A bitcoin wallet is an app that "stores" your bitcoin. (It gives access to your bitcoin at your address.) It’s basically your wallet’s digital version. You receive and "store" bitcoins in this digital wallet and also send them out from there. Note that this doesn’t fully compare to a bank account, because there is no financial institution in the background that is storing your money or keeping track of it for you!
A bitcoin wallet is nothing more than a digital keychain, that stores the owner’s bitcoin address and the confidential keys needed to spend the available bitcoin at that address. These confidential keys are commonly referred to as ‘private keys.’ They’re private, because anyone with these keys can spend the bitcoin in your wallet. For this exact reason, you shouldn’t share them with anyone else and you should also take care to keep them in a secure place.
Bitcoin wallets can be categorized into two buckets:
- There are software wallets that you can download onto your computer or mobile device. These wallets have a steeper learning curve, however they keep all of the private keys with you, giving you full control over your bitcoins.
- There are also “web wallets” that are hosted by a third party that has your private keys. In this case, you have to trust that the service provider has ensured all safety measures are in place to secure your bitcoins. These wallets act as Bitcoin “banks” that store your bitcoin for you and keep an account of your transactions.
We don’t recommend web wallets as they’re more vulnerable to hacker attacks, your account may be frozen at any point in time for any reason, not to mention an unreliable service provider can quickly disappear with your bitcoins in tow.
For specific advice on choosing the right bitcoin wallet, you can find more info here.