Why Many Beginners Misunderstand How Bitcoin Wallets Works

[joniboini]

I don’t really know how the new spread out but it most have being somone very close to him that most have pass such information, he was a tech guy and into crypto.

What about his social media or other stuffs like that? Sounds like the attack is very targeted. In another case we see someone share their crypto lifestyle on social media then got attacked with a $5 wrench attack later. You're right that stuff like this gets reported many times in the past. Newbies or not, some people fails to keep the secret that they own a lot of crypto. A self-custody wallet won't really help in case like this.

[Alonso_]

Honestly speaking, when I started buying and investing in bitcoin, I didn’t know how to set up an exchange account and also how to get my wallets from an exchange wallets, most especially my bitcoin wallet, I have to talk to someone who is a Pro and he knows how this things actually works.

As a beginner I actually struggled with this little details, but when you know about it it’s no longer a little details, then along the line I started learning about this things, how to get my bitcoin wallets, I now know how it works and I have thoughts newbies who doesn’t know how any of this actually works.

[MusaPk]

What about his social media or other stuffs like that? Sounds like the attack is very targeted. In another case we see someone share their crypto lifestyle on social media then got attacked with a $5 wrench attack later. You're right that stuff like this gets reported many times in the past. Newbies or not, some people fails to keep the secret that they own a lot of crypto. A self-custody wallet won't really help in case like this.

If you have huge crypto in your wallets and you have also implemented all necessary security protocols but if you are advertising your crypto wealth on social media or other public platforms then all your digital security protocols will be of no use. Because looters can grab all your crypto wealth through a $5 wrench attack. This holds true for other sectors also like if you have huge bank balance and your advertise it on different platforms then there is great chance that looters will come after you. We must keep it secret that how many crypto we have in our wallets for its safety. 

[YellowSwap]

Alright since you already know about this
I would like to add that Trustwallet you shared on your OP isn't really open sourced
And not to mention it's currently owned by a centralized exchange, Binance.
If I would recommend without much Grandeur it would be Electrum for Android and Desktop and
Blue wallet for iPhone.

Thanks for pointing that out. The reason why I made mention of the Trust wallet it because it one one the wallet most beginners are family with, but from you explanation now have learnt  that being non custodial alone is not enough when making decisions to choose a wallet. I will do well to go learn more about open source wallets so I do make I better recommendation next time. Thanks for helping to improve my  understanding

Trust wallet is not fully open source, that's all I can say, and they have this wrong or misleading judgement about crypto wallet recovery seeds, exactly how they should be kept safe.

Instead of them to advice against storing recovery seed in any cloud storage they went ahead and make it possible for trust wallet users to store their recovery seed in a cloud storage.

I used to like hot wallets that are non - custodial but today I don't anymore because you aren't going to worry about that recovery seed alone but also the smartphone that you are running the wallet on.

[Mame89]

Honestly speaking, when I started buying and investing in bitcoin, I didn’t know how to set up an exchange account and also how to get my wallets from an exchange wallets, most especially my bitcoin wallet, I have to talk to someone who is a Pro and he knows how this things actually works.

As a beginner I actually struggled with this little details, but when you know about it it’s no longer a little details, then along the line I started learning about this things, how to get my bitcoin wallets, I now know how it works and I have thoughts newbies who doesn’t know how any of this actually works.

Like you, when I first started learning about Bitcoin, I only understood exchange wallets and didn't understand other wallets. Understanding Bitcoin wallets can be complicated when I first started. I initially thought storing assets on an exchange was the best option but after continuing to learn, I finally realized that storing assets on an exchange was a big mistake.

The longer I've been in the crypto world the more I've come to understand that the best Bitcoin wallet is one you can control yourself. The main principle is "Not your keys, not your coins." Only when you have the private key is your Bitcoin truly yours. Basically an exchange is just a place to buy easily but it's not entirely yours. A personal wallet is a secure storage place (you hold the key). So, from my own experience when I introduce Bitcoin to friends, relatives or family, I always prioritize wallet security before investing, as this is the most fundamental aspect of investing in Bitcoin.

[Cookdata]

What about his social media or other stuffs like that? Sounds like the attack is very targeted. In another case we see someone share their crypto lifestyle on social media then got attacked with a $5 wrench attack later. You're right that stuff like this gets reported many times in the past. Newbies or not, some people fails to keep the secret that they own a lot of crypto. A self-custody wallet won't really help in case like this.

If you have huge crypto in your wallets and you have also implemented all necessary security protocols but if you are advertising your crypto wealth on social media or other public platforms then all your digital security protocols will be of no use. Because looters can grab all your crypto wealth through a $5 wrench attack. This holds true for other sectors also like if you have huge bank balance and your advertise it on different platforms then there is great chance that looters will come after you. We must keep it secret that how many crypto we have in our wallets for its safety. 

There is different between security and privacy and attack can come in different form. Like you said, if you have Bitcoin and you often display all you have on your social media, the first thing attacker can think about is using that your social to get to you. What some will do is they will look for your emails if visible and try to send you some spams, that's the closest thing they can, some can disguised and catfish you with things you like through social engineering.

You can tidy your security but one mistake with malware can make you lose everything. Mostly, malware are limited with hardware wallet since private keys are offline but that does not mean malware can't change your address when you want to make transaction. The worst wallet for any user is hot wallet, they are the most vulnerable ones even if you afr too careful, you may not even know where the attack is coming from.

[Sammysmart001]

But come to think it, if it's not wallet that stores your bitcoin, what else does? Obviously where you keep your bitcoin stores the bitcoin for you as the case maybe, it's called bitcoin or storage system.
What's questionable in the system is the custodial status quo of the wallet, if it's a non custodial wallet, then you're in charge of controlling your funds because you've access to your wallets recovery keys but there in custodial wallet the platform controls your funds because you won't have access to your recovery keys.
Well I had this very basic knowledge from my beginners stage because I was thought basically about wallet and bitcoin storage even before I bought my first bitcoin.

Yes the most important difference is who hold or control the private keys. Most especially trying to compare custodial and non custodial wallet’s but the very point am making here is that the this wallet itself don’t contain Bitcoin, rather Bitcoin remain in the blockchain recorded.

Then on the other hand wallet have the key that will allow you to access your coin and get to spend it. This what really explains why you can get to recover ur fund in another suitable wallet with the very help of your seed phrase

[khaled0111]

But come to think it, if it's not wallet that stores your bitcoin, what else does? Obviously where you keep your bitcoin stores the bitcoin for you as the case maybe, it's called bitcoin or storage system.

I'm not sure I understood what you mean here, but if you think your coins are stored in your wallet, then that's not right and this is the misconception this thread is trying to address.
A wallet doesn't store your coins. It's not a safe but just a tool that lets you interact with the bitcoin network. It allows you to check your balance, see the transactions related to your addresses and, most importantly, sign transactions using the relevant private keys (supposing you have them or have the wallet seed).

[uchegod-21]

I love this thread. If people understand how wallets work, they will understand the importance of their seed phrase and why they must protect it from everyone. They will understand that the moment they got their seed phrase, ownership of their bitcoins was handed over to them, so they must not carelessly hand over ownership of their bitcoins. They must never share their seed phrase with anyone, no matter the circumstance or who is involved. No one should request their seed phrase; the only reason they would request it is to scam them.

No one who is genuine and legitimate will ever ask for their seedphrase, not even Satoshi himself. Exchanges too aren't safe either.

[SquirrelJulietGarden]

I love this thread. If people understand how wallets work, they will understand the importance of their seed phrase and why they must protect it from everyone. They will understand that the moment they got their seed phrase, ownership of their bitcoins was handed over to them, so they must not carelessly hand over ownership of their bitcoins. They must never share their seed phrase with anyone, no matter the circumstance or who is involved. No one should request their seed phrase; the only reason they would request it is to scam them.

No one who is genuine and legitimate will ever ask for their seedphrase, not even Satoshi himself. Exchanges too aren't safe either.

Sharing wallet seed phrases to the other people is stupid, not only careless but likely lack of knowledge too but it's not the only bad practical thing. Some people believe that they are doing right and safe things for their fund and wallet backups but in security, it's terrible practice.

For example
If they save their wallet files, or wallet seed phrase online like in any messaging application (Facebook, Telegram, Whatsapp, Discord, ...) or in any cloud storage like Google Drive, Dropbox, Microsoft Azzure, ... it's very dangerous. They don't directly share their wallet seed phrase to anyone but online backup storage is dangerous because it can be hacked, leaked and accessed by the others in the future.

[Awaklara]

My question for us all [/b]
When you start using bitcoin, did you think that wallet stores your BTC or you do understand how it works from
The very beginning?

I even kept my Bitcoin on a centralized exchange for quite a long time. Actually, when I first got to know and own Bitcoin, it was already quite popular, though not like it is now. It's just that my knowledge was still limited or maybe I was too lazy to learn.
Back then, I really didn’t know how a Bitcoin wallet worked. I trusted my Bitcoin on the exchange like I was keeping money in a bank. It seemed practical to access whenever I wanted to buy or trade it. Until I realized that was just stupidity.

[MadSl1m]

this same "the app must be holding it" assumption is exactly why so many people get surprised by how crypto debit cards work too. a custodial card holds your balance on its own books, same as binance or bybit holding your btc, while a self-custody card (gnosis pay, ether.fi, metamask card) pulls straight from your own wallet the moment you swipe, no balance sitting anywhere else to freeze or lose. 45 of the 133 cards i track are actually the self-custody kind, but almost nobody checks which side theirs is on before signing up.

[ImGenius]

Only one wallet address can be accessed through a private key for example if a Bitcoin wallet's private key is extracted you can only recover that Bitcoin wallet with that private key. The private key changes based on address for example the private key of the EVM address is the same since all EVM networks have the same address. whenever the address changes the private key will change.

 On the other hand a seed phrase is a combination of one or more wallet addresses. If you want you can open an unlimited amount of wallet addresses in a seed phrase. Whenever you recover with an seed phrase you can recover all the addresses.

[Oshio-man]

You don't need to blame beginners who don't understand, how bitcoin wallets work to help investors to hold their coins till they are satisfy to start selling to grow income, there are many wallet you can use to hold bitcoin but if you make trust wallet or safepal wallet to hold you will enjoy your holding because those wallets are solid for holding bitcoin for long term before you can sell to earn income from the market, not that there is no other wallets to hold bitcoin but the ones I have mentioned are the ones I have used before to accumulate bitcoin to achieve what I want from bitcoin investment before I switched to electrum wallet which is the most solid wallet.

[I_Anime]

Most  folks did not actually understand how the wallet works especially when we are talking about the technical aspects they only sees as a place meant to hold your coins which is the primary uses of the bitcoin wallet . While some folks are interested in going further in the technical aspect which still give some edges in increasing and improving your security.

They should also try to learn how the differential custodial wallet from noncustodial wallet . Custodial wallet , the one with third party like your daily crypto exchanges which is actually meant for purchasing cryptocurrency not for actually holding , non custodial is best for holding .

[Ojima-ojo]

You don't need to blame beginners who don't understand, how bitcoin wallets work to help investors to hold their coins till they are satisfy to start selling to grow income, there are many wallet you can use to hold bitcoin but if you make trust wallet or safepal wallet to hold you will enjoy your holding because those wallets are solid for holding bitcoin for long term before you can sell to earn income from the market, not that there is no other wallets to hold bitcoin but the ones I have mentioned are the ones I have used before to accumulate bitcoin to achieve what I want from bitcoin investment before I switched to electrum wallet which is the most solid wallet.

I can't prefer trust wallet to any wallet considering their track record and associations with binance, trust wallet is popular but trust wallet is not among the top choices unless for newbies who are just getting to know about wallets.


The importance of mentaining the right wallet and securing your keys can not be overlooked because of the eas that comes with most valuable means of storing your Bitcoin like exchange wallets, so we should also make effort to safeguard our Bitcoin and keeping it from third party control.

[EL MOHA]

You don't need to blame beginners who don't understand, how bitcoin wallets work to help investors to hold their coins till they are satisfy to start selling to grow income, there are many wallet you can use to hold bitcoin but if you make trust wallet or safepal wallet to hold you will enjoy your holding because those wallets are solid for holding bitcoin for long term before you can sell to earn income from the market, not that there is no other wallets to hold bitcoin but the ones I have mentioned are the ones I have used before to accumulate bitcoin to achieve what I want from bitcoin investment before I switched to electrum wallet which is the most solid wallet.

At least you have actually switched from this wallets to a proper wallet because let’s be sincere the wallet you mentioned shouldn’t be any wallet you actually recommend like that for people to use. Most especially the Trustwallet it’s not actually a great wallet to use most especially for long term storage means. Electrum though is the best SPV wallet out there but for long term holders too it depends on which mode you uses electrum because if you use electrum as an hot wallet that is in a device that is always online, then you will actually be risking your funds. You can use electrum wallet as a cold wallet by having it on an airgapped device and this is the best means for storage in my opinion. Or you can simply go for hardware wallet because cold storage is the best means of storage for long term use.

[hd49728]

I can't prefer trust wallet to any wallet considering their track record and associations with binance, trust wallet is popular but trust wallet is not among the top choices unless for newbies who are just getting to know about wallets.

The importance of mentaining the right wallet and securing your keys can not be overlooked because of the eas that comes with most valuable means of storing your Bitcoin like exchange wallets, so we should also make effort to safeguard our Bitcoin and keeping it from third party control.

Don't let the name of wallet or the brand of company behind the wallet to derail your thinking like it is a good or bad wallet to use.

Binance or not Binance, it's not important.
The more important thing for your fund is which technical things that wallet provide to you and other users. Whether it is an open source, non custodial wallet, that are more important.

You must check these things by yourself, and can not simply and naively believe in their click-baited advertisement.

Trust wallet?
It is a close source wallet.
Then, a quick conclusion is it is not a good wallet to use. Binance are behind Trust wallet, who care if you can lose your fund with Trust wallet someday.

https://walletscrutiny.com/?platform=allPlatforms&page=0&query-string=trust
It's no source as you can see from the link.

[Hatchy]

You don't need to blame beginners who don't understand, how bitcoin wallets work to help investors to hold their coins till they are satisfy to start selling to grow income, there are many wallet you can use to hold bitcoin but if you make trust wallet or safepal wallet to hold you will enjoy your holding because those wallets are solid for holding bitcoin for long term before you can sell to earn income from the market, not that there is no other wallets to hold bitcoin but the ones I have mentioned are the ones I have used before to accumulate bitcoin to achieve what I want from bitcoin investment before I switched to electrum wallet which is the most solid wallet.

I can't prefer trust wallet to any wallet considering their track record and associations with binance, trust wallet is popular but trust wallet is not among the top choices unless for newbies who are just getting to know about wallets.


The importance of mentaining the right wallet and securing your keys can not be overlooked because of the eas that comes with most valuable means of storing your Bitcoin like exchange wallets, so we should also make effort to safeguard our Bitcoin and keeping it from third party control.

We could argue alot about this, but it's connection with binance doesn't really matter. What I normally check before using a wallet is it's reviews, features and functionality. Trust wallet has always had bad reviews but from personal experiences and those from the public. Their wallet name confuses alot of newbies, just because it says trust wallet doesn't make it a much better wallet to use. But many do not do their research and when they see the crowd showing interest in one brand they want to follow as well. Trust might not be of our taste in terms of storing our coins but some people might have a good use of it. That's why you must have a good reason why you chose not to use it even when others makes bad remarks..