How To Open A Bitcoin Checking Account
Opening a bitcoin checking account is one of the first steps in investing in bitcoin. This article explains how to create a bitcoin wallet so that you can begin trading bitcoin.
What Is a Bitcoin Checking Account?
We’re using the term bitcoin checking account to refer to a digital account that allows you to store and trade bitcoins. Bitcoin wallet means the same thing.
To be clear, a bitcoin checking account does not have most of the features of a traditional checking account. It’s not managed by a bank. You don’t get an ATM card. There are no checks to write.
Instead, a bitcoin checking account provides a digital address that you can use when you are sending bitcoin to other people or receiving bitcoin from them. Technically speaking, a bitcoin checking account stores the public and private keys that you need to conduct bitcoin transactions.
It’s also a secure place to store your bitcoin and monitor your balances. (By secure we mean that it requires a login, so it’s secure as long as you don’t share the login with people who shouldn’t have it.)
How Do You Open a Bitcoin Checking Account?
Bitcoin checking accounts or wallets come in two main forms: private and hosted.
The first comprises wallets that you download and install on your personal computer, phone or tablet. There are a variety of options in this category. Note that the wallet you download must be compatible with your devices’ operating system.
The main advantage of this type of bitcoin wallet is that it is more private than a hosted wallet. No one except you controls your wallet running on your device. On the other hand, you are responsible for keeping the wallet safe. If you lose it, you lose your bitcoin.
The second type of bitcoin wallet is a hosted one. Platforms like Coinbase and Kraken offer bitcoin checking accounts that don’t require you to install any software on your local computer.
A hosted bitcoin wallet is more convenient than a private one in many respects. You can access it from any location over the internet, and you do not have to worry about losing your bitcoin if you lose the wallet. Some hosted bitcoin wallet platforms also provide extra features, like the ability to exchange bitcoin for U.S. dollars.
The downside of a hosted wallet is security and privacy. When someone else manages your wallet, you have to trust them to keep your bitcoin secure and to respect any personal information that they collect from you.
Bitcoin Checking Account Tips
To make the most of your bitcoin checking account, keep the following tips in mind:
- Security. A bitcoin checking account is like a traditional checking account in that anyone who has access to it can access your money. Don’t share the wallet login credentials with anyone who should not have access to your bitcoin, just as you would not give your checkbook to someone whom you don’t want to write checks from your bank account.
- Backups. As noted above, if you lose your wallet or forget the credentials required to open it, you lose your bitcoin. This makes wallet backups crucial, especially if you install the wallet on a personal computer.
- Altcoins. A bitcoin checking account can be used only for bitcoin. Other types of cryptocurrency, or altcoins, require different wallet software.
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