4 Types of BitCoin Wallets

A lot of people are concerned about one very important question: What’s the best BitCoin wallet. Well, before finding out the best and the most secure bitcoin wallet, we need to first understand what are the different types of wallets available and how one is better than other.

What is a BitCoin Wallet

A BitCoin wallet (or any cryptocurrency wallet) is just like your bank account or a place where you store your money.

What are public and private keys?

A public key is used to send or receive cryptocurrency to your wallet. Private key is the one which gives you actual access to your cryptocurrency account.

4 types of bitcoin wallets

Two main categories of BitCoin wallets

We can classify all bitcoin wallets into two main categories:

  • Hot wallet (online wallets)
  • Cold storate wallet (offline wallets)

Ok so now lets see four types of cryptocurrency wallets

1. Online Wallets

Online wallets are also called web wallets. They come under the category of hot wallets. They’re easies to use as they can be accessed from any device that’s connected to the internet. However this type of wallet have their own problems, being least secure is one of them.

Pros of Online Wallets

  • Ease of use
  • Accessible from any devide with internet connection
  • Easy to setup
  • Online wallets are usually linked with cryptocurrency exchanges or bitcoin exchanges online

Cons of Online Wallets

  • Private keys are saved on someone elses server
  • More prone to hackers
  • Prone to technical glitches
  • Website management can limit or suspend your account anytime for any reason
  • Website has the control over your cryptocurrency

2. Software Wallets

Software wallets are also hot wallets. They require the user to download a software on their laptop mobile or any other device. Usually software clients are available for multiple devices, especially for both mobile and desktop versions.

Desktop wallets like Bitcoin Core requires the users to download the complete blockchain, which is almost 100GB in size. However not all wallets require the blockchain to be downloaded. They are relatively easy to use too and safer than online wallets.

Mobile apps based software wallets are quite easy to use too.

However they have their own down sides. Such as they can be hacked if someone gains access to the computer or mobile device they’re stored in. Also, if the data or device itself is lost, the wallet and thus all cryptocurrency you have is gone too. Some wallets provide an option for backup too to fix the issue of data loss or device loss.

mobile bitcoin software wallet

Pros of Software Wallets

  • More secure than online wallets
  • Data is available at the users own computer or mobile device
  • Easier to backup yourself
  • You have control over your cryptocurrency

Cons of Software Wallets

  • Wallet is lost if device is lost
  • Hackers can hack the computer or mobile and gain access to wallet via malware
  • Requires some technical know how

3. Paper Wallets

Yes you heard it right. It’s possible to print out your public and private keys and storing them on a paper. Paper wallets are a type of Cold Storage method, as it’s an offline method of storing your cryptocurrency.

As it’s obvious, paper wallets are more secure than online or software wallets, as you have the the private and public keys printed with you physically on a piece of paper.

How to generate paper wallet?

Most of the online or software wallets available allow the users to print their existing keys for their wallet. However if they don’t, they can still be generated using various services like BitAddress or BitCoinPaperWallet.

Once you have the paper wallet printed keys, you can simply use them wherever you want just by adding public-private key combination into your existing wallet service.

Apparently, paperwallet is more secure than the online and software wallets. However they’re harder to keep damageproof. One way is to generate multiple physical copies of your paper wallet and then place them in a secure place, to avoid getting hacked or robbed!

bitcoin paper wallet

Pros of Paper wallet

  • More control on your wallet
  • More secure than online and software wallets
  • Can be stored and taken care of without internet connection or holding on to a computer or mobile device

Cons of Paper wallet

  • Can get damaged with time
  • Get get stolen physically
  • Multiple copies to prevent damage make it more prone to being stolen
  • Need more technical knowledge to generate and then use the paper wallet

4. Hardware Wallets

Hardware wallets are a type of cold storage. These are the devices which are usb shaped devices. They need to be plugged into the computer while making a transaction and can be pulled out and stored safely when done.

These devices generate the keys for your bitcoin wallet on the fly while you’re making the transaction.

Hardware wallets are relatively safe from computer virusus, malware and hackers as they generate they private keys on the device iteself. So as the private keys are generated offline, they’re harder to be hacked.

They are also easy to use and provide backup options too. The hardware wallets come with builtin security features like password protection too to avoid theft.

Hardware wallets are a very good option if you have plenty of bitcoins and regular deal with them and carry them with you from place to place.

bitcoin hardware trezor wallet

Pros of Hardware wallets

  • Most Secure
  • Backups possible
  • Password protected
  • Minimum risk of malware based hack attempts

Cons of Hardware Wallets

  • They’re not free
  • Have to take care of them physically
  • Can be lost due to small size, if not cared for properly

Which type of BitCoin wallet is best and should be used?

Now, as we understand different types of wallets and their pros and cons. We can now discuss and see which wallet suits whom and in which conditions.

  • Small and frequent transactions: Online wallets or Software wallets
  • Cryptocurrency exchange: Online wallet (but only the amount that you play with)
  • Occassional big transactions: Hardware wallet
  • Storage only: Hardware wallet or paper wallet

Actually we shouldn’t keep all our bitcoins in only one wallet. Divide it into more than one and be safe.

Also, keep your money in online or software based wallets only when you need to frequently send or receive it. Keep only the amount that you usually need and keep the rest of the amount in a better wallet like hardware wallet.

Which wallet do you use? What are the pros and cons of it?

Oscillator

Osciallator referes to several technical analysis tools for chart reading. All of them might be useful, however check them out and see which ones you like and feel more comfortable with.

I’ll share the oscillator which I use too below. However they might change from time to time.

What is an Oscillator

An oscillator is used to figure out if the crypto currency or stock that we are trading is oversold or overbought. Remember that it’s just a short term indicator.

If the oscillator’s value reaches the upper limit, it signifies that it’s overbought and probably it’s time to sell it. However if it reaches the bottom then it’s underbought and probably time to buy more if you can. But again, remember that it’s a short term indicator.

Why are we emphasizing on the fact that it’s short term? Well because of 2 reasons:

  • It’s only affective if the trend don’t change. If it does change in any direction, then it’s ineffective and unreliable.
  • It’s for short term analysis and for quick decisions on an item which is moving sideways and horizontally.

So remember, it’s not reliable when the line reaches the top or bottom and trend keeps on going. We can’t predict if the trend is forming or ending with this indicator.

rsi oscillator

Examples of Oscillators

Good examples of oscillators are:

  • RSI
  • StochasticRSI (or StockRSI)
  • MFI
  • ROC

RSI and StochasticRSI are good ones. Usually RSI should be good enough to predict the oversold or undersold status of the stock or crypto currency. But only when they’re moving horizontally or sideways!

When the value of the indicator reaches above 70, then we’re probably in overbought range. So Don’t buy it, until you’re sure that it’s not moving horizontally, rather an upward trend is forming.

Similarly if the indicator reaches under 30 percent, then it’s oversold. So don’t sell it at this price if you intended to, unless you’re sure that it’s not moving sideways and instead going into a downward trend, and you might go a lot below this current oversold price.

As long as the price of the current item remain in the established range for that item, then the signals can be considered valid. But not in breakouts! It’s very important to know that’s why it’s repeated!

Let me know if you use any other oscillator so that we can include it along with your review.

Chart reading basics

When I started crypto currency trading, I realized that this can’t be a wild guess game. Honestly speaking, I was always interested in figuring out patterns in almost everything around me since I was a kid. So I was happy to find out that there are charts available and patterns identification techniques too.

However, many websites and tools offering charts analysis for crypto currency related exchanges are not up to the mark. Infact almost all of them lack basic elements needed for chart and pattern analysis.

Note: I’m coding my own charting script and will make it public soon.

Bad charting websites:

Don’t get me wrong, they might be very good in someone elses view, or yours too. But I found them quite basic or lacking many pattern and chart analysis scripts and stuff. We don’t just need the main graph and keep guessing on our own regardnig what’s gonna happen next!

The websites that I don’t recommend to be used (will keep adding as I find more bad scripts and websites):

  • Tradingview
  • bitcoinwisdom

Good chart analysis website

The best charting script I’ve found is on cryptowat.ch

No I don’t trade via kraken (who acquired cryptowat.ch). Neither did they pay me to advertise them here.

Example view of cryptowat.ch that I usually use (I do change themes time to time to keep it fresh and interesting).

cryptowatch trading view

Note the indicators and overlays that I’ve turned on.

I do turn others on too, the sideview tabs too, time to time. Depends on what I’m looking for.

The most important indicators are following in my opinion, so keep them turned on.

Important indicators for Chart Analysis and Pattern prediction

First we’ll see the important indicators that I use on cryptowatch (there are more, some are not available on cryptowatch too, so helpless in that one!)

  • Volume
  • MACD
  • RSI
  • Aroon (7)*

Note that I mentioned the settings value 7 for Aroon. This is variable. Sometimes I set 14, sometimes more or less. Depending on various factors and the time limit of the chart (e.g. 1 minute, 1 hour or so on).

For an easy tip, set the Aroon at 7 or 14 and see if all the past Aroon indications go perfectly with the main chart’s rise and fall. If it does, then probably you’ve set the right value for Aroon indicator.

Note: Remember to learn these indicators in DETEAIL. Starting from their definition. Know everything about them. EVERY SINGLE THING.

Basic Technique for Chart Analysis

Honestly, chart analysis is such a vast and variable technique that I can’t compile it in a simple or basic form.

However I can give you some basic tips which can help you get started, as we build up more stuff on this website and learn together, helping you and me both to improve our chart analysis and pattern recognition techniques.

Follow these tips and techniques for now:

  • Study all length charts for the item that you’re trading. E.g. see and follow 1 minute, 3 minute, 5 minute, 1 hour, 1 day and so on, as many of them are available. Please don’t assume that any of them would be similar to other one or you already know what they look like. They don’t. Look at them. Repeatedly.
  • Plan your strategy on the maximum size chart. E.g. the Daily or weekly chart.
  • If you’re day trading, then learn what day trading is first.
  • If you’re day trading, make your strategy based on maximum available chart first, then come down slowly to 1day chart, then lower gradually up to the 1 minute chart.
  • Make lines on the chart.
  • Make lines on the chart.
  • Make lines on the chart. (it wasn’t a typo, was intentionally repeated thrice to give it importance).
  • Day trade with 1/3rd or 1/2 of the total cryptocurrency or any other stock that you’re trading. Keep the remaining on the long term strategy line only.

And the last and most important trick:

Get over yourself

The crypto or trading world isn’t running around you or against your. You’re not a hero you’re not a villan. You’re just another person who’s doing what all other people are doing. So don’t overestimate yourself, neither underestimate yourself. Don’t estimate yourself at all, just estimate and analyze the chart and identify the pattern.

Let me know if you have any questions through comments. I’ll reply and update this post as needed. And add more posts too.

Future of CryptoCurrency

Last year a friend of mine was insisting me on buying OneCoin (yes I know it’s not crypto currency, keep reading). However I had to debate with him for long to explain to him how I don’t feel comfortable with it being controlled centrally and not having any open market value as such.

I explained to him that bitcoin is a better opportunity than onecoin and he should invest in it. Alas! I didn’t follow my own advice and didn’t purchase bitcoin at that time!

It was only until this year when I seriously looked into bitcoin and purchased some of it. To be honest, I truly felt that I was late in the market and might have missed the train. I hope I’m wrong!

Is Bitcoin and other CryptoCurrency market at its peak?

No! not even near that! I would say that not even 1%. How can you be sure? Ask the people around you. How many of them own bitcoin or any other crypto currency? I’m sure not even 1% do that. Take that to Africa and other backward areas and not even 0.01% owns them!

So apparently, at least 100 to 1000% jump is still waiting. But we can’t be sure how long it may take. As acquiring cryptocurrency also means that you acquire a digital device to store and manage it, apparently. However we can see it being fixed in future in one of the two ways, or more:

  • Introduction of regionally central bitcoin or crypto hubs or banks, which provide normal tenders to the local population, hence they don’t need to learn how to manage or use crypto
  • Spread of smart phones like a plaque

It’s a paradigm shift in the making. We were expecting the paradigm shift for long and today it’s beginning.

futrure of crypto currencies and bitcoin

Should we just buy bitcoins and wait?

No. I wouldn’t suggest that. And this is what this website is all about. We need to learn about currencies, world, crypto, technology, market and exchange.

The goal is to tripple the fiat investment and then take out 1 third, leaving us with our original investment back in fiat and then watching the crypto fly high. I know it feels more interesting to let all remain and not pull out initial investment, but it’s always best to take 2 steps forward, 1 step back.

Corporations are acquiring crypto

Microsoft and many other corporations are investing in crypto and thus it will expand the market. I know they’re not investing like most of us believe they do. They might not be buying the coins that we have in our wallet. However they’re investing in the technology, hence pushing it forward for sure.

Governments are panicing

Anything that confuses and panics the governments is something important for sure.

Many governments and banking systems have legalized bitcoin and crypto and have launched ATM’s even that let you withdraw from your bitcoin account directly.

However some countries are also banning them as they’re confused. Most of them run on the invisible slavery network and are threatened by anything that sets people free.

Conclusion:

Don’t just buy crypto. Learn about it, and the future is yours.