Bitcoin For Dummies, 2nd Edition
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A software wallet is a bitcoin application that sits on your computer's hard drive and allows you complete control and great security, because each bitcoin you hold is only accessible on your own computer. This software, called Bitcoin Core, is developed and supported by the Bitcoin Foundation.

When your software wallet is installed, it creates the wallet.dat file that holds the data that relates to your personal bitcoin wallet.

To find out how to get a software wallet, visit Bitcoin.org and click the Get started with Bitcoin link.

The bitcoin software wallet is open source (meaning that the source code for the software is fully accessible by anyone who wishes to see the code). Open source ensures transparency and allows users to check the source code to ensure it contains no malware or other suspicious code that could damage your computer or jeopardize your security. It also means, if you're a bit of a technical whiz kid, you can compile applications such as Bitcoin Core wallet yourself (although we're not the computer experts to ask about this).

Syncing your wallet

To ensure that your software wallet is giving you the most up-to-date information about your account, you should sync (technical speak for a refresh and update) it on a regular basis. Different computers and tablets perform this sync in their own way, so be sure to check out how to sync a program on your device.

When you first download and install the Bitcoin Core software client — which you'll need to download to use a software wallet — the installation may take a few days because it needs to download the history of every transaction ever created from 2009 to the very latest transaction.

Every time you close the wallet either with a computer shutdown or by closing the application, remember to sync again next time you open the application.

Securing your wallet

The Bitcoin Core client allows you to encrypt a password — which we recommend you do, because with encryption, if somebody got their hands on your hard drive, they would need to know the password to get access to your bitcoins. And if you've set a hard-to-guess password, you can rest assured that your bitcoins are as safe as can be.

Every time you send bitcoins from the wallet, you're asked for the password you used to secure the wallet, so make sure you set a memorable one.

Backing up your wallet

When you create your bitcoin wallet, please ensure to back it up within the software. You can put the backup file onto a USB flash drive or external hard drive, and with it being encrypted, it means you will be safe in the knowledge you can have access to your bitcoins again if something bad were to happen to your computer.

Multiple bitcoin addresses

When you install the bitcoin wallet, it allows you to create multiple addresses as required, which means you can have an address dedicated to people who send you bitcoins.

About This Article

This article is from the book:

About the book authors:

Peter Kent is an e-commerce consultant who specializes in search engine optimization (SEO). He’s also delved into cryptocurrency, including creating the online course Crypto Clear: Bitcoin & Cryptocurrency Made Simple. A former vice president of web solutions at a national internet service provider, and vice president of marketing and SEO expert at Indigio, Kent has been involved in the online world since 1984. He's been writing about the internet since 1993. He’s the author of nearly 60 books, as well as hundreds of articles. Tyler Bain is a professional engineer who specializes in the electrical grid. He is also a Certified Bitcoin Professional who focuses on system resiliency and mining mechanics.

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