Like traditional wallet where one puts their fiat, Bitcoin wallet is a place one puts their bitcoin. Technically, bitcoins are not physically stored anywhere, they are assets whose existence is represented as a balance in the Bitcoin blockchain network. Instead of storing bitcoins, what is stored in a Bitcoin wallet is the relevant information. For example, private key (secret number) for every Bitcoin address is saved in the Bitcoin wallet of the person who owns the balance. Another example is the carried-out transaction history related to this address.
Bitcoin wallets facilitate sending and receiving bitcoins and gives ownership of the Bitcoin balance to the user. Bitcoin wallets may be in many forms:
Desktop wallets are wallets downloaded and installed on a PC or laptop. They are only accessible from the single computer in which they are downloaded. Desktop wallets enable the user to create a Bitcoin address and allow the user to store a private key. They are one of the most secure types of wallet. However, if the computer is hacked or gets a virus, there is still possibility of loss. Well-known desktop wallets include: Bitcoin Core, MultiBit, Armory, Hive OS X, Electrum, etc.
Online wallets run on the cloud and are accessible from any device anywhere. They are easier to get access, however, at the cost of higher risk: your private keys are stored online and may be controlled by a third party, making it more vulnerable to a potential attack or theft.
Mobile wallets run on an app with your mobile phone, overcoming the handicap of desktop wallets which are fixed in one location. Therefore, you can use your Bitcoin wallet in retail stores which accept bitcoin payment via NFC or QR code scanning. Mobile wallets are usually much smaller and simpler than desktop because of the limited space available on a mobile.
Hardware wallets are by far the most secure kind of Bitcoin wallet. They differ from software wallets in that they store a user’s private keys on a physical piece of equipment such as a USB. They are stored offline which delivers increased security. Very few instances of Bitcoin theft have been reported related to hardware wallet. Making transactions via hardware wallets is easy. User only needs to plug in their device to any internet-connected computer and others are the same. The disadvantage of this type of wallets is that they are not free. You have to pay usually $100 to $200 for it.