Before you start buying or even mining Bitcoin (BTC), you need a wallet. It is required for managing your Bitcoins. Whether you want to receive, send or simply keep your Bitcoins, you need a reliable wallet. Think of it as your internet banking account, where you money is not physically stored but resides digitally and you need it transfer to your money to another account or use it to pay for any service or get money from someone. Unlike normal internet banking accounts, the Bitcoin Wallet have a private key or a seed, and not username or passwords. Some wallets do added additionally security options like passwords or PINs. It is the private key that gives you access to your Bitcoins. If anyone else gets access to your private key or seed, he or she can steal your Bitcoins. In reality, with these wallets you are securing your private key or seed. A wallet is simply managing your Bitcoin private keys for you.
There are different types of wallets that you can use depending on your needs for security and convenience. In this post, I will detail some of most common types of wallets and which of them you can use. Let’s start with the types of Bitcoin wallets.
Web or Online wallets
Web or online wallets are most common and the first ones you will come across while dealing with Bitcoins (BTC). These are offered by standalone firms as well as Bitcoin exchanges.
In the cases with day-to-day trading with Bitcoin or exchanging Bitcoin with some other cryptocurrency, these are fine to use, but are not recommended for long term storage of Bitcoins.
Online BTC wallets are the most convenient and accessible to you at a moment’s notice, but also the most vulnerable. In web or online wallets, your private key is stored online, which makes them vulnerable to hackers and other malicious parties. We have all heard the stories where millions of dollars worth of Bitcoins have been lost to hackers. So, if you are planning to use a online wallet for a small amount of Bitcoins then it is fine, but for bigger sums, always go for hardware wallets (more on it later in the post).
Why are online wallets good?
Easily accessible, free, easy to use, available across devices
Why are online wallets bad?
Not 100% secure, service or exchange holding your Bitcoins can crash or completely shut down, someone other than you as access to your Bitcoins
Best and most trusted Bitcoin online wallets
Green Address: It is the most trusted and commonly used online wallet for BTC. It provides a number of additional security options including multiple signature support and two-factor authentication.
App or mobile wallets are similar to online wallets. It is just that you access your Bitcoin wallet on an app instead of a website. These are slightly more secure than the web wallets because if you choose the right wallet, your private key or seed resides on your mobile device rather than a website server, making it safer.
Why are app wallets good?
Ease of use, pretty much with you all the time, free
Why are app wallets bad?
Mobile devices are constantly connected to the internet making them vulnerabile, one wrong app and your Bitcoins can disappear
Best and most trusted Bitcoin app wallets
GreenBits/ GreenAddress: In addition to its web wallet, GreenAddress also provides iOS and Android app wallets. Their iOS wallet uses the same name GreenAddress, but the Android wallet is called GreenBits.
Bitcoin Wallet: It is the official Bitcoin wallet from the core Bitcoin team. It can be called as the official Bitcoin wallet. It is only available on Android at this point.
Coming to the software wallets or the Bitcoin wallets that reside on your computer. These are comparably more secure than BTC app or web wallets. Unless you plan to have significant Bitcoin holdings and use your computer responsibly (keeping its safe from viruses and malware), software wallets are a good option. Your private key resides on your computer, making it fairly secure. As long as you have access to your computer, you have all the convenience you will normally get with an app or web wallet.
Why are software wallets good?
A good mix or security and convenience, easy to use, free
Why are software wallets bad?
Best and most trusted Bitcoin software wallets
Electrum: It is one of the most popular desktop Bitcoin wallets around and one of the safest. Electrum is available for Windows, Mac and Linux machines.
Bitcoin core: It is the official wallet from the Bitcoin core team. It acts as the full node for blockchain, so you don’t need third party servers to confirm transactions. On the downside, you have to download the full blockchain, which is huge and gets bigger each day. However, by using it, you support the ecosystem and help keeping blockchain in shape.
Armory: It is the safest and most secure Bitcoin software wallet. It can be slightly intimidating to users at first, but it keeps everything safe. If you have lots of Bitcoins, but don’t want the inconvenience of hardware wallets, go for Armory.
These are the safest and most secure way to keep your Bitcoins. If you have a significant amount of Bitcoin holdings and you want to keep them safe, hardware wallets are the way to go. On the downside, they are not free and add a bit of inconvenience, but then you can have everything.
Best Bitcoin hardware wallets
Ledger Nano S: It is the most affordable and popular hardware Bitcoin wallet with a screen. It has been thoroughly tested and the presence of the screen gives it added bit of security. The seed or recovery phrase is generated offline, so nobody can steal it without physical access. The only time you go online is to receive or transfer Bitcoins. Along with Bitcoin, Ledger Nano S can be used to store Litecoin, Ethereum and several altcoins.
Price: 58 euros – Buy
Trezor: It is another very popular hardware Bitcoin wallet with a screen. It is however slightly more expensive. It has been around for a few years and has been used extensively by the community without issues. In addition to Bitcoin, it also supports Litecoin, Dash and ZCash. Using the third-party wallets, you can also use Trezor store Ethereum.
Price: 89 euros – Buy