Getting started with Bitcoin

In Insight

In simple terms, Bitcoin is data that is transferable and that everyone manages together. By giving this data value as money, the blockchain provides a mechanism for it to function as a currency and be used for settlement purposes.

However, keep in mind the value of Bitcoin is not guaranteed, unlike traditional government-backed fiat currency like the US dollar.

Nevertheless, Bitcoin is an emerging asset and one that's being increasingly used in everyday life. If you're going to be using Bitcoin, you'll need to get familiar with a few basics.

What is a cold wallet?

People talk about cold wallets when speaking of security concerning cryptocurrencies, but what is a cold wallet?

Before we get there, let's touch on what a cryptocurrency wallet is.

A wallet is an address used for managing the balance of a cryptocurrency, which is equivalent to a bank account for fiat. Just as you need a PIN to manage your bank account, you need a data equivalent to a PIN, known as a private key, to manage a cryptocurrency addresses.

"Cold wallet" generally refers to a state of managing this address and private key offline. This helps protect the user from malicious actors and viruses, thus keeping funds safe.

What is a public key?

 

A public key is data to check if a received cryptocurrency is sent from the genuine owner. In other words, a public key is used in conjunction with a private key to confirm data, similar to using a PIN for a bank account.

The authenticity of a public key can therefore be confirmed without knowing the content of the private key.

Easy.

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This content is not financial advice and it is not a recommendation to buy or sell any cryptocurrency or engage in any trading or other activities. You must not rely on this content for any financial decisions. Acquiring, trading, and otherwise transacting with cryptocurrency involves significant risks. We strongly advise our readers to conduct their own independent research before engaging in any such activities.

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