How to Choose a Bitcoin Wallet
In this day and age when everyone and their mother is getting into cryptocurrencies, choosing a secure Bitcoin wallet is crucial. Moreover, financial experts recommend getting two different wallets – a ‘hot’ one and a ‘cold’ one, for the coins you’re planning to spend and those you plan to keep on ice. In this article, we’re going to take a look at how to choose the best Bitcoin wallet for your particular needs – be that daily spending or long-time investing.
What are the options?
There are three main types of Bitcoin wallets – software, hardware, and paper ones. Software wallets come in two types – desktop clients that work in offline mode, and in-browser wallets, that work only if your computer is connected to the Internet. Some software wallets will even offer you the option of creating a crypto debit card, which you can connect to your wallet and use as you would a normal VISA or Mastercard. Hardware wallets are better for people who own big amounts of crypto, as they add an extra layer of security to your Bitcoin storage. They are very similar to external hard drives or USB sticks, and you have to purchase one before storing your Bitcoins on it. Lastly, you have paper wallets, which are unique addresses generated and sent exclusively to your home printer, printed out, and not stored anywhere else in a digital format. Each type of wallet has its own advantages and disadvantages, depending on everyone’s personal needs.
Why choose a software Bitcoin wallet?
Software wallets are great for people who aren’t interested in long-term investments. They allow you to withdraw, sell, purchase and exchange your Bitcoin with just a couple of clicks. If you want to use your Bitcoin to pay for goods and services, it’s best to opt for a software wallet that offers crypto cards as well, such as Cryptopay. You’ll be able to shop at thousands of online and offline businesses that take debit cards.
If you opt for a regular software wallet, make sure it’s not an exchange wallet. Might be a bit redundant of us to say that, but you probably shouldn’t use an exchange wallet for long-term storage, especially if you own a large number of coins.
Another important thing to look for when choosing a software wallet is privacy. Some wallets will put you through a tedious identity verification process (usually for your own good, but it can be very time-consuming and frustrating.) Some browser wallets even have access to their clients’ private keys and store them in a third party server (we’re looking at you, Coinbase.) And while that doesn’t mean that they will necessarily steal your Bitcoins or disclose that information to a third party, it’s probably best to keep your cold storage somewhere else.
When choosing a software wallet, make sure it offers all the features you need and has a comprehensive UI. There’s nothing worse than getting a wallet that has tons of features you’re never going to use, especially since they’re also likely to take up a lot of space on your computer. That’s why many people have turned away from using the regular Bitcoin desktop client, as it downloads a full copy of the blockchain on your computer and tends to slow it down a lot. If you’re a beginner, there are tons of beginner-friendly Bitcoin wallets out there – Exodus, Electrum, Green Address, and Blockchain.info are just a few you can check out.
Why choose a mobile Bitcoin wallet?
If you’re always on the go and are used to doing everything on mobile devices, there are also mobile Bitcoin wallets. Much like desktop ones, these come in online and offline versions. Each of them has the advantages and disadvantages of their desktop counterparts; the online ones are susceptible to hacker attacks, and offline ones will be compromised if something happens to your mobile device. However, they are very convenient if you’re used to trading and shopping on the go before you get to sit down at your home PC.
Why choose a hardware Bitcoin wallet?
If you’re looking to put your Bitcoins in cold storage, might be worth getting a hardware wallet. You can also find software wallets with high safety standards, such as Armory, but they’re usually harder to use for beginners than a Trezor or Ledger. Trezor and Ledger are the two brands that lead the Bitcoin hardware wallet industry, and they are surprisingly easy to use, even if you’re not a cryptocurrency pro. All hardware wallets have fairly similar working protocols and features, but you have to be extra careful to not lose or compromise the hardware, as that will cause you to lose your Bitcoins for good.
It’s worth mentioning that Bitcoin hardware wallets are not as easy to use as software ones, especially if you want to actively trade or spend your Bitcoins.
Hardware wallets can be expensive, and not everyone can afford to drop $50+ on one. The alternative is a paper wallet, which can be generated on several websites, including Blockchain.info, BitAddress, BitcoinPaperWallet, and more. They are fairly safe, as there’s no digital copy of the wallet address stored anywhere online or offline. However, they are susceptible to very trivial factors, such as water, for instance. Getting water on a piece of water can literally destroy your Bitcoins, but what can you do to prevent that? For once, you can laminate the printed Bitcoin wallet. Alternatively, you can use a more advanced paper wallet site, such as BitcoinPaperWallet, which generates tamper-resistant designs and holographic labels.
To sum it all up, here’s how to choose the perfect Bitcoin wallet for your needs:
If you tend to actively spend and trade your Bitcoin, choose a software wallet. Make sure it doesn’t store your private keys on a third party server though – some research should bring that out.
If you want to put your Bitcoin on ice, choose a hardware or paper wallet. However, be extra careful about how and where you store it, as it can be an easy target for prying eyes.
If you spend more time on mobile than at your PC, opt for a mobile Bitcoin wallet. Your concerns should be the same as with a software wallet – anonymity, ownership of private keys, and features you use often.
Keep an eye on Cryptocomparison for more reviews and information on how to choose the safest and most practical Bitcoin wallet for your needs.