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Creating a Bitcoin Wallet

by Daniel Joseph 4 days ago in wallets
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Why Do Miners Store a Large Amount of Bitcoin in Cold Wallets?

Creating a Bitcoin Wallet
Photo by Tezos on Unsplash


By now you know that wallets are your encrypted storehouses that contain all the payouts and rewards. Now, we are going to look a little deeper into their types.
There are two types of cryptocurrency wallet, which are: Cold or offline wallets and Hot or online wallets. Let us learn how the two types vary from each other.
The most fundamental difference between the two is that the hot wallets are linked to the online world, while the cold wallets restrict that connection. Most miners use both types of wallet, which provide them with varying purposes.

Hot wallets are more like checking accounts that you use more often. On the other hand, a cold account is like a savings account for keeping all your digital assets safe. Miners usually keep a small amount of currency in the hot wallets for trading. And a significant amount of their digital money is stored safely in cold wallets. Now, you must be wondering about the security aspects of the two. Let us explore a little more deeply.

Why Do Miners Keep A Large Sum Of Their Bitcoins In Cold Wallets?

The answer to this is simple. This way the attackers will not be able to steal their digital assets, as there is no online connection to exploit the wallet.
Does That Mean Hot Wallets Are Not Safe? For determining how secure a hot wallet is, one will have to study the reputation and behavior of the third parties and individuals who are connected to the hot wallet. Anything that is linked online is prone to hacking and attacks. So, miners usually prefer keeping a small amount in their hot wallets, as an attacker will not waste his/her resources just to get hold of a small amount.

Types Of Hot Wallets Account-Based Hot Wallets

Accounts that are stored in the online asset exchange companies, such as Bittrex and Poloniex, are deemed as hot wallets as they record all the funds of a user in their servers and infrastructure. If an attacker hacks the Poloniex system and drains all the assets stored there, then your account is most likely to be affected by the attack as well, as Poloniex is holding your funds for you directly.
A Coinbase account is also a type of hot wallet. So, if Coinbase is attacked, you could lose your funds too. This is why many practices keeping a small number of their digital assets in Coinbase and similar hot wallets.

Using Coinbase to trade and exchange Bitcoins is secure, as long as you immediately move the money out of the wallet once the trade is completed. Many have found Coinbase to be a secure platform for business. However, it still questions the ethics of whether it is fully secure and worth risking storing huge sums of money in it. I would suggest using Coinbase if you are a beginner miner, as the firm offers a user-friendly app and website for users, especially in the U.S.
Software-Based Hot Wallets

There is another type of hot wallet, such as Exodus.io, which is software downloadable and installable on a computer. Another name in the software types of hot wallet is Dash QT wallet. In this wallet, Exodus does not practice storing the private keys of the miners on the servers. Thus, the miners control their own money. However, there is still a risk of getting phished, as your wallet is connected to the internet, which can be a medium for a potential hacker to attack your computer and gain access to it. Exodus wallets are fabricated to communicate with the various blockchains directly. It also acknowledges many digital cryptocurrencies, except Bitcoins.

You can consider several factors when choosing a software wallet. Exodus has been a popular choice among many users because it is user-friendly and has been combined with Shapeshift. This combined feature lets users avoid migrating to an asset exchange division externally, such as Poloniex or Bittrex to facilitate trading. With Exodus, miners have the benefit of not leaving the unsecure system. It surely is a great wallet, but it still needs to update its features to make the hot wallet more secure for users.

Types Of Cold Wallets Hardware Wallets

While there are many types of cold wallet, the main one that we will focus on is the hardware wallet. This wallet has a physical body that is not connected to the internet. However, it does have a plug-in feature that lets it connect to the internet when required. These wallets are very secure, as whenever a transaction is made, the wallet asks for confirmation from the user by instructing him/her to press the button present on it. You can consider them hack-proof. These encrypted devices are great for storing large sums of assets.
Three popular hardware wallet brands that miners usually choose are: KeepKey, Ledger Nano S, and Trezor.io.

Each one of these hardware/cold wallets has its unique features. For instance, Trezor.io has an outstanding reputation, and it was designed at Satoshi Labs. Trezor provides exceptional customer service and supports a multitude of currencies, namely – Testnet, Dogecoin, Namecoin, Litecoin, ZCash, Ethereum Classic, Ethereum, Dash, and Bitcoin.

Start Mining

By now, we have learned all the beginner-level stuff about Bitcoins and their terminology. Do note that there is much more to learn in this network of cryptocurrencies, but all the above information is enough to get you started.
Now that we know which devices, software, and other equipment are needed for mining, it is time to start the actual mining. This last step is where you will learn about ways to improve your knowledge and stay updated about Bitcoin mining and news. This currency and all the rules surrounding it are quite volatile. They tend to change often. Therefore, you will have to try your best to stay as updated about new techniques, latest news, etc., as you can.

Even though Bitcoin has been considered a risky investment, you cannot deny that the interest in this digital currency is increasing every day. You read this book until now because you want to learn about it. You have probably already set up all the accounts and hardware to start with the mining procedure, but before you continue, you should know that keeping yourself updated with any new developments in the mining space is of high significance.

Staying Updated

So, as stated earlier, the last step is all about staying updated and mining according to what you learn from such updates. This is not as simple as it may seem. You will have to dig deep into the layers of the cryptocurrency world to find information of importance to you in your mining activity. This can be very time consuming, especially when you do not know where to start.

Learning Through Widgets: My Bitcoins Gadget (For Windows)

With this widget’s aid, you will get to know the number of coins you possess, their current worth, and it also lets you link to your pool mining community to reveal data and rewards, if any. Domchi, a member of BitcoinTalk, developed this widget. A new update has also been released for this widget after the previous update Mt.Gox collapsed. At first glance, the website may look malicious, but many BitcoinTalk administrators have already tested it and found that it is clean, simple, and safe to use.

Bitcoin Ticker (For Mac)

For MacBook users, the Bitcoin Ticker performs quite efficiently. This widget stays at the top of the screen on your Mac OSX and displays the prices of up to seven types of cryptocurrency exchange.
Learning From Internet Browsing Websites

Here are some popular news websites, which offer Bitcoin news and updates regularly.

Coindesk

This cryptocurrency-related news website stays up-to-date about anything related to Bitcoins and the cryptocurrency industry. A number of articles are published every day which talk about more than just recent updates. Many long-form pieces present on this website are worth reading, as they teach a lot about the world of cryptocurrency, its future, tips to improve mining, etc. Coindesk is also a great place for beginner miners to start. Their Blockchain 101 has been listed as a great article for newbies. Here, the most commonly asked questions related to the Bitcoin world are answered. Besides the cryptocurrency section, readers can also go through their other sections, which are Data, Research, Business, Markets, and Technology.

Cointelegraph

This site is an independent news platform targetting applications related to decentralization, the blockchain network, and cryptocurrency. It started in 2013 but has since garnered a massive audience, making it stand out as the second most visited Bitcoin news website. Cointelegraph publishes a mixture of cryptocurrency-based commentary, market data & analysis, expert opinion, and breaking news. Cointelegraph also provides a user-friendly ICO calendar that gives all updates related to the launch of potential new coins.

Bitcoin Magazine

This magazine is more focused on Bitcoin in particular. The other cryptocurrency coins are occasionally covered, but a significant part of the website focuses on news updates related to the first cryptocurrency. This website consists of articles that are divided into five broader classes, which are: Technical, Opinion, Price & Data, Guides, and News. Each class further divides into subclasses that provide various topics of interest. So, there is plenty of information on this website, despite its coverage limited to just Bitcoin. It started in the year 2012 and publishes four articles every day, currently.

TheMerkle

This website is considered to be the youngest of all the websites on this list, as it was launched in 2014. The site covers the whole cryptocurrency sector, but there is an occasional turn towards news and reports related to other markets as well. Besides the usual categories of news, you may also find its review section educational. TheMerkle studies the finest cryptocurrency wallets and exchanges and reviews them. The site also provides comparisons on various virtual currencies and other financial equipment of importance. For instance, one of their comparison articles talked about the difference between stock-driven IPO and crypto-driven ICO. This site updates with up to 15 articles every day.

CryptoCoinsNews

CCN is a sister website of Hacked, but while the latter targets advice on trading and analyzing coins, the former is all about providing news coverage. The significant currencies covered in the news on the website are Ethereum, Litecoin, and Bitcoin. However, there are also updates related to other alternate coins from time to time as well. The site is more focused on a professional approach compared to the others on this list. For any reader who wants to study offerings of new products, changes in price, and mergers, then CCN is the place for you. CCN also offers an educational portal, just like CoinDesk. Though it may not be as detailed as CoinDesk, it still provides vital information on the crypto sector.

Official Bitcoin Blog

This may be the official Bitcoin blog, but it only updates when there is a major announcement or news update regarding this currency. The Bitcoin team hardly updates a single post every couple of months, but when it releases, it gets aggregated coverage from all other news websites instantly. Nevertheless, if you are into Bitcoins, then you should definitely bookmark this website for updates. In addition, this is the only official platform that will offer you genuine updates about these digital coins. You can just add it to your current RSS feed and stay updated.

Bitcoin Talk

Bitcoin Talk is not really a conventional news website, but a forum, and a reputed one, at that. Over 1.5 million forum members actively operate on this website to cover and share the slightest update related to the cryptocurrency world. There is also a subclass for every possible section related to Bitcoins, such as trading updates, mining news, technical discussion, etc. A unique and helpful section that this website possesses is the Press Hits page, which offers one of the most broad-scale clusters of news articles for your knowledge. When you scroll down further on the website, you can also find a little section that dedicates itself to other cryptographic currencies and coins. Members share and discuss all major updates in that section.

Reddit

Anyone familiar with Reddit already understands the vast cluster of data available on it for educational, entertainment, and other significant purposes. Subreddits related to Bitcoins and the cryptocurrency industry are no different. You can find plenty of them available on the website, which you can join and stay informed. A few of them that will update all major and minor news related to the crypto sector are /r/CryptoCurrency, /r/Bitcoin, /r/CryptoMarkets, and
/r/BitcoinMarkets. Do visit /r/Bitcoin if Bitcoins are your number one mode of interest in this industry. Nevertheless, try subscribing to as many subreddits as you desire. You may never know when you get vital information from any of them.

Learn From Your Mobile Phones And Smart Devices

These mobile applications, which I am going to share below, are great at providing you with news updates and information on the run. Websites are most suitable when you are at your home
computer or laptop. But apps provide you with a user-friendly layout that can be viewed whenever you get time. That said, here are a few popular mobile apps to get you updated with Bitcoin information.

Bitcoin Checker (For Android)

With over 50,000 users and a rating of 4.7 by 3,400+ downloaders, Bitcoin Checkers offers you information related to the latest cryptocurrency prices. In addition, you can set alarms on this app that notify you about any major or trivial change in the cryptocurrency market, for which you can set up specific prerequisites. For instance, the app can notify you with an alarm when there is a rise or fall in the coin price by a certain amount.

Zeroblock (For Both iPhone And Android)

The ZeroBlock app not only keeps you updated on the real-time market prices, but also the latest news related to the world of digital currency. In addition, you also get a Bitcoin calculator incorporated in this application. This app has seen more user following among iPhone owners, who also use it for staying updated about current prices.

My Recommendations

No doubt, there are many portals from where you can gather Bitcoin information at your convenience, but let us look at the ones that I recommend you to try out above all the rest.

WeUseCoins

WeUseCoins was one of the first portals I found very useful to polish my Bitcoin knowledge. You are able to acquire news updates, starting guides, FAQs, Mining tips, and buying guides for Bitcoins as well as altcoins. Some of the most influential Bitcoin experts and miners share their experiences and tips on this website. In addition, you can certainly learn a lot from them. To get you started, you can read their posts about some of my favorite and 100%-noteworthy topics:
1. Decentralized Bitcoin
2. Tips on Securing Your Online Mining Presence
3. Why Wont Bitfinex/Tether Publish Already Existing Reports
4. Should You Buy Bitcoin with a Credit Card
5. How Latin American Growth Will Advance Through Bitcoin
6. The Process of Accepting Bitcoin Payments for your Business
7. BCash Hard Fork
8. A Guide to Claiming and Selling Bitcoin Forks
9. Top Cryptocurrencies Besides Bitcoin
10. Purchasing Litecoin

The Subreddit: /R/Bitcoin

I already mentioned it, but now I highly recommend that you follow this portal for all the latest updates regarding Bitcoins in specific. It is one of the highest-ranking platforms on Reddit, and this reputation makes it worth subscribing. You should note that other Redditors share external links here that will give you an idea of the most fascinating news leaks related to cryptocurrencies.

Coindesk

With an estimated visitor count of a few million every month, Coindesk is the largest and the leading source of Bitcoin information. A great thing I like about Coindesk is that there is no sponsored submission on this platform. This makes the posts more trustworthy to read. It may sometimes be hard for you to keep track of the number of posts updating on this website. A way to cope with that is by subscribing to their newsletter and reading the posts you find useful, while briefly glancing over the trivial ones.

DCMagnates

This website platform offered me not only the latest news about Bitcoins and altcoins, but also advice and guides on trading in these coins. It has a great collection of articles consisting of news updates, trading assessments for Bitcoin, and other currencies, such as Litecoin. You should sign up to their newsletter to stay updated about any new posts.

Recommended Bitcoin Calculators

Some of the above websites and apps offer Bitcoin calculators, but I found more useful information related to Bitcoin trading analysis and calculations at the following portals.

BitcoinX

BitcoinX’s profitability calculator provides the most extensive information based on the information you enter. The fields that it calculates and covers for your information are:

Difficulty Mining Factor.

Average generation time for a block (solo).

Hardware break even.

Net profit first time frame.

Coins per 24h at these conditions Power cost per 24h.

Revenue per day Less power costs.

System efficiency Mining Factor.

Average Mining Factor 100 Power cost per time frame.

Revenue per time frame Less power costs.


These fields are enough to give you an idea of whether you will make any profit from your status in the Bitcoin world or not.

The BitcoinWisdom Calculator

This calculator offered by BitcoinWisdom not only updates the usual profitability information, but also targets the latest prices of interesting hardware related to Bitcoins and other cryptocurrencies. It is worth visiting if you are planning on upgrading your equipment and want to find all competitive prices in one place.

Conclusion

Bitcoins have been helpful in reaping benefits that were never imaginable before. In fact, many major-scale industries are actually making millions by mining and exporting cryptocurrencies. Many people find these useful, because they have an international currency status. A person with Bitcoins can use them in any part of the world by converting them into the conventional currency of that region. In addition, the security of the blockchain network is top-notch, which ensures that your money is sent to or received from the right person, and that too without the need of disclosing either one’s identity online.

Many have seen the numerous benefits Bitcoins provide. A major one is that there is third-party influence, which would have charged a fee for a transaction otherwise. This is why Bitcoins are supported by many small and large-scale industries who do not have to rely on intermediaries any more. Support from users strengthens the existence of Bitcoins, and if all people in the world start using it, then the day is not far off when Bitcoin replaces all currencies as the official one. But, there are still disadvantages due to skeptics at the moment. Many hesitate to learn and become involved in it because it is an innovative and self-governing technology. But, with time, this issue can be resolved as more and more people embrace it.

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Daniel Joseph

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