Most people’s introduction to Bitcoin is by using a Bitcoin wallet. A wallet is the equivalent of a Bitcoin bank account, and is what enables sending and receiving payments with others. A Bitcoin wallet contains a collection of Bitcoin addresses owned by you. A nearly unlimited number of addresses can be created and stored by your wallet, so that you can give different addresses to different people and track payments you’ve received. When a payment is sent to one of your addresses, your Bitcoin wallet will reflect your new balance – you’ve got bitcoins!
In addition to wallet software that runs on your computer or mobile device, web wallets – cloud services run by independent organizations – can also maintain a wallet with addresses, or can operate like a bank where your bitcoins are simply stored as an account balance in their Bitcoin wallet. Choose a wallet that is appropriate for you.
If the wallet data stored on a computer is deleted, or the computer hard drive dies, then the owner loses the ability to send their bitcoins to anyone else – they are lost. This is why it is important to make a secure backup of the wallet before using Bitcoin for significant amounts.
If someone else gains access to your computer or the wallet data, they can spend your Bitcoins. Bitcoin-Qt allows encrypting a wallet with a passphrase, so even if the wallet data is stolen, the bitcoins contained in the wallet addresses cannot be sent or stolen without cracking the password.
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