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What is the Difference Between a Hot and a Cold Bitcoin Wallet?

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bitcoin wallet

Like a leather wallet keeps your fiat bills safe, a bitcoin wallet helps you store and spend cryptocurrency. Of course, bitcoins are digital currencies that cannot be held in a leather wallet. So, the wallet does not keep the coins physically but it stores the private keys used to access your bitcoin address.

Types of Wallets

The categories of bitcoin wallets depend on their design. You can have a desktop, mobile, hardware, or an online wallet.  In fact, you can even get a paper wallet for your bitcoins. Then, another taxonomy for the wallets is the internet connection. This is the major difference between a hot and a cold wallet.

If a bitcoin wallet connects to the internet, then it is hot. Likewise, a wallet that does not depend on the internet is cold. 

The fact that the two types of bitcoin wallets have distinct functions makes it prudent to keep both. For instance, a hot wallet is connected to the internet, and thus useful for placing the bitcoins you want to spend or trade for other digital currencies. In contrast, cold storage is free of the internet. Thus, it’s a reliable place to store the bitcoins you don’t need to spend. So, you can use the cold wallet to save your cryptocurrency. According to Blockchain Charts, more than 70% of the bitcoins in the world are on cold wallets and only 30% on hot wallets.

In brief, you can store your surplus coins in the cold wallet, and the few spendable in the hot wallet. There are many items you can buy using bitcoins, and you will require the hot wallet. You can move the digital coins from the cold to the hot wallet anytime you need to make a major purchase. Thus, you should have the two wallets in place- it’s like having both the recurrent and savings accounts under your name. Read on for a deeper insight in the two wallets.

Hot Wallets

Now you understand the need for an internet connection when using hot wallets. Hot wallets are essential because they form the basis of spending your digital coins. In fact, if you have bought stuff via bitcoins before, you have used a hot wallet.

Security Advice for Hot Wallets

Hot wallets are internet-based, which makes them vulnerable to cyber-attacks while hackers cannot access wallets that are offline. This makes cold wallets safer but hot wallets are generally quite safe too. It depends on how you manage them, though. To access your Bitcoin address, you need to have the private key, and so does the hacker. Anyone who has the key has dominion over your address and digital coins. So, the safety of your private keys should be a top priority so never share it with anyone.

Here are three of the best hot wallets

Mycelium 

Mycelium is a famous organism in botany, but it is also a household name in the world of cryptocurrencies. As a hot wallet, Mycelium is compatible with Android, Windows, and most platforms. As one of the best online bitcoin wallets, Mycelium lets you back up Bitcoin data and generate strong passwords using the Hierarchical Deterministic (HD) protocol.

Blockchain

Blockchain is an online bitcoin wallet that lets you access your address on phone or PC. As a security measure, Blockchain has a strong pin-code security system. The wallet is also user-friendly and helps track the market.

Electrum

Electrum is one of the bitcoin wallets with the toughest security measures. Apart from the HD protocol, Electrum has a system of multiple servers, which makes it hard to hack. 

Cold Wallets

A cold wallet is not linked to the internet and this makes it is safer but less flexible. Hackers target online devices, thus making the cold storage the safer bitcoin storage option. There are several types of cold wallets; paper, physical and hardware bitcoin wallets.

All cold wallets are mainly for offline use, and this has its inconveniences too. For instance, it is not easy to move your digital coins. The process takes time, and thus, the wallet is not ideal for recurrent spending. A cold wallet is not what you want to use for paying for coffee on the go. 

Best Cold Wallets

So, which is the best cold bitcoin wallet? If you want a cold storage for your valuable digital coins, you can choose one of the below-mentioned. 

Trezor

Trezor is an offline bitcoin hardware wallet. The cold storage not only offers security for cryptocurrencies, but it is also easy to use. Firstly, Trezor has a high-level security owed to the lengthy seed. Secondly, Trezor boasts of being the very first hardware bitcoin storage to have a screen. Its ergonomic nature makes it worthwhile in the list of the best cold storage for bitcoins.

Ledger Nano

If you are looking for a smart card based wallet, then you should consider buying the Ledger Nano. For €58.00 only, you are assured of an easy-to-carry cold storage for digital coins. It looks like a USB disk, and it’s very ergonomic.

 

Hot and cold bitcoin wallets all store your digital coins. The hot BTC wallet is best for ‘teller’ services, while the cold bitcoin wallet is worthwhile for savings. Each type of wallet has its cons and pros, but it’s advisable to use both types of wallets. 

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Online Retailer Newegg Now Accepts Bitcoin in Kenya, Nigeria, South Africa, Tanzania, and Uganda

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Bitcoin Accepted

Online retailer Newegg has expanded its bitcoin acceptance to 73 countries, including Kenya, Nigeria, South Africa, Tanzania, and Uganda.

Newegg and BitPay Partnership

NeweggNewegg has been collaborating with BitPay since 2014 to facilitate bitcoin payments in the US and Canada. “Since this initial implementation, not a single chargeback has been required for any bitcoin transaction on Newegg. The companies now build on this successful collaboration by extending the bitcoin payment option to the 73 new countries announced today,” an official statement said.

BitPay processes bitcoin transactions worth more than $1 billion yearly for its e-commerce partners. The bitcoin payments company uses blockchain technology to offer transparent transactions and to eliminate chargebacks. BitPay also “enables Newegg to increase its margin on each bitcoin transaction by avoiding credit card fees typically assessed on credit card purchases.”

Anthony Chow, Newegg’s president global sales, said: “Five years ago, we were one of the first major online shopping destinations to accept Bitcoin, and our early-adopter customers were quick to embrace this new payment option. Broadening the ability to pay with bitcoin to the majority of our global network underscores our commitment to bring innovation to the online shopping experience, and answers customers’ growing preference for our bitcoin payment option.”

Newegg sells products such as electronics, gaming equipment, and smart home appliances to over 38 million registered users in North America, Latin America, the Middle East, Europe, and the Asia Pacific.

Buying Products with Bitcoin

Buying items on Newegg with bitcoin is simple. Like with other online shopping processes, you add your items to a cart and select the shipping address of your choice. Once you do this, you proceed to choose bitcoin as the payment option of your choice, review your order, and then pay using BTC. Newegg allows users to pay using computer-based, web-based, or smartphone-based digital wallets.

While South African payments service PayFast recently dropped bitcoin, Newegg is extending this payment option to more people across the globe, highlighting the benefit of using a borderless, decentralised digital currency to shop online.

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How Popular is Bitcoin Gambling in South Africa?

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Bitcoin Gambling in South Africa

Ever since bitcoin launched in 2009, it has had a tremendous impact on many different industries, including online gambling. Having a reliable and secure payment method is imperative in order to have a worthwhile gambling experience, no matter which forms of betting you subscribe to.

When online gambling websites began accepting bitcoin, players all over the world had the ability to make quick and easy payments, while also maintaining privacy. In a sense, bitcoin (and the cryptocurrencies that followed) started a revolution in the online payment sphere and its impact has been felt all over the world.

One country that has significantly enjoyed the benefits of bitcoin is South Africa. South African gamblers are becoming ever more fond of cryptocurrencies and bitcoin ranks among the most-used.

Bitcoin’s Popularity in South Africa

Before we can explore the prominence of bitcoin gambling, we first have to take a look at how well cryptocurrencies are received in the country.

While bitcoin is popular all over the world, it is especially liked in developing countries. Nowhere is the previous statement more true than in South Africa. In a recent study, researchers found that bitcoin ownership in South Africa exceeds the world average by two times. It is estimated that 5.5 percent of the global population owns cryptocurrency, while in South Africa 10.7 percent hold a crypto balance. In the previous year, crypto transfers have increased by 25 percent in South Africa in a trend that seems to have swept over the entire continent.

This Calvin Ayre opinion shows that the transactions are used for both financial and recreational purposes, meaning that cryptocurrencies including bitcoin are becoming a part of everyday life. As one can imagine, recreation can also cover online gambling and there is a rising number of people using bitcoin to place bets on their favorite casino games or sporting events.

The Dark Side of Bitcoin Gambling in South Africa

bitcoin gambling in South AfricaCryptocurrencies are becoming increasingly more popular in South Africa. However, one thing that many overlook is that bitcoin and altcoins are not regulated by any government authority. Effectively, bitcoin is not recognised as a legitimate and official transaction solution. So how does this affect the online gambling scene?

Аnother article about bitcoin for gaming shows that crypto gambling in South Africa is illegal due to lack of regulations from the appropriate authorities. Any South African players engaging in bitcoin gambling is doing so at their own risk and no government institution can step in to assist them in case of fraud. That is not to say that all gambling operations accepting bitcoin from South Africans are fraudulent, but there are no fail-safes and no measures in place to protect users.

So far, the South African government has been slow in implementing some if any regulations to ensure the rights of online players and the safety of any crypto enthusiasts.

Of course, this does not even begin to tackle the problem of regulating bitcoin and cryptocurrencies in general. The added anonymity features and the lack of centralised supervision make crypto hard to regulate.

Moreover, identifying the owner of a wallet is downright impossible without cooperation from other parties. This does not account for the fact that crypto users are developing additional measures to protect their anonymity when using their currency of choice, e.g. hardware wallets or dispersing their funds across multiple wallets.

Future of Bitcoin Gambling in South Africa

It is clear that the South African gambling scene is ripe for further implementation of bitcoin and blockchain technology. However, slow actions on the government’s side will likely stall any potential progress and leave all bitcoin gambling operations in a legal gray area, at best.

Unless regulators take a more proactive approach, it is unlikely that any significant developments will be made in the near future, putting thousands of gamblers at risk.

Naturally, placing the safety of its citizens should be the South African government’s first priority and ensuring that no fraudulent operation remains active for long.

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South African Online Payments Processor PayFast Drops Bitcoin

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PayFast Drops Bitcoin

South African online payment gateway PayFast will cease supporting bitcoin payments from July 20, 2019, due to high transaction fees and long confirmation times. The company expressed its frustrations through an announcement on its website.

Bitcoin’s Current Limitations

PayFastAlthough digital currency is meant to make online transactions cheaper, faster, and convenient, PayFast observed that bitcoin’s current limitations have made it difficult for the company to offer it as an alternative to traditional payment methods.

“Unfortunately, there are a number of limitations and design flaws unique to Bitcoin that make it an impractical substitute for cash, including high transaction fees and long confirmation times for buyers. We have tried various ways to mitigate these problems, but unfortunately, these issues are fundamental. The resultant poor user experience has led us to re-evaluate Bitcoin as a payment method on our platform and a decision has been taken to discontinue support for Bitcoin from midnight 20 July 2019,” PayFast explained.

The PayFast platform has a ten-minute window for the confirmation of bitcoin payments. However, the Bitcoin network has failed, in most cases, to confirm payments within this time period resulting in unsuccessful transactions. The Bitcoin network can currently not handle the volume of transactions it gets at a faster speed, PayFast noted.

Luno has been enabling bitcoin payments on the PayFast platform by acting as an intermediary. “To eliminate any risk posed by bitcoin’s price volatility, Luno locked the bitcoin to ZAR exchange rate for a ten-minute window. If the transaction was not sufficiently confirmed within ten minutes, the payment was unsuccessful and a refund would be due,” PayFast said.

The Bitcoin network can only handle seven transactions per second compared to VISA’s 24,000. This limits bitcoin’s usefulness as a means of exchange and an asset. Moreover, users making payments using bitcoin risk incurring non-refundable processing fees when the transaction fails.

Despite these challenges, the Lightning Network promises to improve bitcoin transactions by making them instant, low-cost, scalable, and acceptable across different platforms.

PayFast Remains Open to Cryptocurrency

PayFast hopes that as this space continues to grow, cryptocurrencies will be able to handle faster payments.

“We are eagerly following the developments of cryptocurrencies and the supporting technologies that are aiming to enable faster payments. As soon as these become workable alternatives, we look forward to supporting cryptocurrencies as a payment method in the future,” the South African company stated. 

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