another, you must pay the fee.

Miner Fees

Miner fees are dynamic, and they always make the news because they're so high. They're not always so high, but Bitcoin has gone through several periods where network congestion made miner fees very high. In other words, if many transactions are happening in the system, then the miners' fees would likely be very high due to the congestion. That's comparable to Uber rates during rush hour.

To put things into perspective, in April and May 2021, many transactions were happening on the market, making fees as high as $50. They were also very high back at the end of 2017 when Bitcoin hit a price record, just shy of $20,000.

Imagine you want to send a friend $20 worth of Bitcoin, but the fee alone costs $50. Transaction fees like that would make you not want to use it, except for larger transactions. People went into a frenzy to jump on the Bitcoin bandwagon when its price skyrocketed. All that activity led to high miners' fees, which got a lot of complaints. Now, fees are generally much lower.

The number of inputs on a transaction could also cause higher fees. If you send some bitcoin and it's broken up into smaller pieces, these smaller pieces add more memory to the transaction. That means they'll be processed with larger memory size, and the miners' fees will increase as they incur a higher cost.

Let's address the elephant in the room. Why do fees exist, to begin with?

Fees?...For What?

These fees give incentives to the miners to verify the blocks. Miners verify each block using mining machines that crunch the numbers on the cryptographic puzzles. When the miners complete a block, they receive some Bitcoin as a reward.

When it comes to rewards, miners can prioritize which transactions they include in a block. The higher the miner fee, the higher the chances the miner will include it in the current block. In some cases, like if your transaction carries a lower fee, it might take a few blocks until a miner picks up your transaction, puts it into a block, and verifies it. That way the mining system is incentivized for the miners, too.

Bitcoin blockchain can't progress without the miners who complete transactions. That's why the miners and their fees are critical to the Bitcoin ecosystem.

Now you're probably asking: how do I pay the miners' fees? Well, don't worry: most wallets will include that in your transaction. They'll deduct the miners' fees from the amount you're sending. Currently, fees are around $1.50 per transaction, but this isn't always the case.

Owning Bitcoin is so simple with Atomic Wallet even with the fees involved. Let's check what you can do with the Bitcoins you hold in your wallet.

What Can You Do with Bitcoin?

You can use bitcoin to buy things, pay people, send money around the world, and do what most people do, invest and save. Bitcoin is a great store of value because it gains so much value over a short time. Since it appreciates so quickly, it's a great hedge against inflation, which the world is seeing a lot of right now. Bitcoin is dubbed digital gold, which is crazy when you think about it! It's even more than digital gold because it's worth so much!

Some countries are embracing Bitcoin to save their economy. El Salvador made Bitcoin an official currency alongside their national currency. In Turkey, people also are adopting Bitcoin after inflation and a plummeting Lira destroyed purchasing power.

As you can see, you can do many things with Bitcoin.

Learn More About Bitcoin

If you want to learn more about Bitcoin, please view the resource links at the end of this article. The links can give you all the information you'd ever want to know about Bitcoin. This article already gave you a great primer.

Atomic Wallet has many features that basic wallets don't offer. It's also simple and easy to use and makes setting up a Bitcoin wallet a piece of cake. At this stage, you're ready to get your wallet–if you haven't already–and start using Bitcoin!

FAQs

What is Bitcoin?

Bitcoin is the first cryptocurrency ever created. It functions on blockchain technology, which provides blocks of transactions. Once miners verify these blocks, they can't be changed or altered in any way. The ledgers are also public for anyone to view. Finally, Bitcoin is decentralized, which means that it doesn't have a central governing body to control it.

What is a Bitcoin Wallet?

A Bitcoin wallet is a simple application that allows you to store, send, and receive Bitcoin. It creates an address from your private key. This address is hash-encrypted, and you can give it to others without exposing your private key. A more advanced wallet, like Atomic Wallet, allows you to do more than just send and receive. It helps you to buy, trade, exchange, stake your coins, and much more.

What are transaction fees?

Transaction fees, more commonly known as miners' fees, are a necessary part of the Bitcoin ecosystem. These fees entice miners to mine (verify transactions in the blocks) and keep the proof-of-work verification system blockchain running. Fees can rise and fall depending on the number of transactions on the network. Before you send your Bitcoin, check the miners' fees.

Where do Bitcoins come from?

Bitcoin's circulation comes from users like you and me sending and receiving the coin. Miners receive new Bitcoins (really, fractional Bitcoin) as rewards for verifying transactions. In total, 21 million Bitcoin exist, 18.9 million of which are in circulation. Each mined block mints 6.25 Bitcoins into circulation. The world still has 2 million Bitcoins to mine. Some Bitcoins are also lost and essentially out of circulation.

What happens when all the Bitcoins are mined?

When all the Bitcoins come into circulation, miners won't get reward blocks anymore. From there, they'll have to rely only on the fees from verifying blocks. We expect Bitcoin prices to soar once all Bitcoins have been mined. No new Bitcoins will enter circulation, which will create scarcity and in turn, cause the price to spike higher. If you're looking to buy, buy them now and save them for your grandkids and great-grandkids.

When will the last Bitcoin be mined?

It's predicted that the last bitcoin will be mined in 2140. That's because Bitcoin halves the number of rewards paid to miners every 4 years. Needless to say, we won't see it in our lifetime. Looking back to 2008, miners got 50 Bitcoins per block. Then in 2012, this number went down to 25 Bitcoins per block, then in 2016, it was down to 12.5. Right now, it's 6.25, and in 2024 it'll be halved to 3.125.

As time goes on, the reward becomes less and less, reducing the number of Bitcoins that come into existence until all the Bitcoins are mined. Based on this, Bitcoin isn't going anywhere anytime soon. Its economy will continue to grow until 2140. We'll have to wait 119 years until the final Bitcoin is mined.

Resources

Atomic Wallet

Check the latest wallets and cryptocurrencies on Atomic Wallet on our website.

Bitcoin Atomic Wallet

Get your Bitcoin Atomic Wallet here.

Atomic Wallet Academy

Learn about cryptocurrencies and Bitcoin in our Academy.

Bitcoin Blockchain Explorer

Check out transactions and the status of Bitcoin and other cryptocurrencies on Atomic Wallet's Blockchain Explorer.

Bitcoin website

Read more about Bitcoin from the official site.

Bitcoin Tax Havens

Looking to save on taxes? Check out the countries that won't tax your gains! You won't believe which country is number 2 on the list.

Counties Banning Bitcoin and Cryptocurrencies

See where Bitcoin and other cryptocurrencies are banned.