Bitcoins are stored using software known as bitcoin wallet. Each wallet uses a unique set of secret keys which grant you access to any bitcoins sent to you, much like a password for your online bank account or pin number for an ATM.
If you’d like to set up a wallet, you have two options depending on your preferences:
- Software on your computer – Software clients the most secure option and offer users the most control over their coins. A wallet data file is created on your personal computer by the bitcoin software. With this options, as long as you have access to the file and your personal security key, you will have access to your bitcoins. Fortunately, your wallet file can be backed up and stored on any device including external hard drives, USB flash drives, and even in cloud storage services like Dropbox.
- Online wallet – Several web sites offer the option to create your wallet file on their page, allowing you to access your bitcoins from anywhere with an internet connection. For increased security a unique wallet and password is generated for each user, instead of a central wallet storing everyone’s coins.
For more information about the basics of bitcoin check out the rest of our Bitcoin 101 lessons: