A bitcoin wallet is the software used to store bitcoins that you have bought and holds the private key that allows you to access your bitcoin address. That is also used when sending or storing bitcoin and works like a traditional bank account. Opening a bitcoin wallet account is perhaps the easiest part of trading in bitcoin, especially since wallets are free. Doing so just requires an email address and a password so that you can start receiving payments.
Wallets fall into two broad categories: hot wallets and hardware wallets. The former is one that is installed on a computer or mobile device and connected to the internet. This type of wallet provides certain security over coins, but since it links to the internet, it is less secure than hardware wallets.
Hardware wallets, used for keeping bitcoins offline, are installed on a disk or hard drives. Not connected to the internet, they offer a higher degree of security.
Wallets may also be grouped according to the kind of storage option used: desktop wallets, browser wallets, mobile wallets. The names indicate where you install them.
Paper wallets are merely pieces of paper on which the private and public keys of any bitcoin address are printed. These are useful for long-term storage or when bitcoins are given as gifts.
With the rising popularity of bitcoin and other cryptocurrencies, knowing basic terms and ideas can help make navigating the world of digital currencies easier and more interesting. Knowing what wallets are and why they are used is a good place to start before you learn about the actual process of buying your first bitcoins.