How do Bitcoin Wallets Work?
A physical wallet helps in storing money securely within one place. Similarly, a bitcoin wallet is simply a place where the bitcoins are safely held or stored. Though the bitcoins are an inseparable part of the Block Ledger, but virtually if it is thought to have a separate identity than the Block Ledger, these are similar to physical coins which are safely stored in a virtual wallet.
A more refined way of defining a Bitcoin wallet would be a store of the digital credentials of all bitcoin holders by a miner. This wallet or the safe holding where the credentials are safely put in can be easily accessed and transacted whenever required. The transactions of bitcoins from these wallets are secured by a two key system.
Such transactions are dependent on a Public Key and a Private Key. The Public Key is identical to the account number of a physical bank account that we hold. The private key holds the details of our ownership credentials. A wallet is basically a collection of these two keys which makes the storage and transaction online easy and safe.
The transactions of bitcoins using a bitcoin wallet are enabled by using bitcoin wallet software. This software is also known as the bitcoin client software. This software generates and stores the keys apart from allowing communication with peers on the bitcoin network. Bitcoin-Qt was the first Bitcoin wallet software developed by the originator of the Bitcoin concept Satoshi Nakamoto in 2009. The Litecoin software was created on the basis of this Bitcoin-Qt but was developed software.
The Litecoin wallet software is known as Litecoin-Qt. This is an offline wallet similar to that of the Bitcoin wallet. The Litecoin-Qt wallet can be run with Linux, Windows and Mac operating systems.
Recently the Litecoin android software has been launched to enable the operation of litecoin software even from the smart phones or the tabs. This Litecoin wallet released in April 2014 and called the Electrum client is a lightweight wallet to support the Android software and fix and update any problem cropping upstream while transactions immediately. This latest android software was an up gradation on the existing android software which resolved the critical issues of support faced by the earlier versions.
Though all possible measures are taken to protect and secure the wallet, it is still stolen. Similarly, whatever levels of security measures adopted there is always a security issue with virtual currency and this extends to the virtual wallets as well. The hackers or the miscreants are always on the lookout for such loopholes to fish in money and other credentials, thus we need to be extra careful while transacting over the virtual platform.