Bitcoin is a digital currency. As such, the approach to acquiring and storing it differs greatly from conventional, fiat currencies. Technically, bitcoins don’t exist in any physical shape or form and, therefore, cannot really be stored. Rather, it’s private keys used to access your public bitcoin address that needs to be stored. That’s where bitcoin wallets come into the picture. What is the best Bitcoin wallet? How do I read a wallet review?
What Is a Bitcoin Wallet?
A bitcoin wallet represents a software program which stores bitcoin (BTC) 00 private keys. Often, wallets come in hardware and software for, the former being known as a hardware wallet. In general, they grant you access to your public Bitcoin address, often with Bitcoin Core and an internet connection, thus facilitating the buying and selling of cryptocurrency.
Obtaining a blockchain wallet is necessary in order to hold any type of crypto assets or digital currency. While there are certain solutions which would only allow you to hold one type of digital currencies, the wide majority of Bitcoin wallets, many harnessing the open-source programming of Bitcoin Core, also allow the user to hold multiple cryptocurrencies at the same time, including Ether (ETH), Bitcoin Cash (BCH), Monero (XMR), Ripple (XRP), Stellar (XLM), and others.
What Is a Private Key?
In the context of bitcoin, a private key represents a secret sequence of numbers and letters which allow bitcoins to be spent. Each bitcoin wallet contains at least one, or sometimes more, private key. The keys are saved within the wallet file and are mathematically related to all of the bitcoin addresses which are generated for the wallet.
Put simply, this is your “ticket” which will allow you to spend your bitcoins. As such, it is quintessential that you keep it secure. This is the reason for which all reputable cryptocurrency exchanges put the emphasis on advanced privacy when it comes to storing your digital assets.
Different Types of Bitcoin Wallets
There are many types of wallets: desktop, mobile, paper, web, and hardware. Many have different features allowing a span of financial activity like savings management or retirement planning. A good wallet review will make these features clearer.
Desktop wallets, as the name suggests, are installed on your computer’s desktop. These types of wallets offer full control over the software wallets. They enable the user to generate a bitcoin address for buying and selling bitcoin. Naturally, they also allow the user to store their private key.
A mobile wallet, on the other hand, provides for more convenience, as they aren’t fixed in one place. These usually come in the form of paid applications that you can run on your smartphone. In terms of functionality, however, a mobile wallet would allow you to do the same things as a desktop wallet. These differences can often be fleshed out in an online wallet review. One notable advantage is the fact that a mobile wallet could enable you to receive payments and make direct payments in physical stores which accept digital currency by scanning a QR code.
Among the various types of wallets —a mobile wallet, bitcoin wallet, etc. — is the paper wallet. This is nothing but your public and private key printed together. Technically, a paper wallet is a type of cold wallet because it is entirely offline. You can make a paper wallet out of any substance that you can print information on.
Differentiation can also be made based on the operating system the wallet can be used on. As such, you can have Android wallets (which are Android apps), Apps for iOS on iPhone and iPad, Windows, Mac and Linux, and so forth. Many software solutions are programs with a free download. Naturally, almost all of the hot wallets can be classified as Android wallets as they are usually supported by the operating system and they do have designated Android apps. Some wallets are compatible with mining hardware as well.
Hot Wallets vs Cold Wallets
The next differentiation is based on whether or not the wallet is connected to the internet. If they are connected, they are referred to as web wallets or, most commonly, a hot wallet. If it’s not connected and it operates entirely offline, the solution is called a hardware wallet or cold wallet.
Cold wallets are generally considered to be safer, simply because they can’t be tampered with by someone online. They are not connected to the internet and, as such, they are safe from any types of hacking attempts and attacks. This is a type of offline storage.
Hot wallets, on the other hand, are a web-based wallet which is actually on the internet. In other words, in order to access them and to manage your BTC, you will need to have a stable internet connection. They offer a lot more flexibility and many of them have integrated solutions which facilitate the buying and selling of digital currencies. At the same time, though, they are considered to be less secure because they are connected to the internet and, hence, subjected to hack attacks.
Naturally, both solutions have their own benefits and drawbacks. Understanding them is critical when making the right choice finding a wallet provider for storing bitcoin.
Advantages and Disadvantages of a Hot Wallet
As with any wallet provider, hot wallets have their pros and cons. Being well aware of these advantages and disadvantages will enable you to make the right choice based on your particular preferences.
Pros of Using a Hot Wallet:
- Most of the hot wallets are beginner friendly and easy to use.
- They provide instant access to your crypto assets at any given moment as long as you have internet connection (Web-based wallet).
- They usually come with numerous layers of security features and backup options.
- They are compatible with most every operating system such as Windows, Mac and Linux, and Android, as well as mining hardware.
- 2-Factor Authentication for improved security.
Cons of Using a Hot Wallet:
- They offer a lower level of security features compared to cold wallets as they are always connected to the internet.
- They are run on centralized servers, hence are usually limited in terms of the number of transactions that can be handled, which may cause occasional delays.
It’s worth noting that hot wallets are very user-friendly and, as such, are particularly convenient for beginners looking to safely and securely store your cryptocurrency, or trade a relatively small amount of cryptocurrencies. If you’re looking to store your cryptocurrency in bulk, though, you might be better off with a cold wallet.
Advantages and Disadvantages of a Cold Wallet
Cold wallets offer offline storage solutions for those users who prefer to keep their private keys stored offline safely and securely off the internet. In order to gain access to the information stored offline on them, you would need to simply plug them to your computer. As this is their main characteristics, they reveal certain distinct pros and cons.
Pros of using a cold wallet:
- No one but the owner of the cold wallet has access to the information kept on it.
- They are not connected to the internet and, hence, provide greater security.
- They are excellent for long-term investors who would like to securely have their assets stored offline.
Cons of using a cold wallet
- Cold wallets are a bit more challenging to work with and they offer limited flexibility when it comes to transacting.
- A lot of them don’t accept all types of tokens
- They can be a bit expensive
- Difficult compatibility with mining hardware.
How to Choose a Wallet?
Naturally, if you want to get involved in buying and selling cryptocurrency and you are reasonable enough when it comes to the integrity of your personal finance, you need to pick the best Bitcoin wallet possible — not to mention the most secure wallet for your task.
One of the best things you can do, in case you are unsure about the type of solution you’d want to use, is to read a solid bitcoin wallet review, investigate Bitcoin Core, various apps, etc. It goes without saying that choosing the best bitcoin wallets will require you to determine whether you’d want to be actively trading or to simply store your bitcoin or any other digital currency for a longer period of time.
Here are some of the popular wallets used for storing digital assets.
Trezor is among the very first hardware wallets and it allows the offline storage of a wide range of different digital assets including Bitcoin, Litecoin, Binance Coin, Dash, Zcash, Ethereum, Ethereum Classic, and over 500 other cryptocurrencies.
Trezor, another popular hardware wallet, is beginner friendly and comes with a monochrome display containing 2 buttons. The secure wallet brand has two models currently on the market. In terms of security, the device offers 2-factor authentication, SSH, encryption via GPG, encrypted cloud-storage, and other features.
Keepkey wallet is another cold wallet which is designated to enable users to store your Bitcoin, Ethereum, Bitcoin Cash, Dogecoin, Dash, Bitcoin Gold, Litecoin, and a wide range of ERC20-based tokens.
It has a rather sleek design and a large display which makes it easy to manage your BTC. Every single transaction needs to be manually approved. This is possible through KeepKey’s confirmation button. One of the main benefits of the device is that if you lose it, you can recover it without worrying about your private keys being compromised.
Copay wallet is a web-based wallet and multisignature wallet. You can get it from the app store, or you from the Google Play store if you are using android wallets. It also works on Windows, Mac and Linux.
The wallet comes with a range of features to give and receive payments such as secure payment verification, 2-factor authentication, and full support for the Bitcoin Payment Protocol. Its code is open-sourced, allowing users to take full control over their finances. A look at a Copay wallet review will reveal a positive outlook from many users and their Bitcoin wallet reviews.
The Ledger Nano is perhaps one of the most popular hardware wallets currently available on the market. Beginner friendly and lauded by Bitcoin wallet reviews and overviews of hardware wallets, the Ledger Nano supports over 40 different cryptocurrencies which include — but are not limited to — Bitcoin, Ethereum, and XRP. The Ledger Nano guarantees that your private key is never going to be exposed, as it remains protected within a secure chip that is locked with a pin code.
It is very easy to use as it only has 2 buttons. All of the actions can be easily verified on the device’s screen. It also has back-up and restore functions, meaning you can easily recover your accounts if you lose your device through a confidential recovery phrase. This makes it a great choice for activities like retirement planning.
Ledger Blue is described as a premium hardware wallet which places the emphasis on advanced privacy and user experience. Unlike the Ledger Nano, Ledger Blue comes with a large touchscreen wallet interface and it is built around a conveniently secured element that includes all regular features you can expect from a cold wallet. It similarly garners a near-universally positive Bitcoin wallet review as one of the best Bitcoin wallets.
Naturally, Ledger Blue stores a wide range of different cryptocurrencies – over 30. The device allows you to manage up to 11 crypto assets at the same time. The touch screen is colorful and it allows you to easily manage your holdings.
Coinomi wallet is an application which supports multiple languages and, hence, offers international usage. Some of these multiple languages include Spanish, Russian, Chinese, German, English, and others.
It’s a web-based wallet that you can get from the App Store or the Google Play Store, regardless of whether you are using iOS device like an iPhone and iPad with apps, or Android device with an Android app. The application stores multiple cryptocurrencies and comes with 2-factor authentication for further security. It is fairly easy to use and has a beginner friendly wallet interface which allows novice users to easily manage and store your bitcoin. A glance at a wallet review shows just how popular this wallet is.
Electrum represents a free download software wallet which is released under MIT-issued license. It supports hardware wallets such as KeepKey, Trezor, and Ledger. It is capable of being used with a multisignature wallet and offers comprehensive offline storage.
It comes with 2-factor authentication to deliver greater security. It can be used on mobile and desktop. The solution is forgiving because it enables the user to recover funds through a secret phrase. It is particularly safe and very fast. It has different add-ons such as third-party plugins. There are no downtimes, which is a significant benefit. It’s regarded as one of the best Bitcoin wallets.
This hot wallet represents a combination of services in one. It is a portfolio, an exchange, as well as a wallet for your crypto assets. Apart from advanced privacy, the solution allows you to exchange different digital currencies right from the wallet interface, which is quite convenient, especially for novice users.
The app is personalized and allows full control over your private keys. It comes with easy to understand and beginner friendly live charts. This will enable you to easily track the value of your entire crypto asset portfolio in real time.
The Jaxx wallet is a lesser-known hot wallet which requires no registration and claims to be entirely free. You can use it on your iOS Device — like an iPhone and iPad — or Android wallets as a free download on an Android app, Windows, Mac and Linux. You can also use it on your desktop through Google Chrome. It can be paired on multiple devices.
The wallet supports over 85 different crypto assets, something, which allows for great portfolio diversification. It has a beginner-friendly wallet interface and it is fairly simple to use all of its features. Naturally, the 2-factor authentication improves the security, among the other features that the device comes with.
This wallet is supposedly going to enable the user to have full control over personal finance when it comes to storing bitcoin. It allows the setting of spending limits, rate limit transactions, and others of the kind.
One of the unique features of the wallet is that it has a ‘per-transaction’ 2-factor authentication. In other words, in order to further guarantee the security of your funds and the integrity of your transactions, you’d have to double verify them each time. This does, however, make transacting a bit slower. On the other hand, the wallet has a beginner friendly interface and it’s not challenging to get a handle on it. Bitcoin wallet reviews tend to be generous.
The Samourai Wallet is a hot wallet which comes with a range of different perks. Advanced privacy, high security, and transactional integrity are just a few of its perks.
The wallet is intended to provide the user with complete control over privacy and miners fee with every single transaction. It takes pride in offering the first full BIP 47 implementation which brings privacy to public payment addresses. It also has remote SMS commands which provide for a great amount of flexibility and increased usability. Many consider Samourai to be their favorite and best Bitcoin wallet.
Mycelium wallet prides itself as one of the top-rated applications on the Google Play Store. According to the application’s official website, there are new tools which will come out soon and supplement the functionality of the wallet.
For instance, it’s projected that the app will feature fully-fledged, blockchain-based fiat accounts as well as debit cards which are linked to the wallet and issued by it. The solution also intends to introduce an option to exchange cryptocurrencies through its software wallet which is quite convenient.
This is yet another hot wallet which enables the user to control and store a wide variety of different digital assets. It has an app for iOS devices including iPhone and iPad, and an Android app for an Android device. It is easy to use and available on both the App Store and the Google Play Store.
The wallet comes with multi-asset support and it is designated for both long-term holders and for active traders. It allows the user to exchange between different assets on the go. You can also buy and sell cryptocurrencies from within the application itself, which improves user-experience and overall flexibility.
BRD is intended to be a very simple and secure storage solution for Bitcoin, Ethereum, and a range of other digital currencies. It’s available for download on the App Store and the Google Play Store.
The wallet enables the user to purchase bitcoin through a range of different methods, which include credit cards, bitcoin ATM in-person purchase, and others of the kind. It is also possible to convert cryptocurrencies. The design is simple and user-friendly, allowing for seamless storage experience and exchange. Purportedly, the wallet is directly connected to the blockchain through a 12-word paper key. In turn, there are no accounts that you have to set up or passwords that you have to remember. Check out a wallet review online!
This hot wallet is one which allows the user to buy, sell, exchange, and to transact with Bitcoin, Bitcoin Cash, and Ether. The API blockchain wallet is particularly easy to use and it allows you to go over specific transactions, to access live bitcoin data, and many more of the kind.
The blockchain wallet is purportedly convenient for those users who seek additional market insight and are keen on interacting with the cryptocurrency market frequently instead of just holding for the long term.
Coinbase is the largest US-based cryptocurrency exchange, and it also has a wallet service. Often making the rounds among Bitcoin wallet review circuit, it’s a hot wallet which supports the cryptocurrencies offered by the exchange itself. The wallet allows the user to transact with cryptocurrencies in a fairly seamless manner.
One of the benefits is that Coinbase keeps conventional checking accounts through the so-called “Coinbase vault” which adds for more security. Also popular with the retirement planning crowd. transaction fees are a downside.
Clearly, there are plenty of different bitcoin wallets that you can take advantage of. While the above are some of the more popular, there are other solutions that you are free to take a look at as well.
One of the most important things that you ought to keep in mind is the purpose of you using the wallet. Turn to a solid wallet review or go online to find a match.
If you want to be actively interacting with the cryptocurrency market and trade regularly, you might be better off with a highly-secured hot wallet, as it is easier to access your funds. Furthermore, hot wallets are most commonly compatible with a wide range of different mobile devices like an Android device, making transacting with cryptocurrencies on the go possible.
On the other hand, if you are looking at cryptocurrency as a long-term play and investment, it goes without saying that your better bet would be to store your private keys within a cold wallet. As it doesn’t connect to the internet, it is much more challenging to hack. Again, a good wallet review can help here.
A general rule of thumb is to check which digital assets the selected solution supports. If you intend to hold only bitcoin, you might be better off with a simple bitcoin wallet but if you want to store your cryptocurrency differently than you should obviously look another way.
Keep in mind that there are plenty of different bitcoin wallets which allow you to purchase cryptocurrencies right from the web interface, which is something very convenient for beginner users as it takes away the hassle of interacting with the market through cryptocurrency exchanges. There are also wallets with built-in exchange features, which would allow you to exchange your cryptocurrencies directly from the app, without having to register and verify accounts on different exchanges. It is always helpful to also find a good wallet review.
In other words, the best Bitcoin wallet is easily that which serves the best purpose based on your investment intentions.
What do you think is the best Bitcoin wallet? Do you have a favorite hardware and software, web interface, or preferred software wallets? What about security features you find most useful? Do you have a particular purpose for storing bitcoin and crypto — savings, retirement planning, etc. What about Bitcoin Core and the choice of an operating system, transaction fees, mining hardware, and more? Don’t hesitate to let us know in the comments below!
Images courtesy of bitcoinist archives, Shutterstock.
The post Best Bitcoin Wallet – How to Securely Store Bitcoin with Software, Apps and Hardware appeared first on Bitcoinist.com.