There are two main types of wallets: hardware wallets and software wallets. Read more: Make sure your cryptoassets are safe with these simple tips. To set up Cloud Backup in the Wallet, just go to Settings > Cloud Backup and follow the instructions. Here you can create a single custom password and use it to unlock all of your private keys, which are stored in encrypted form in your Google or iCloud account. For this reason, the Wallet integrates a “Cloud Backup” system. Storing all those recovery phrases on paper quickly becomes onerous. Further, if you're using a multi-coin wallet (like the Wallet), you'll have a separate recovery phrase for every different blockchain your wallet supports. This presents problems because safely storing a piece of paper can be hard. Since you shouldn't store your recovery phrase in plain text (unencrypted form) on your computer, for most people the best solution is to write it down on paper. While the recovery phrase is an improvement upon the private key, it still leaves a lot to be desired. Here is an example of a recovery phrase consisting of 12 words:īecause the recovery phrase is equivalent to a private key, you should never share the words with anyone, or store the plain text on your computer or online. A recovery phrase is a list of words, usually between 12 and 24, that allow you to reconstruct your Bitcoin wallet and gain access to your funds even if your Bitcoin wallet is destroyed. Bitcoin wallets provide a way to write down this private key in a much more human readable format, referred to as a recovery phrase, secret passphrase, or seed phrase. In fact, private keys are almost never handled directly by users. One of the key functions of a Bitcoin wallet is to manage the private key. A private key is a 256-bit secret number. The private key, meanwhile, is kind of like a debit card’s password in that it grants access to the bitcoin associated with that public bitcoin address. The public address is comparable to the debit card’s account number. For our purposes, the two key pieces of information are the public bitcoin address and the private key. Each Bitcoin “account” within a Bitcoin wallet also has information associated with it. For instance, debit cards have information associated with them, including an account number and a password. We can view this sub-wallet as being roughly equivalent to a debit card. Here is a list of our partners.Continuing with the debit card analogy from above, a Bitcoin wallet holds at least one “account,” or sub-wallet. Our partners cannot pay us to guarantee favorable reviews of their products or services. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. So how do we make money? Our partners compensate us. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward - and free. We believe everyone should be able to make financial decisions with confidence. Our estimates are based on past market performance, and past performance is not a guarantee of future performance. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. They are not intended to provide investment advice. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. is an independent publisher and comparison service, not an investment advisor.
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