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 app 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 a digital currency, that works on peer to peer Bitcoin network.

Bitcoin is 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 numbers. Bitcoin's primary and only function is to be a store of value that users with Bitcoin wallets can send and receive. Other digital assets, like Ethereum, can execute smart contracts.

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 and what differs it from a bank account?

How Do Bitcoin Wallets 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.

Basically, a crypto wallet is an app to store your crypto portfolio. First Bitcoin wallets don't support other crypto assets. It also doesn't have staking options or exchanges to buy, sell, and trade Bitcoin.

Unlike the basic Bitcoin wallet, Atomic Wallet encompasses all the above features and more: users are able to buy Bitcoin, exchange, and manage it in a convenient way.

You have dozens of Bitcoin wallet apps out there to choose from, though not all wallets are the same. Some wallets are basic, just for storing, sending, and receiving while Atomic offers a built-in exchange, staking, cashback payments and other options. 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. Decentralized crypto apps like Atomic allow you to store all your wallets in one place. Hardware wallet support also helps many users to protect their assets with another layer of security features.

Now that you have your Bitcoin 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 account and how to get started with it.

Atomic Bitcoin 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 after downloading the app for your PC, iOS, or Android device.

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. Bitcoin 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. But don't worry: While you're keeping mnemonic seed phase in a safe place, you're able to sign in to your crypto wallet anytime in any place.

3. Bitcoin Passphrases

You should have a seed phrase to restore your wallet on another PC or mobile device. What's more, you should secure your wallet with a single custom password, too. That's just another level of security to protect your favorite cryptos. 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 Keys and Public Keys

You've probably heard the terms private keys 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 Bitcoin 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 it 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.

Bitcoin 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 miners' 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 a 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?

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.

One more important thing to mention: how to 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.

What Can You Do with Bitcoin?

You can use crypto for trading, to buy things, pay people, send, receive bitcoin 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 got an idea to 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.

Bitcoin Resources

Atomic Wallet

Check the latest wallets and digital assets on Atomic Wallet on our website. Install Atomic on PC or mobile device in just one click. The app allows you to store millions of cryptocurrencies with a full control on it. In addition, you have the ability to buy, swap crypto and earn interest with 10+ assets.

Bitcoin Atomic Wallet app

Get your Atomic Bitcoin Wallet app 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 and source code

Get more info about Bitcoin from the official site.