Bitcoin wallets – how to choose

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Contents

Выберите свой биткойн-кошелёк

Найдите ваш кошелек и начните совершать платежные операции с продавцами и пользователями.

Let’s help you find a bitcoin wallet.

Answer the following questions to create a list of wallets that meet your needs.

What’s your operating system?

Mobile wallets

Portable and convenient; ideal when making transactions face-to-face

Designed to use QR codes to make quick and seamless transactions

App marketplaces can delist/remove wallet making it difficult to receive future updates

Damage or loss of device can potentially lead to loss of funds

Desktop wallets

Environment enables users to have complete control over funds

Some desktop wallets offer hardware wallet support, or can operate as full nodes

Difficult to utilize QR codes when making transactions

Susceptible to bitcoin-stealing malware/spyware/viruses

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Web wallets

Easy to access from different devices, only a web browser is needed

Funds can potentially be recovered if a device is damaged or lost

Service disruptions can make it difficult to access funds

If a web wallet’s platform is hacked, your funds are at risk

Hardware wallets

One of the most secure methods to store funds

Ideal for storing large amounts of bitcoin

Difficult to use while mobile; not designed for scanning QR codes

Loss of device without proper backup can make funds unrecoverable

How much do you know about Bitcoin?

Show wallets ideal for new users.

Note: This option is unavailable based on your previous selections.

Show all of the wallets.

Which criteria are important to you?

Note: This option is unavailable based on your previous selections.

Some wallets give you full control over your bitcoin. This means no third party can freeze or take away your funds. You are still responsible, however, for securing and backing up your wallet.

Note: This option is unavailable based on your previous selections.

Some wallets have the ability to operate as a full node. This means no trust in a third party is required when processing transactions. Full nodes provide a high level of security, but they require a large amount of memory.

Note: This option is unavailable based on your previous selections.

Some wallets are open-source and can be built deterministically, a process of compiling software which ensures the resulting code can be reproduced to help ensure it hasn’t been tampered with.

Note: This option is unavailable based on your previous selections.

Some wallets can be loaded on computers which are vulnerable to malware. Securing your computer, using a strong passphrase, moving most of your funds to cold store or enabling 2FA or multifactor authentication can help you protect your bitcoin.

Note: This option is unavailable based on your previous selections.

Some wallets make it harder to spy on your transactions by rotating addresses. They do not disclose information to peers on the network. They can also optionally let you setup and use Tor as a proxy to prevent others from associating transactions with your IP address.

Note: This option is unavailable based on your previous selections.

Some wallets give you full control over setting the fee paid to the bitcoin network before making a transaction, or modifying it afterward, to ensure that your transactions are confirmed in a timely manner without paying more than you have to.

What features are you looking for?

Note: This option is unavailable based on your previous selections.

Two-factor authentication (2FA) is a way to add additional security to your wallet. The first ‘factor’ is your password for your wallet. The second ‘factor’ is a verification code retrieved via text message or from an app on a mobile device. 2FA is conceptually similar to a security token device that banks in some countries require for online banking. It likely requires relying on the availability of a third party to provide the service.

Note: This option is unavailable based on your previous selections.

Bech32 is a special address format made possible by SegWit (see the feature description for SegWit for more info). This address format is also known as ‘bc1 addresses’. Some bitcoin wallets and services do not yet support sending and/or receiving to or from Bech32 addresses.

Note: This option is unavailable based on your previous selections.

Some wallets fully validate transactions and blocks. Almost all full nodes help the network by accepting transactions and blocks from other full nodes, validating those transactions and blocks, and then relaying them to further full nodes.

Note: This option is unavailable based on your previous selections.

Some wallets can pair and connect to a hardware wallet in addition to being able to send to them. While sending to a hardware wallet is something most all wallets can do, being able to pair with one is a unique feature. This feature enables you to be able to send and receive directly to and from a hardware wallet.

Note: This option is unavailable based on your previous selections.

Most wallets have the ability to send and receive with legacy bitcoin addresses. Legacy addresses start with 1 or 3 (as opposed to starting with bc1). Without legacy address support, you may not be able to receive bitcoin from older wallets or exchanges.

Note: This option is unavailable based on your previous selections.

Some wallets support transactions on the Lightning Network. The Lightning Network is new and somewhat experimental. It supports transferring bitcoin without having to record each transaction on the blockchain, resulting in faster transactions and lower fees.

Note: This option is unavailable based on your previous selections.

Some wallets have the ability to require more than one key to authorize a transaction. This can be used to divide responsibility and control over multiple parties.

Note: This option is unavailable based on your previous selections.

Some wallets support SegWit, which uses block chain space more efficiently. This helps reduce fees paid by helping the Bitcoin network scale and sets the foundation for second layer solutions such as the Lightning Network.

How to Choose a Bitcoin Wallet?

There are two critical steps to finding a Bitcoin wallet that is right for you. First, you need to decide what sort of crypto wallet you need, and then you consider specific wallets to find the best one for you.

Bitcoin wallets differ by security, convenience, coin support, level of privacy and anonymity, user interface, customer support, fees, built-in services, and other variables.

The most common distinction between Bitcoin wallets is whether they are cold or hot. Cold wallets refer to offline storage, while hot wallets are connected to the internet most of the time.

The online wallets are more suitable for daily use but aren’t secure, while offline wallets are less convenient for frequent use yet are more secure.

However, the distinction between the Bitcoin wallets doesn’t end there.

Five main types of Bitcoin wallets

There are five sorts of Bitcoin wallets that you can choose from: hardware, desktop, mobile, web, and paper wallets.

Hardware wallets. These are Bitcoin wallets that store your private keys on devices like USB sticks. Hardware wallets are mostly cold and very secure, but they also cost a bit of money, so it’s recommended to get one only if you plan to store over $1000 value in crypto assets for a long time.

Popular hardware Bitcoin wallets include devices by:

Desktop wallets. Desktop wallets are installed on personal computers or laptops. If the device is constantly connected to the internet, they classify as hot. Generally, they are regarded as secure, yet they are vulnerable to various malware and computer viruses.

Mobile wallets. Mobile wallets, like desktop ones, are software wallets. Unlike desktop Bitcoin wallets though, they are significantly smaller and simpler. They serve as a convenient on-the-go wallet for daily usage.

  • Jaxx
  • Breadwallet
  • Exodus
  • Electrum
  • SamouraiWallet
  • MyCelium

Web wallets. These are online wallets that are considered less secure than other types of wallets, yet they can be highly convenient. Web wallets include browser plugins, website wallets, exchange wallets, and others. Popular web wallets include:

Paper wallets. Paper wallets are generally classified as cold storage. The term “paper wallet” generally refers to a physical copy or paper print of your public and private keys. Other times it means software used to generate a pair of keys along with digital file for printing. Whichever the case, paper wallets can grant you a relatively high level of security. You can use Bitcoin Paper Wallet Generator to generate a paper wallet for Bitcoin.

The main risk that comes with Bitcoin paper wallet is that it may not be durable enough, so you should consider its storage conditions before making one.

This is how Bitcoin paper wallet looks like.

What kind of Bitcoin wallet do I need?

Look for an online Bitcoin wallet (aka “hot”) that’s web-based and runs as an app on your phone (one can find a bitcoin wallet for Android and a bitcoin wallet for iOS) or a program on your computer if:

– You only need to store a small amount of bitcoin, which wouldn’t be too painful to lose;
– You’re looking for good user experience;
– You can only afford a free wallet;
– You’re not concerned about privacy;
– You want web access to it from a mobile device or computer;
– You trust a third party to safeguard your wallet;
– You need to share the wallet with someone else.

Consider an offline (aka “cold”) Bitcoin wallet for storage (e.g., paper bitcoin wallet or hardware bitcoin wallet), if:

– You need to store a large amount of bitcoin and security is a top priority;
– You don’t need to use it often or access it anytime, anywhere;
– You prefer to safeguard your funds yourself rather than trust a third party;
– You’re ready to pay for hardware (typically from about 50 to a couple of hundred dollars);
– Privacy is very important to you.

You can, however, use both types of wallets: a cold one for storing bitcoins, and a hot one for spending them.

How to evaluate a specific Bitcoin wallet

Ask these questions to evaluate a specific Bitcoin wallet properly:

– Does it only support Bitcoin or can it store other cryptocurrencies as well?
– If it’s a web wallet, does the address begin with HTTPS? That offers greater security than an HTTP wallet.
– How secure is authentication? Does it provide two-factor authentication (username and password plus some piece of information only you have)?
– Does it have a multi-signature feature (if you want to use a wallet with multiple owners)?
– Is the wallet “hierarchical deterministic” (HD), meaning it will always use a new Bitcoin address to receive payments and so enhance the security of your money?
– How transparent is the wallet provider? Do you know who they are?
– Has the company behind the wallet published the wallet’s code and is it open source?
– Is the wallet simple to use?
– Is there a way to back up the wallet?
– What does the community have to say about the wallet? Check forums like Bitcoin Reddit or Bitcoin Forum.
– For a hardware wallet, what do you think about its design, user interface, manufacturer reputation, and price?
– Are there any fees that you will have to pay for the provided services? If so, what are they?

A hardware Bitcoin wallet by Trezor

Note that this information is only for general educational purposes. You should always carefully consider the latest available information when choosing a wallet.

You might also find the official website of the Bitcoin Foundation Bitcoin.org to be of help. It provides a list of wallets to choose from. Also, don’t forget whether a wallet supports your country – if you are looking for a bitcoin wallet in India, make sure it’s on the list of supported countries.

Have any suggestions about this entry? Let us know.

How To Select A Bitcoin Wallet: The Definite Guide For Beginners

CoinSutra » Wallets » How To Select A Bitcoin Wallet: The Definite Guide For Beginners

If you are choosing your Bitcoin wallet randomly, you are doing it wrong.

This is probably the worst one can make that could result in the loss of bitcoins, all at once. Not just that, choosing your wallets based on suggestions by a friend who is only a day older in experience than you in crypto is not a wise decision.

One has to be serious while choosing a Bitcoin wallet because the wallet is something where your private keys and public keys reside, which if compromised can result in you losing all your bitcoins.

In a detailed write-up on Bitcoin wallets in the past, I mentioned the different types of wallets, but not which to use when.

I did so deliberately because which wallet to use and when is a separate topic altogether that requires a dedicated guide like this one.

So here I am today, to share with you how to select a Bitcoin wallet for yourself.

This guide will enable you to understand different wallet options you have and which one you should pick for storing a little or a huge amount of Bitcoins.

How To Select A Bitcoin Wallet (Complete Guide)

When selecting a reliable Bitcoin wallet, irrespective of whether it is a software or a hardware wallet, one should judge it based on the following criteria:

  1. Control private keys: A wallet where you own and control your keys.
  2. Backup & security features: Seed backup keys and pin codes.
  3. Developer community: Active development community for maintenance.
  4. Hot/Cold Wallet: Whether a wallet is a hot or cold wallet.
  5. Ease of use: Elegant UI for fast and easy use.
  6. Compatibility: Compatible with different operating systems.
  7. HD Wallet: A wallet that generates new addresses itself.
  8. KYC: A wallet that doesn’t require KYC.

These are a few aspects that you should look into for any type of wallet you are going to use for any purpose.

But there is more to it.

The purpose for which you are going to use a particular wallet also plays an important role in selecting which type of wallet is required by you. Some of the purposes are:

  • Long-Term Savings
  • Short-Term HODL
  • Daily Transactions
  • Daily Buy/Sell or Trading Of Crypto

Choosing The Best Bitcoin Wallet (Let’s make it easy for you)

Based on above-mentioned criteria and purposes, one can easily select a good Bitcoin wallet for themselves. How? Let me explain in detail.

Hardware wallets are wallets that satisfy all the mentioned criteria. Moreover, they are cold wallets that never comes in contact with the internet directly. So if you are someone who wants to store their savings for a long-term then hardware wallets are the most suited option for you.

Also, they are HD wallets that never re-use the same public address again. You can also use a hardware wallet by connecting it to an infected device.

Some of the hardware wallets that we trust are:

Here is a video tutorial series by Harsh Agrawal on Ledger Nano S & Trezor.

There are some software wallets that satisfy all of the 8 criteria of a good wallet, so one can also look at these wallets as an option based on their purpose.

Let us say the purpose is to HOLD some cryptos for a short period of 2-3 months. In this case, desktop wallets are a good option to go for. Desktop wallets are hot wallets that connect to the internet as soon as one goes online.

But they provide other security features of back seed, PIN code, as well as HD wallets to satisfy the short-term need. Moreover, remember, this type of wallet will always be at risk of malware and virus if any on your device. Some of the wallets that one can look for in this category are:

Web Wallets:

Desktop Wallets:

Note: For short-term HODL, up to 2-3 months, as an extra caution people use hardware wallets too and I am one of them. If the hardware wallet supports that currency I always prefer using that one.

M obile wallets and web wallets are the other kinds of software wallets . Most of the mobile wallets fulfill all the criteria that I have mentioned but there are very few web wallets that match at least some of the criteria that we need.

Web wallets are wallets like Coinbase. where you need to do your KYC and you never control your private keys. Inbuilt wallets of centralized exchanges like Bittrex or Binance also fall under such category.

That is why, if you want to use these wallets for daily crypto trading with security measures like 2-FA authentication, it is alright, but for long-term or even few days, it is risky storing your cryptos here.

On the other hand, there are many mobile wallets that satisfy our criteria and are fit for doing small daily transactions and even crypto trading. Some of these wallets are:

These mobile wallets are very handy and can be used by anyone on the go to purchase daily routine things.

Note: Though these wallets satisfy the criteria, it is not recommended to store large amounts of Bitcoins on them because they are hot wallets that are always connected online.

Conclusion: The Best Ways To Store Bitcoin

There are different types of wallets available but not all are worth using because many wallets are created just to scam people.

Moreover, whenever you see a new wallet, we suggest you not to get excited to use it and instead survey on Bitcoin Reddit or the Bitcoin Forum to find out as many details about new wallets first.

Also, do look for multi-sig functionality in the wallet. By using this feature, you can make your Bitcoin wallet even more secure. However, this feature is not supported by many wallets.

It is perfectly fine to use multiple Bitcoin wallets for multiple purposes too.

Write back, using the comment section below, and tell us which wallets you use to store your bitcoins.

If you liked the post, please share it with your friends & family!

Here are a few more hand-picked articles you should read next:

An award-winning blogger with a track record of 10+ years. An international speaker and author who loves blockchain and crypto world.

After discovering about decentralized finance and with his background of Information technology, he made his mission to help others learn and get started with it via CoinSutra.

Join us via email and social channels to get the latest updates straight to your inbox.

How to Choose the Right Bitcoin Wallet for Your Needs

Knowing how to best safeguard your bitcoins can be tricky since many different solutions exist for various needs such as privacy, simplicity, and long term storage.

Choosing a bitcoin wallet is no longer a simple matter of settling between security and simplicity. Using a few wallets for different purposes is becoming the standard, much like using different types of accounts for fiat money.

Bitcoin Banks Are for Convenience Alone

The ultimate in convenience is found at ‘bitcoin banks’ like Coinbase and Xapo, which hold onto your coins and private keys. They offer the fastest access to buy, sell, and spend your bitcoins.

However, since you do not control your private keys, they are best treated as on-ramps and off-ramps to owning bitcoin only and should not be considered long term storage of your coins for any serious amount.

Walking Wallets Are Fun and Full of Features, but Don’t Keep Much in Them

Mobile or web-based wallets are easily set up and have many unique features making them attractive to new bitcoin users. Blockchain wallet is the world’s most popular bitcoin wallet with over 10 million installs, largely because of its super-simple and private interface. Airbitz and old-school favorite Mycelium wallets allow buying bitcoins from inside the app. Airbitz also offers vendor discounts and has built-in mobile top-up. There are many others such as Breadwallet, Copay, Jaxx, and Greenaddress; all have something unique to offer.

However, these wallets are considered lower security, ‘pocket money’ wallets even though some now offer two-factor identification and other security measures making them pretty secure. Most experts still advise to only keep an amount of bitcoin on them that we can afford to lose, such as $100 or less, since they are not kept offline and could be subject to hacking.

High Privacy Wallets Make Anonymity Using Bitcoin Easier

For those who make privacy their highest concern, a few wallets were made to add extra anonymity layers to accessing stored bitcoins. For example, some support the anonymity network TOR, while others offer coin-mixing schemes like Coinjoin.

Darkwallet was the infamous first attempt, but development on it has stopped and it is not considered safe. Samourai wallet is fun and full-featured. The most popular option for dark web users, however, has been the highly-configurable wallet Electrum, which offers a few privacy options while allowing for offline storage.

Full Wallets Support the Bitcoin Network

Those active in the bitcoin technical community who do mining or run a node to support the network may want to run one of a few “full wallets.” These wallets download a whole copy of the blockchain and act as a peer-to-peer node for the support of the community. A few different versions exist such as Bitcoin Core and Bitcoin Unlimited. Each one represents a different view of how the bitcoin protocol should behave.

Hardware Wallets Offer Above-Average Security With Convenient Access

Hardware wallets like the Trezor, Keepkey, and the Ledger Nano S, offer convenient access to highly secured bitcoins kept fully offline. Although they can cost between $60 and $100, these devices allow bitcoins to be spent directly from where no hackers can get to them; a task that is too technical for most users to duplicate in non-hardware wallets.

The security features make hardware wallets ideal to receive bitcoin income in. Once in a hardware wallet, any amount of bitcoins can be transferred over to other types of wallets for extra functionalities while keeping the remaining offline by default.

Maximum-Security Wallets for Advanced Users

For those with large amounts of bitcoin, a few wallets have added exceptional levels of security, at the cost of extra complexity and learning.

The first such wallet made, Armory, is no longer fully supported but still available. This flexible wallet offers several unique options but requires downloading the whole blockchain.

Using the privacy wallet Electrum on a Tails USB boot drive is one of the most popular ways to bypass malware and hackers. It’s so popular that the Tails build has even included the Electrum wallet as its default bitcoin wallet. For maximum security, follow all directions completely and then only use the Tails drive sparingly, using the whole operating system only for your wallet.

Long Term Storage With no Wallet at all

For long term storage, many have chosen to greatly reduce the access to their coins by keeping them on printed paper only, a form called ‘paper wallets’. Making one requires a small amount of trust in the website or code that randomly generates the wallet, although with technical proficiency, that trust can be reduced. Bitaddress was the first popular paper wallet generator, but there are several others, including Bitcoin.com’s.

For added randomness, technophiles can use physical dice can be used to generate perfectly-secure bitcoin address or seed using Diceware.

Keep in mind that bitcoins stored on paper will have to be swept into a different wallet where it can be spent from, making this option only suitable for long-term storage. In addition, the chance of fire over several years should not be overlooked, so paper wallets must be stored in a fireproof safe that you control. Never store them nor any wallet seed in a safety deposit box at a bank.

Which bitcoin wallets are right for you? Let us know in the comments section below.

Images courtesy of Shutterstock, Medium, Press Online

Bitcoin Wallet Guide, Reviews and Comparison

By: Ofir Beigel | Last updated: 11/12/19

Bitcoin wallets are programs that allow you to send and receive Bitcoin. However, in order to choose the best wallet for your needs there are a lot of factors to take into account. In this post I’ll cover everything you need to know about wallets and also review the best Bitcoin wallets around.

Bitcoin Wallet Summary

A Bitcoin wallet is a device or program that stores your private keys and allows you to interact with the Bitcoin blockchain (i.e. send and receive Bitcoins). It’s important to differentiate between wallets where you have complete control over your private keys (non-custodial) and those that don’t give you access to your keys (custodial).

Here are my top picks by category:

If you want the complete guide to Bitcoin wallets and different wallet reviews keep on reading. Here’s what I’m going to cover:

This isn’t the shortest read out there, but it will teach you everything you need to know about wallets so I suggest bookmarking this page for future reference.

Not in the Mood to Read? Watch Our Video Instead

1. What is a Bitcoin wallet?

A Bitcoin wallet is a program for sending and receiving bitcoins. The wallet does this by interacting with Bitcoin’s ledger, known as the blockchain. Bitcoin wallet programs are available for mobile phones, desktops, and even as a standalone piece of hardware (more on that later on).

Generally speaking, Bitcoin wallets are a bit similar to how email works. If you want to send and receive emails, you need some sort of a program to do so (e.g., Gmail, Outlook). Like emails, receiving Bitcoins requires a unique personal address. This unique address is called your Bitcoin address, and—just like your email address—you can share it with anyone who wants to send you bitcoins.

Here’s a Bitcoin address example: 1BoatSLRHtKNngkdXEeobR76b53LETtpyT

(Bitcoin addresses always start with a “1” or “3”)

Once you have your address what’s missing is your password. With email, you choose your own password, while with Bitcoin, the wallet chooses it randomly for you. This password is called your private key and—similar to your email password—it should never be shared with anyone.

The private key is best kept offline, meaning you shouldn’t write to a file on your computer. The best practice is to write it down on a piece of paper or keep it on a flash drive that’s disconnected from the Internet.

2. What is a private key?

A private key is a very long string of numbers and letters that acts as the password to your bitcoins. It’s from this secret combination that your wallet derives the capability to tell the Bitcoin network you want to send your Bitcoins to another destination. The most important thing to remember is this: Whoever knows your private key has control over your bitcoins.

The private key is also used to generate your Bitcoin address. The process would look like this:

  1. You download a wallet program to your mobile phone or laptop.
  2. The program (also known as the client) randomly creates a private key.
  3. A Bitcoin address is created by running some sort of mathematical algorithm on your private key.

Even though the Bitcoin address is generated from the private key, there’s no way to figure out what the private key is just by examining a Bitcoin address. This is a one-way process.

The wallet’s core function is the creation, storage, and use of the private key. In other words, it automates Bitcoin’s complex cryptography and blockchain interactions for you. You could argue that the program itself isn’t that important—the only thing that matters is the private key.

For example, if you have a Bitcoin wallet on your phone and that phone gets stolen, but you’ve written down your private key on a piece of paper before that happened, you could just download a new Bitcoin wallet to a different phone, import the private key to that new wallet, and regain control of your bitcoins again.

Custodial vs. Non-Custodial wallets

In general, wallets can be categorized as custodial and non-custodial. A non-custodial wallet is any wallet where you are the sole owner of the private key. This means that no one has access to the private key (or seed phrase) other than yourself.

A custodial wallet, is kind of like today’s bank accounts. It’s a place to store your Bitcoins but you don’t actually own them since the company supplying it holds the private keys to those Bitcoins. The risks of using a custodial wallet are that the company will freeze your funds, go bankrupt or commit fraud and steal your coins.

The Bitcoin community has a phrase that says “Not your keys, not your Bitcoin”. This goes to illustrate the dangers of a custodial wallet. On the other hand, some people prefer not to be in charge of their own funds and therefor choose custodial wallets.

3. The HD wallet evolution

As Bitcoin wallets evolved, HD wallets (aka hierarchical deterministic wallets) were created. HD wallets generate a phrase known as a seed or mnemonic phrase. This seed is a set of common words that you can memorize instead of the long and confusing private key.

As you can imagine, it’s much easier to write down 12 simple words than a long, confusing string of numbers and letters.

an example of a seed phrase from an Electrum wallet

Additionally, an HD wallet can create many Bitcoin addresses from the same seed, so you don’t have just one Bitcoin address. All the transactions sent to addresses created by the same seed will be part of the same wallet.

4. Types of Wallets

There are two main types of Bitcoin wallets – Cold storage, and hot wallets.

Cold storage: The secure way to hold Bitcoin

Cold storage (or cold wallets) refers to any type of wallet that is detached from an Internet connection and therefore cannot be hacked remotely. Some examples of cold storage wallets are hardware wallets, paper wallets, and brain wallets.

All cold storage wallets are non-custodial.

Hardware wallets

Hardware wallets are physical devices that safely store private keys. They usually come in the form of a flash drive that can connect to your computer in order to interact with them.

Different types of hardware wallets

Hardware wallets are built to protect your private key even if the device they are connected to is compromised by malware. You can even use them with a public computer you don’t trust. To send your bitcoins to someone using a hardware wallet, you’ll need to have your hardware wallet connected to a computer and to use some sort of software or web page that allows control over the wallet.

Hardware wallets offer the optimal mix between security and ease of use. Their only limitations are that you need to have the hardware wallet on you in order to send the coins and that they cost money.

Paper wallets

Paper wallets are just pieces of paper with a private key or seed written on them. When you keep your private key on a piece of paper, only someone who can view that paper can steal your bitcoins. However, paper wallets are easily destroyed, and it’s advisable to create multiple copies so that if one is lost, your bitcoins can still be retrieved.

An example of a Bitcoin paper wallet

Another thing to consider is that to send the bitcoins you have on a paper wallet, you will have to import the private key into some form of digital Bitcoin wallet.

Hot wallets – The convenient way to store Bitcoin

A hot wallet refers to any form of Bitcoin wallet that is connected in some way to the Internet. This can be a wallet that is connected to a web service, a wallet installed on a computer connected to the Internet, or even a wallet installed on your mobile phone, assuming you have an active data connection to and from your phone.

Hot wallets, while being the most popular type of wallet, are also the least secure because they allow access to their inner workings through Internet connections.

Desktop wallets

Desktop wallets are hot wallets that store your private key on your computer. As long as your computer is free of malware or any security weaknesses, your Bitcoins are safe. However, we all know that’s not the case for most of us. Today it’s hard to be 100% protected and this makes desktop wallets that are connected to the Internet a valuable target for hackers.

Mobile wallets

These wallets store your private key on your mobile phone. I actually consider these wallets to be the least secure of all wallets. As phones are frequently lost, broken, or stolen, it’s strongly advised that you enable two-factor authentication, password-protect your wallet, and create a private key backup.

Mobile wallets are highly convenient and are designed to provide as much security as possible in an insecure environment. Nonetheless, substantial sums should not be stored on a mobile wallet.

Web wallets

Markets, exchanges, betting sites, and other Bitcoin services frequently require you to deposit funds into their online hot wallets in order to conduct your business. These web wallets are the least secure option for storing bitcoins because the operators own the private key to the bitcoins stored on their site. In other words, they are custodial wallets.

Web wallets are also more vulnerable to hackers since they have many possible loopholes along the way. For example, the website in question, the device you’re using to connect to the website, or the Internet connection can be monitored to steal your bitcoins.

On the other hand, web wallets are highly convenient, as they allow you to buy, sell, and send bitcoins at a moment’s notice.

More competent web wallet services will provide two-factor authentication options, such as validating every account login with a text message, to guard against external hackers. Even so, for storing any significant amount of coins, web wallets are not worth the risk. We advise that you avoid the #1 newbie mistake and never keep your bitcoins in a web wallet.

5. What is the Best Bitcoin Wallet to Use?

Different people use different Bitcoin wallets for different purposes. For example, if I need to store a large amount of Bitcoin safely, I will probably use cold storage. If, on the other hand, I just want to pay for a cup of coffee a hot wallet would be more suitable.

Usually, wallets vary on the scale of security versus convenience, and you need to decide where you want to be on that scale. Some of the questions you should ask yourself include:

  • How many bitcoins will I be storing?
  • How frequently will I use the wallet?
  • Can I afford to pay for a wallet?
  • Will I be storing additional coins other than Bitcoin?
  • Do I need to carry the wallet around with me?
  • Do I need to share the wallet with someone else?
  • How tech savvy am I?
  • How much do I value my privacy?
  • Do I trust myself to safeguard my wallet, or do I want to give a third party the task of doing so?

You may want to use more than one wallet. For example, you can use a hardware wallet for large sums of bitcoins and a mobile wallet with a small balance on it for daily payments. This way, even if your mobile phone breaks or gets stolen, you’re not risking a lot of money.

How do I get a Bitcoin Wallet?

Desktop and mobile wallets can be download for free from the Internet, hardware wallets can be bought online and will be shipped to your home or office. Web wallets require you to sign up to a specific service.

What is the Best Bitcoin Hardware Wallet?

Ledger

Ledger manufactures cold storage wallets designed for users who want increased security. Their wallets are a physical device that connects to your computer. Only when the device is connected can you send Bitcoins from it. Ledger offers a variety of products, such as the Ledger Nano S and the Ledger Nano X (a bluetooth connected hardware wallet).

TREZOR

TREZOR is a pioneering hardware wallet company. The combination of world-class security with an intuitive interface and compatibility with other desktop wallets, makes it ideal for beginners and experts alike. The company has been gained a lot of the Bitcoin community’s respect. TREZOR offers two main models – The TREZOR One and TREZOR Model T (which has a built in touch screen).

KeepKey

KeepKey’s hardware wallet has a very sleek and unique design, which makes it probably the best looking physical Bitcoin wallet out there. The device itself is very intuitive and easy to set up. It also supports a variety of different coins. You can read a full KeepKey review here.

CoolWallet

What is the Best Bitcoin Desktop Wallet?

Exodus

Exodus allows you to store not only bitcoins but also Litecoin, Dogecoin, Dash, and Ethereum. It’s unique in its beautiful design and intuitive user interface. You can also trade cryptocurrencies from within the wallet. Currently, the wallet is available only in a desktop version. Here’s my full review of Exodus.

Electrum

My personal favorite. While Electrum can look a bit daunting for beginners, if you put in some extra time you can quickly get the hand of it. The wallet has a pretty ugly interface but offers a variety of features most other wallets don’t such as RBF and Segwit support (explained in Chapter 8 – Transaction handling). Here’s my full Electrum review.

Bitcoin Core

Bitcoin Core (also known as Bitcoin QT) is a full node, meaning it’s a wallet that downloads the complete Bitcoin blockchain to your computer. This takes a lot of time (can reach several weeks) but also gives you an array of advanced options that are more suitable for experienced users. If you’re just starting out I suggest avoiding this wallet.

Armory

Armory is a well-known and trusted open source brand when it comes to Bitcoin security. The wallet is usually best suited for more advanced users. If you are looking for a wallet that emphasizes safety and security, Armory should make the short list as it features a variety of encryption and cold-storage options (including multisig).

What is the Best Bitcoin Mobile Wallet?

Ledger Nano X

The Ledger Nano X is the latest hardware wallet by Ledger. The Nano X’s interface is done through the Ledger Live mobile app (via a bluetooth connection). Ledger’s intuitive design is maintained with this model. This is probably one of the safest ways to store coins on your mobile device since the private key isn’t on the device, it’s on the Nano X itself. You can read my full review of the Nano X here.

Edge Review

Previously known as Airbitz, Edge is an open source, multi-currency mobile Bitcoin wallet. Additionally to its excellent security score, Edge is also known for its beginner friendly features, such as listings of merchants that accept bitcoin, and ways to buy discounted gift cards.

Coinomi Review

Coinomi is a secure cryptocurrency wallet that offers exchange capabilities within the app. Coinomi considers itself to be security and privacy focused emphasising the fact that no identity linking is possible from within the wallet. You can read my full Coinomi review here.

BRD Review

BRD is probably one of the simplest Bitcoin mobile wallets around. The wallet is open source which makes it more secure and reliable. No registration is required to use the app; once the app is installed you can instantly start sending or receiving Bitcoin. However, its simplicity also makes it lacking in features.

6. Additional Bitcoin Wallet Terms

Multisig wallets

Multisig stands for multisignature, a wallet that allows sending bitcoins, only with the approval of enough private keys, out of a set of predefined keys. Let me explain:

To clarify, let’s say that Alice, Bob, and Charlie all want to open a business together and invest some of their Bitcoins, but none of them actually wants only one person to have the private keys to the money. So they each get one key and use a multisig wallet that requires two out of three of those keys. This way, none of them can run away with the money alone, but they also don’t need all three of them to pay expenses.

For example, if Alice wants to run away with the money, she can’t because she only has one key. But if Bob is missing and Alice and Charlie want to pay an expense, they can do it with their two keys.

Multisig doesn’t have to be only two out of three—it can be almost any combination. For example, a couple wants a shared account and decides that they can spend the money only if both of them agree; or a Company’s board of directors allows payments only by vote of a majority.

Multisig is often used for escrow services, in which two parties decide on a transaction that requires two out of three keys. If the seller and buyer don’t agree, a trusted third party will arbitrate and release the funds.

SPV wallets

Some wallets hold a full copy of the blockchain in order to validate each and every transaction, these type of wallets are referred to as full nodes, . Unlike full nodes, SPV (simplified payment verification) wallets (aka lite or thin wallets) don’t hold a full copy of the blockchain. SPV wallets rely on the full nodes to which they are connected in order to validate transactions.

SPV wallets are faster and consume less disk space than their counterparts. Since the blockchain today is becoming increasingly big, many wallets offer an SPV solution for limited-capacity devices such as mobile phones, tablets, and desktops.

Brain wallets

Brain wallets are just a way to create a private key out of a predetermined text or set of words. So instead of getting a randomly generated seed or private key, you can decide for yourself on a passphrase and use some basic algorithms to generate a private key from that passphrase.

However, brain wallets have a significant disadvantage by having a higher probability of being hacked. This is because people are usually very predictable in what they use as passwords or supposedly random text, and hackers have a way of knowing that.

To prove this point, some tests have been done where simple passwords have been used for brain wallets and deposited with funds. The results? The funds have been quickly stolen. Additionally, one Bitcoin user lost four bitcoins from his wallet after using a brain wallet private key generated from an unknown Afrikaans poem.

This proves that even if you think you’ve found an obscure text for a passphrase, you’re still in danger of being hacked.

Bear in mind that some wallets will fulfill more than one criteria. For example, you can have a mobile SPV wallet that also has a multisig feature.

7. Backing up your Bitcoin wallet

Because private keys and seed phrases have complete power over your Bitcoins they must be kept secret and safe. If you fail to protect your wallet’s private key or seed, the bitcoins it controls could be irretrievably lost.

A standard Bitcoin wallet (i.e. not an HD wallet) will create a wallet.dat file containing its private key. This file should be backed up by copying it to a safe location, such as an encrypted drive on your computer, an external flash drive, or even a piece of paper that’s hidden away.

An HD wallet, on the other hand, will supply you with a seed phrase with 12–24 words that you should write down in a safe place. One interesting product people often use for backing up their wallets is the Cryptosteel, an indestructible metal plate that has your private key on it.

8. Transaction fee handling

Each Bitcoin transaction has a transaction fee attached to it. This fee is included in order to incentivize Bitcoin miners to include the transaction in the next block of transactions. The larger the size of your transaction, the higher the fee you’ll need to pay in order to get confirmed in the next block.

Some transactions aren’t as time sensitive as others. For example, if I’m just moving funds from my desktop wallet to my hardware wallet for safekeeping, I don’t really care if it takes the transaction even two days to get confirmed. That’s why I can allow myself to use a lower fee. However, if I’m sending payment for a service or a product I purchased, I might want to use a higher fee so the transaction is confirmed faster.

Fees are also highly dependant on the amount of transactions waiting to be confirmed. Since if a lot of people want to confirm their transactions, they will start bidding up the attached fees. Therefore, a fee that was considered high yesterday might be considered low today.

One of the important features to check out in a wallet is fee handling. Here is what you need to find out:

  1. Does the wallet allow you to choose your own fee or does it choose it automatically for you?
  2. Does the wallet support Segwit? An upgrade issued to the Bitcoin protocol, which—among other things—allows you to shrink your transaction file size (hence reducing your required fee).
  3. Does the wallet support Replace by Fee (RBF)? If your transaction can’t get confirmed because you didn’t pay a high enough fee, you can easily bump the fee via the RBF option. Your wallet will then rebroadcast the transaction with a fee raised to your required level.

9. Watch out! Common ways hackers will try to steal your money

Apps that steal Bitcoin

Hackers will sometimes introduce a new wallet to the app store (or Google Play) with the intent of stealing user funds. There’s no way to know a wallet isn’t malicious other than by actually reviewing its code, and that’s not a feasible option for most of us.

In order to stay on the safe side, it’s always recommended to only download wallets that are open source (i.e. their code is public) and that have accumulated a strong reputation in the Bitcoin community. Don’t just download an app or wallet because a friend referred you; do your own research, ask around on forums, and read review sites.

The wallets listed on this page have all been around for at least two years and have gained good reputations from the Bitcoin community.

Hardware wallet tampering

Hardware wallets should only be bought from the manufacturer or an authorized reseller. Having said that, most reputable hardware wallets have a built-in mechanism that will alert you if your device has been tampered with.

Hardware wallets should come sealed with a holographic sticker showing that the device has never been opened. One thing to keep in mind is that the seed phrase for the hardware wallet should be generated by the device itself and not by the manufacturer. This is done so that only you will know the seed phrase to your device.

Not too long ago, a user reported that he’d received a Ledger wallet with a sheet of paper that already had a 24-word seed phrase on it. Once he uploaded funds to the wallet, they were stolen, as the seller knew his seed phrase.

10. Conclusion – My Top Picks

Now that you’re a Bitcoin wallet expert you probably understand that there’s no simple answer to the question “what is the best Bitcoin wallet to use?”. But not to leave you empty handed here are my personal picks:

In the end the decision is yours based on your needs. If you have any additional comments or questions, or if you’d like to share your experience with a specific wallet feel free to leave me a comment below.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Like this post? Please share to your friends:
Binary Options Trading Wiki
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: