Bitcoin Wallets
Unit II Bitcoin basics and wallets deck: what Bitcoin is and is made of, the Bitcoin and Ethereum stacks, hot and cold wallets, the five wallet categories, common wallets, how to get bitcoin and how its price is set.
BitcoinSearch on YouTube
Bitcoin is a collection of concepts and technologies that form the basis of a digital money ecosystem.
- It is a unit of currency and a cryptocurrency.
- It is not managed by a bank or agency.
- Transactions are recorded in a public blockchain. Every transaction is entered into the ledger.
- Users transfer bitcoin over the network and can buy or sell goods with it.
- Bitcoins are entirely virtual money. What moves is a transfer of value between sender and recipient.
- Users own keys that prove ownership of bitcoin in the network.
- Keys are often stored in a digital wallet on the user's computer or smartphone.
There are no coins inside a wallet. The blockchain records who owns what. The wallet holds the private keys that let you sign transactions spending that value.
What Bitcoin consists ofSearch on YouTube
- A peer-to-peer (P2P) network.
- A public transaction ledger (the blockchain).
- A set of rules for independent transaction validation.
- A mechanism for reaching global decentralized consensus on the valid blockchain (Proof of Work, see L04).
People Pay Real Coins: P2P network, Public ledger, Rules for validation, Consensus mechanism.
- Bitcoins are created by mining. Mining is the process of adding transactions to the large distributed public ledger of existing transactions.
- Bitcoin is a protocol accessed through a client application.
- A bitcoin wallet is the most common user interface of the Bitcoin system, like a browser is for the web.
Bitcoin vs Ethereum stackSearch on YouTube
The deck compares the layers of each platform, from the bottom up.
| Layer | Bitcoin stack | Ethereum stack |
|---|---|---|
| Top | (none) | Verticals: end user applications |
| Application | Wallet / exchange application | Application framework: smart contracts |
| Protocol | Bitcoin blockchain protocol / operations | Ethereum blockchain and Ethereum Virtual Machine |
| Network | Peer-to-peer network and operating system | Peer-to-peer network and operating system |
| Base | Hardware | Hardware |
Bitcoin's top layer is wallets and exchanges, because it is mainly a currency. Ethereum adds a virtual machine and smart contracts, so it can host end-user applications. See L06.
Crypto walletsSearch on YouTube
Crypto wallets keep your private keys (the passwords that give access to your cryptocurrency) safe and accessible. They let you send and receive cryptocurrencies like Bitcoin and Ethereum.
There are two types:
| Hot wallet | Cold wallet | |
|---|---|---|
| Connection | Internet-enabled, online | Offline |
| Form | Software (app, browser, website) | Physical device, such as a USB stick |
| Main benefit | Convenience, ease of use, well-designed interface | Security: harder to hack, less risk of losing assets |
| Use | Day-to-day spending and exchange | Long-term storage of large amounts |
Hot and cold wallets are the primary means of storing and exchanging cryptocurrencies and tokens.
Categories of walletsSearch on YouTube
| Category | How it runs | Notes |
|---|---|---|
| Desktop wallet | On a general-purpose OS such as Windows or Mac OS | Has a few security disadvantages, since the OS is shared with other software |
| Mobile wallet | On a smartphone (Apple iOS or Android) | Ease of use, simplicity |
| Web wallet | Through a web browser; the wallet is stored on a server owned by a third party | Not advisable to store a large volume of bitcoin |
| Hardware wallet | A device running a secure, self-contained bitcoin wallet on special-purpose hardware | Keys never leave the device |
| Paper wallet | Keys printed on paper for long-term storage | Fully offline |
Desktop, mobile and web wallets are hot. Hardware and paper wallets are cold.
Don't Make Wallets Hard to Protect: Desktop, Mobile, Web, Hardware, Paper.
"Discuss the different categories of blockchain wallets" was a 5-mark question in the November 2025 end sem. Write the hot vs cold split first, then the five categories with one line each and an example.
Most common bitcoin walletsSearch on YouTube
The deck lists: Trezor Model T, Bitcoin Core, Electrum, Coinbase, Ledger Nano X, Exodus and Mycelium.
| Wallet | Category |
|---|---|
| Trezor Model T, Ledger Nano X | Hardware (cold) |
| Bitcoin Core, Electrum, Exodus | Desktop (Bitcoin Core is a full node) |
| Mycelium | Mobile |
| Coinbase | Web / exchange (custodial) |
How to get bitcoinsSearch on YouTube
- Buy online, for example on Coinbase.
- Buy in person, using sites such as Coin ATM Radar, LibertyX or LocalBitcoins.
- Get bitcoins for free:
- Play mobile or online games.
- Join a bitcoin casino.
- Do online jobs (for example Bitcoinget, Bitfortip).
- Read classic books (for example Bitcoin Aliens, PaidBooks).
- Write about cryptocurrency (for example Bitcointalk, Coinality).
Bitcoin can also be earned by mining (see L01).
Who sets the bitcoin priceSearch on YouTube
- Bitcoin is like a commodity. Its price is set by the market in which it trades, that is, by how much someone is willing to pay for it.
- At launch it had no official price, since no one was selling it for US dollars.
| Date | Price |
|---|---|
| Start | About 6 cents |
| February 2011 | First reached 1 dollar |
| April 2013 | Over 140 dollars |
| December 2013 | Over 1,000 dollars |
| 2023 | About 27,159.60 dollars |
The "Current Status" slide shows 1 BTC = ₹63,51,523.90 on 19 August (a price snapshot, not a fixed fact).
Quick self-testSearch on YouTube
What are the four things Bitcoin consists of?
A P2P network, a public transaction ledger, a set of rules for independent transaction validation, and a mechanism for global decentralized consensus on the valid blockchain.
What does a crypto wallet store?
The private keys that prove ownership and let the user sign transactions. The coins themselves are recorded on the blockchain.
Compare hot and cold wallets.
Hot wallets are online and convenient but easier to attack. Cold wallets are offline devices such as a USB stick; they are harder to hack and safer for large amounts.
List the five categories of wallets.
Desktop, mobile, web, hardware and paper.
Why is a web wallet not advised for large amounts?
The wallet is stored on a server owned by a third party, so the user depends on that party's security.
What is a paper wallet?
Bitcoin keys printed on paper for long-term offline storage.
Name two hardware wallets from the slides.
Trezor Model T and Ledger Nano X.
How does the Ethereum stack differ from the Bitcoin stack?
Both share hardware and the P2P network. Bitcoin has its blockchain protocol and a wallet/exchange layer. Ethereum has its blockchain plus the EVM, a smart contract application framework, and end-user application verticals on top.
Who sets the price of bitcoin?
The market. Like a commodity, its price is what buyers are willing to pay. It started at about 6 cents and passed 1 dollar in February 2011.
- Bitcoin is a decentralized cryptocurrency with no bank; ownership is proven by keys kept in wallets.
- Bitcoin = P2P network + public ledger + validation rules + decentralized consensus; coins are created by mining.
- The wallet is the main user interface of Bitcoin.
- Ethereum's stack adds the EVM, smart contracts and end-user applications on top of the shared base.
- Hot wallets are online and convenient; cold wallets are offline and secure.
- Five categories: desktop, mobile, web, hardware, paper.
- Bitcoin's price is set by the market, like a commodity.