An Official Guide To The Best Bitcoin Wallets
- Understanding What A Bitcoin Wallet Is
- What Are The Different Types Of Bitcoin Wallets?
- The Best Hardware Wallets
- The Best Online Wallets
- The Best Desktop Wallets
- The Best Mobile & Web Wallets
Over the past decade, Bitcoin has managed to grow from an unknown virtual currency into becoming the dominant digital currency in the world. It has become a government-backed currency that proponents have argued has made digital currency safer, easier and more private for consumer use. With more consumers switching over to Bitcoin, it is vital for them to understand the options they have to choose from when looking for the best Bitcoin wallet.
The value of Bitcoin has steadily increased over the years, and many people have also realized it is a great investment opportunity as well. However, before placing any money into cryptocurrency such as Bitcoin, it is critical that investors understand the risks. Although Bitcoin has the potential to double in its value in a relatively short period of time, it can also lose its value to practically zero.
This means that you should never invest more in Bitcoin than you can afford to lose. You may not get your investment back. Once you have decided to move forward, there are a variety of bitcoin wallets that you can choose from to meet your needs.
Understanding What A Bitcoin Wallet Is
A bitcoin wallet is nothing more than a program that is used to send and receive bitcoins. Bitcoin wallets allow these transactions by interacting with the blockchain. The blockchain is bitcoin’s ledger, and these programs can be used on desktops, mobile devices, laptops and even as hardware.
Typically, bitcoin wallets work very similar to email. If you want to send someone an email, you will need to have a program to use. Bitcoins, like emails, also require you to use a specific address to send and receive an email.
The address you use is known as your bitcoin address. You can share this bitcoin address with anyone who is waiting to send you bitcoins. Bitcoin addresses always begin with the numbers ‘1’ or ‘3’.
You will also need a password. When creating your email address, you can choose your password. However, when you are creating a bitcoin account, the password is randomly selected by the wallet. The password is also known as your private key. This information must never be shared with anyone else.
What Is A Private Key?
As previously mentioned, a private key is merely a long string of letters and numbers that act as your password. It is this secret combination of numbers and letters that will give the wallet the capability to let the bitcoin network know you want to send your bitcoins to another location. Keep in mind that whoever discovers your private key will also have complete access to your Bitcoin.
This private key is also used to create your Bitcoin address. Even though your Bitcoin address will be generated from a private key, there is no way to know what the private key is by just looking at the address. The entire process is one way.
The core function of the wallet is to create and store the private key. In other terms, it can automate Bitcoin’s cryptography and blockchain communications for you.
For example, if you have your wallet on your phone, and your phone is stolen, you can download your wallet on another phone as long as you have your private key written down.
Tips For Choosing The Best Bitcoin Wallet
People use Bitcoin wallets for different purposes. Do you need a Bitcoin wallet to store a large amount of Bitcoin, or do you need a Bitcoin wallet to keep some change so you can buy a latte?
Wallets have various security levels, and with some wallets, you may have more security features and less convenience. You will have to decide the features that are more important to you. Some of the questions you may want to ask are:
- Do you want to pay for a wallet?
- How often will you use a wallet?
- Are you tech-savvy?
- Will you be storing coins other than Bitcoin?
- Are you sharing the wallet with someone else?
- Do you value privacy or convenience?
- Do you want to carry the wallet with you?
Depending on your answers to the questions, you should have a list of wallets you are interested in using. You may even decide that you want more than one wallet. A hardware wallet can be used for large amounts of money, and a smaller, mobile wallet can be used to store spare change. This way, even if the mobile wallet is hacked or your phone breaks, you will not be out of a lot of money.
Why Cryptocurrency Wallets Will Rise In Popularity
Cryptocurrency wallets provide you with convenient means to store your private and public keys, allowing you to carry out cryptocurrency exchanges and transactions easily. They come in 4 main forms, giving users a vast array of choices that cater to numerous factors, including security, portability, and ease of access.
The following are the four main forms of cryptocurrency depositories:
Hardware: These are, by far the safest types of wallets. These devices, which look like USB sticks, are not connected to the internet; hence, they eliminate every point of entry which hackers may use to steal your coins. They also come with multi-digit password locks that prevent unauthorized access to the device in case it falls into the wrong hands.
Online: As the name of the category implies, these wallets are hosted on online platforms, giving users the ability to access their keys and carry out transactions anywhere, anytime, from any internet-enabled device.
Mobile: These are apps that allow you to store your cryptocurrency locally on your smartphone, helping you quickly execute day-to-day transactions with your cryptocurrencies with no hassle.
Desktop: These are computer programs that you can install to serve as a safe depository for your cryptocurrencies.
What Are The Different Types Of Bitcoin Wallets?
Several different types of wallets are available for you to store your coins. Cold storage wallets are considered to be the most secure wallets. They are not attached to the Internet so they can not get hacked from a remote location.
Examples of cold storage Bitcoin wallets:
- Hardware wallets
- Paper wallets
Hardware wallets are physical wallets (devices) that will safely store your private key. Typically, they are flash or USB drives that can be connected to computers so you can interact with your Bitcoin wallet. They are built to protect your private key even if the computer you are using becomes infected. You can even use these hardware wallets on public computers and computers you do not trust.
If you want to send your Bitcoins to someone who is using a hardware wallet, you will need to get online and connect to a website that will control your wallet and allow the transfer of the coins.
Paper wallets are nothing more than pieces of paper that have a seed or private key written on it. When your private key is kept on a piece of paper, only a person who has access to the document can steal your private key.
Unfortunately, paper wallets can be destroyed very easily. It is best to create several copies of the wallet so you can retrieve your private key even if one paper wallet is destroyed.
Also, keep in mind that if you have a paper wallet, you will still have to import the key so it can be used digitally.
Mobile wallets store private keys on a mobile phone. Many consider these wallets to be the least secure of all wallets. Because smartphones frequently break, are stolen, or lost, it is best to have 2-Factor Authentication security on your mobile wallet. You should also create a strong password and backup the private key.
On the other hand, mobile wallets are considered to be the most convenient for the average user’s mobile lifestyle. Nonetheless, it is not wise to store a large amount of Bitcoin in a mobile wallet, unless it is used alongside a hardware wallet.
Hot wallets are wallets that are connected to a computer connected to the Internet. Hot wallets, although popular, are not secure because access to the wallet can only be achieved through an Internet connection.
Desktop wallets are hot wallets that are stored on your computer. Your private key is safe as long as the computer is free of any security weaknesses and malware. These types of wallets are valuable targets for hackers.
Multi-signature wallets are best for those who want or need to share their wallets with other people. Also known as multi-sig wallets, bitcoins can only be accessed if there are enough private keys connected together at one time.
For example, if each person has a private key to one wallet, and one person wants to withdraw coins only using their private key, the wallet will not make the transaction without all private keys present. On the other hand, if three people have private keys, and two people want to pay an expense, all of the private keys do not need to be present.
The Best Hardware Wallets
Ledger Nano S: Hardware wallets are the safest and most useful for storing bitcoin and other cryptocurrencies. In this category, the Ledger Nano S, a French brand, leads the competition. The hardware wallet comes with a highly intuitive interface and simplified operations. It’s, therefore, ideal for both seasoned holders and beginners. The device features just two buttons that can be used to perform a host of functions, including entering keys, pin codes, recovery words, etc., confirming transactions, checking balances, and lots more. Users only need to activate the “Live Now” function to begin interacting with their cryptocurrencies. What’s more, the device also comes with a customizable 8-digit pin lock.
Trezor Wallet: Launched since 2014 as one of the first-ever bitcoin wallets, Trezor has not only withstood the test of time, but it has also successfully undergone several upgrades. Today, the key-like device provides a portable means for users to carry about various cryptocurrencies other than bitcoin. Users can operate the device through just two buttons as well as through a computer program and a browser extension.
If you are looking for the Bitcoin wallet with the best security, look no further than Trezor. Even though it is not considered a complete platform for buying and selling like Coinbase, it is a perfect option for storing Bitcoin. It offers features such as 2-Factor Authentication (2FA). Users will have some protection against lost devices and passwords when using this wallet. However, it is essential to take the necessary steps to ensure that no one ever has access to your Bitcoin wallet.
The Best Online Wallets
Coinbase: Coinbase doubles as both a platform for exchanging cryptocurrencies within 32 countries around the world and a web wallet that supports Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. The platform is renowned for its highly intuitive user interface. There are several advantages to using Coinbase wallet. You will be able to connect Coinbase to a U.S. based bank account so you can quickly transfer money in or out of your Bitcoin wallet. The platform also offers offline storage dubbed the Coinbase Vault, which is supported by multi-signature functionality. The vault is an excellent alternative for those who are wary of storing their coins at an exchange.
Before Coinbase, Mt. Gox was the dominant Bitcoin wallet, and when it was hacked, almost $500 million was lost in currency. Coinbase took notice of the hacking incident and put stringent security measures in place, so potential attacks are identified early. These improved security measures also help to expand the user experience.
Blockchain wallet: Founded as Blockchain.info, a basic bitcoin block explorer, Blockchain now aims to provide cryptocurrency holders with an excellent tool to store, manage and trade their coins with a new slogan “Be your own bank.” It’s a web-based wallet that allows you to access your coins from any device at any point in time. The platform also comes with a proprietary “Lockbox” feature that will enable users to sync their blockchain account with any hardware wallet of their choice.
It sports a crisp, intuitive interface, and offers hands-on customer support, making it highly ideal for both newcomers and connoisseurs. However, it only supports Bitcoin, Bitcoin Cash, Ethereum and Stellar Lumens.
Paxful wallet: Your money can be kept on Paxful as a wallet, giving you the ability to also use the Paxful platform for trades if you wish to purchase more or sell some of your bitcoin. With over 300+ payment methods, most people who already use Paxful have bitcoins stored on it so it makes for a great online and mobile wallet. Both their iOS and Android app are constantly being updated with feature improvements and new security enhancements including 2-Factor authentication and Face ID.
The Best Desktop Wallets
Atomic wallet: This is a free, simple, yet highly expedient software for storing and interacting with hundreds of different cryptocurrencies. You can download and use the app on your Mac, Windows, or Linux PCs. The app also facilitates the exchange to save users from risks associated with sending money to exchanges. What’s more, users can have access to an extensive help center with a highly responsive support team.
Exodus: This is another highly-rated currency holder that supports a vast array of cryptocurrencies, including Bitcoin, Dash, Litecoin, Ethereum, and nearly three dozen others. It’s also famous for its highly intuitive user interface that gives users cruise control over the crypto assets.
Electrum is another desktop Bitcoin wallet. Currently, Electrum is supported by the following operating systems: Mac OS X, Android, Windows, Linux. Electrum does have the capability to work with a few physical wallets and does offer more flexibility than other software wallets that are only compatible with Trezor. Electrum does offer a backup recovery option, and it also allows you to create cold storage where you can keep a handwritten wallet or printed set of keys for your safekeeping.
The Best Mobile & Web Wallets
Mycelium: This is one of the first-ever cryptocurrency wallets created way back in 2008. An open-source program, the wallet has versions for both Android and iOS. Besides those attributes, the app has also endeared users because of its top-notch privacy and security features, including the BitID protocol that authenticates users and transactions by generating new addresses for every transaction, as well as hardware wallet integration.
Robinhood: This Bitcoin wallet was initially introduced to the public as a free stock trading platform. Over time, the Robinhood platform has extended into offering customer service and support for other types of investments including Bitcoin. Not only is Robinhood a Bitcoin wallet, but it is also an exchange. It is similar to Coinbase in that everything is centralized in one convenient location. Robinhood is free to use, and there are no commissions to either sell or buy on Bitcoin.
There you have it. The best cryptocurrency wallets out there today. With any of them, you can store and manage your crypto assets without any hassle. Quit running around from pillar to post, trying to protect your crypto assets from thefts. Grab any of these today and enjoy the peace of mind that they have to offer.