Now we have seen the concept of blockchain and how it works. One of the successful application of blockchain is bitcoin. Bitcoin is gaining a great momentum recently. As of now one bitcoin cost more than $12,000 which explains the demand of bitcoin. Along with many other digital currencies crypto currencies are gaining lots of business attention.
Let us see how we can receive, send & store a bitcoin.
Unlike our regular banking transactions, bitcoin is decentralized and there is no central authority to keep a track of your transaction and balance. Our bitcoin balance is stored in a bitcoin address which is 26 to 35 alphanumeric characters. This bitcoin address which is used to receive and store bitcoin is also known as public keys. It is called as public keys because to receive a payment , we need to share this key publically to the third party who is ready to pay.
To send payment, along with public key we also need private keys. As name suggest, private key should be kept secret or private. For sending any payments you need a combination of public and private keys.
Now Private key and public key is discussed, let’s see what a wallet is.
Wallet is a collection of private key & public key pair. It can contain multiple bitcoin address where the actual value is stored. It is very common to confuse between bitcoin address and wallet. Wallet can be of different types.
Consider this as a software which can be installed on your desktop and it store your collection of bitcoin address and its private key.
Mobile wallets are mobile apps which can store your bitcoin address and its private key.
online wallets are stored on webservers and can be accessible from anywhere with an internet connection. This is considered to be unsafe as we have to trust online wallet vendor. This can be used to store lesser value , as we can use them to pay for other services and goods online easily.
This is one of the safest and cheapest way to store bitcoin , if done correctly. bitaddress.org can be used to create paper wallet. We need to be very careful about the public and private keys. Never ever share private keys in any circumstances.
There are few hardware wallets also available to store bitcoins safely. Most of them starts with a cost of $99. We can expect lot more such products in near future. Trezor is one of the such most common hardware wallet.
Now we talked about bitcoin address , private key and wallets. One more term to be understood is crypto exchanges.
Crypto currency exchanges
In most of the cases crypto exchange act as a wallets as well as an exchange. In these exchange we can change currencies. Example if you want to exchange Bitcoin to Etherium or bitcoin to USD or even INR to bitcoin , we can use these exchange. In India we have few popular bitcoin exchange where we can buy and sell bitcoins . Some of them are zebpay , unocoin, pocketbits and coinsecure.
A word of caution : All the above exchange which offer a wallet which should not be used to store your bitcoins for long term as they all are online wallets.
Bitcoin or any crypto currencies have its own risks, trading or dealing with these should be considered as high risk. Information provided here are for academic purpose.