Using Bitcoin effectively is a skill that requires grounding in theory, lots of practice, and patience. It’s hard to overstate the importance of a gradual approach when building bitcoin holdings. Think carefully about your goals and avoid the temptation to let fast exchange rate movements cloud your judgement.
Wallet applications provide the main user interface to Bitcoin. There are many to choose from. Keep these factors in mind when comparing wallets:
- Security. What attacks are most likely against the wallet you’re using? How does your application protect you from these threats?
- Block Chain Model. Where does your wallet pull transaction data from? What, if any, validation is performed?
- Backup and Restore Options. If you lost the device on which your wallet is installed, how would you recover your money?
- Multisignature. What options for co-signers does your wallet offer?
- Fee Flexibility. How does your wallet set transaction fees? What are your manual override options?
- Privacy. To what extent does using you wallet make it possible to link one of your addresses to another you own, your IP address, or your email address?
- Source Code Availability. Who else other than the developer has reviewed the source code for your wallet?
Beware of Malware
Wallet are an ideal vehicle for spreading malware. Know what a malicious wallet can do and how to protect yourself. One of the first lines of defense is to check the authenticity of any downloadable wallet. The articles below show how authenticate an Electrum download, but the information can be applied to any wallet:
Transaction volume ebbs and flows. How will you react when faced with making a payment during a fee surge? These articles offer some specific ways to prepare:
Before investing significant sums of money in bitcoin, develop and practice a cold storage plan. This article can get you started:
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