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Unlike traditional assets, bitcoins can be easily transferred peer-to-peer, much like the digital version of giving someone paper dollars. There are two ways of holding bitcoins; custodial and non-custodial.
Related reading: Bitcoin Digital Carrier Asset: Unraveling Private Rights and Private Keys
The custodial option is usually easier. However, individuals may sacrifice privacy and increase counterparty risk by trusting entities to secure the private keys that enable the movement of their bitcoins. In short, if Paypal can complicate the movement of your dollars, the same can be said when you use those third party services for bitcoins.
In contrast, a non-custodial wallet, or self-custody wallet, allows individuals to be in charge of the private key (password) that generates their bitcoin wallet. This option gives holders complete control of their bitcoins without counterparty risk.
Related reading: Bitcoin, Paypal, and Money Weapons
Bitcoins are transferred via one of two networks. The Bitcoin network, known as chain transactions, is similar to a wire transfer. This is perfect for transfers or payments of large amounts that are not time-limited. There is also the Lightning Network, a second layer that facilitates instant and cheap payments, although generally for smaller amounts.
Here are a number of different wallet providers that can help you start your journey into the world of bitcoin.
Custodian, All Purpose
There are a number of custodial options where you can quickly start your bitcoin savings. The Cash, Strike and River apps are some of the options that will allow you to easily buy, store and send bitcoins.
All three options support the Bitcoin network and Lightning Network. All of them can be easily linked to your bank account to facilitate purchases, just like a traditional brokerage account.
The Cash App even features a direct deposit function where individuals can withdraw a portion of their salary in bitcoins. All three options focus solely on bitcoin, which can help reduce regulatory concerns for savvy savers.
Lightning
Once your bitcoins have been purchased, you may choose to create a Lightning wallet to test some of the functionality of the network. The Satoshi Wallet is a popular smartphone app based wallet that allows individuals to send and receive bitcoins on a lightning network which may be useful for storing small amounts of bitcoins.
Features like the perpetual flash URL function make it easy to embed payment information into apps like Orange Pill App or Nostr to receive bitcoin “zaps” or tips. This feature is useful for content creators or those who want to accept people quickly if they choose to be paid or tipped in bitcoin.
In Chains
For storing larger amounts of bitcoins, experts recommend a wallet where you can store your private keys. Mobile apps like BlueWallet can be used to create a hot wallet, or a wallet where the keys are on your device.
This method is safer than leaving bitcoin with a custodian, but hot wallets should not be used for amounts that exceed the amount you feel comfortable holding in a traditional cash wallet. Private keys can be compromised if your phone is lost or stolen.
As an additional security measure, keys can also be generated offline or in hardware, utilizing Blue as a software interface. Popular bitcoin-only options include ColdCard, Foundation Passport, and Blockstream Jade.
Self Custody Assistance
Unchained lets you keep your keys to yourself, but in a way that provides more peace of mind through a dedicated customer service team. The wallet is created from three sets of private keys, of which the customer holds two, and Unchained holds one. This configuration is known as a multi-signature, or multisig.
Multisig is the gold standard for bitcoin security. Using a company like Unchained, single keys are geographically distributed by default, adding a layer of security to your configuration.
To transfer bitcoins, transactions must be signed by two of the three keys. The keys held by Unchained serve as an emergency backup in case one of your other keys gets lost.
The hardest part of bitcoin is probably just getting started. Luckily there are lots of resources to help you get started. The BTC Sessions YouTube channel is a great way to start your educational journey about this method of storing bitcoins. There are dozens of demonstration videos that provide individuals with instructions on how to use the various containment methods mentioned above.
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