Before you can start trading or mining Bitcoin Cash, you need a place to store it, i.e., a wallet.
Why you need a Bitcoin Cash wallet
Bitcoin Cash is a digital currency. As BCH don’t exist in any physical shape or form, they can’t technically be stored anywhere. Instead, it’s the private keys — which are used to access your public Bitcoin address and transaction signatures — that need to be securely stored. A combination of the recipient’s public key and your private key is what makes a Bitcoin Cash transaction possible.
A wallet consists of two very long sets of random numbers and letters. One of them is your wallet’s public address which other users will use to send BCH to you.
Another one is your private key, which gives you access to your funds and is used to sign off for a transaction. Always make sure to keep your private key safe and secure, as if you will lose access to it, or simply forget it, you will not be able to access your finds. Similarly, if anyone gets hold of your private key, all the funds in your wallet will be stolen.
If you’re registered with a cryptocurrency exchange that supports Bitcoin Cash, it will automatically provide a wallet for you. However, for the safety of your tokens, it is recommended you store them in a different wallet. This is because exchanges that provide wallet services essentially are in possession of your private keys and, by extension, your funds.
Moreover, there have been a lot of instances of exchanges getting hacked and losing their customers’ funds without being able to reimburse them, and even simply shutting down and running away with the users’ money.
If you’re using a full node wallet, which is a wallet that requires you to download the entire Blockchain, essentially all you need to do is back it up into a wallet.dat file. Once it’s done, simply import it into a full node Bitcoin Cash wallet, such as Bitcoin ABC, where you BCH tokens will be available to you.
To be on the safe side, it is recommended you install your full node Bitcoin Cash wallet on a different computer. This is because some full node wallets will use the same data directory, so installing a new one may result in the previous one’s data being overridden. If this happens, you may lose both your Bitcoins and Bitcoin Cash tokens forever.
If you prefer a lighter SPV (Simplified Payment Verification) wallet, which is a wallet that doesn’t require you to download the entire Blockchain, the procedure is a little bit easier. Most of those wallets use a recovery seed, which is a phrase that holds your Bitcoin private keys, and, by extension, your Bitcoin Cash private keys. So, you should be able to access your BCH simply by inserting this seed into a dedicated wallet.
Two Types of Bitcoin Cash Wallet
Software Bitcoin Cash wallets
Software wallets are installed on your computer or mobile device and, unlike wallets provided by exchanges, most of them store your private keys offline, on a device where they are installed. All you need to do to create one for yourself is download a client to your device and follow the instructions. Many of software wallet clients support multiple cryptocurrencies and allow you to create multiple wallets.
Hardware Bitcoin Cash wallets
In the cryptocurrency world, hardware wallets are as safe as storage gets. They look very much like conventional portable hard disks but designed specifically to be used to store cryptocurrencies. They generate transactions offline and on the go, which means you can plug them into any computer to make a transaction.