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Often, when people refer to a Bitcoin wallet, they refer to a crypto exchange that offers a wallet as part of their account features. In this sense, the wallet is just where all of your cryptocurrencies are kept or where you can keep fiat money for future use. How Does a Bitcoin Wallet Work? A blockchain is a shared public ledger where all Bitcoin transactions are conducted from Bitcoin wallets.
When a transaction occurs, there is a transfer of value between more than one Bitcoin wallet. Typically, a single party is exchanging some value of Bitcoin for another asset or service with another Bitcoin wallet. When this occurs, every individual Bitcoin wallet will use its secret data to sign and validate transactions, providing mathematical proof that the buyer or seller is the owner of their Bitcoin wallet.
A crypto exchange can handle the transaction on your behalf and find a buyer so that you can quickly convert the value of your Bitcoin into the cash you need. Some wallets give you full control over setting the fee paid to the bitcoin network before making a transaction, or modifying it afterward, to ensure that your transactions are confirmed in a timely manner without paying more than you have to.
Skip helper What features are you looking for? Optional 2FA Note: This option is unavailable based on your previous selections. Two-factor authentication 2FA is a way to add additional security to your wallet. The first 'factor' is your password for your wallet.
The second 'factor' is a verification code retrieved via text message or from an app on a mobile device. It likely requires relying on the availability of a third party to provide the service. Bech32 Note: This option is unavailable based on your previous selections.
Bech32 is a special address format made possible by SegWit see the feature description for SegWit for more info. This address format is also known as 'bc1 addresses'. Some bitcoin wallets and services do not yet support sending or receiving to Bech32 addresses. Full Node Note: This option is unavailable based on your previous selections. Some wallets fully validate transactions and blocks. Almost all full nodes help the network by accepting transactions and blocks from other full nodes, validating those transactions and blocks, and then relaying them to further full nodes.
Hardware Wallet Note: This option is unavailable based on your previous selections. Some wallets can pair and connect to a hardware wallet in addition to being able to send to them. While sending to a hardware wallet is something most all wallets can do, being able to pair with one is a unique feature. This feature enables you to be able to send and receive directly to and from a hardware wallet.
Legacy Addresses Note: This option is unavailable based on your previous selections. Most wallets have the ability to send and receive with legacy bitcoin addresses. Legacy addresses start with 1 or 3 as opposed to starting with bc1. Without legacy address support, you may not be able to receive bitcoin from older wallets or exchanges.
Lightning Note: This option is unavailable based on your previous selections. Some wallets support transactions on the Lightning Network. The Lightning Network is new and somewhat experimental. It supports transferring bitcoin without having to record each transaction on the blockchain, resulting in faster transactions and lower fees.
Multisig Note: This option is unavailable based on your previous selections.
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