What is the best Bitcoin wallet? Let's talk!
So, you've decided to buy Bitcoin. That's great but… where will you store them?
You know what a wallet is, don’t you? Yes, that’s right! The place where you store your hard-earned cash.
Well, that’s how Bitcoins work… sort of. But instead, you store your Bitcoins in a Bitcoin wallet. Bitcoin wallets are digital and are required for you to store, send and receive the cryptocurrency in question.
Keeping your Bitcoins safe is very, very important. That’s why I’m here to help you protect them — just like you would a newborn baby (kind of).
By the end of this guide, you will know what is the best Bitcoin wallet for you, and how to keep it safe. But first, let's talk about why security is so important in the world of digital cash!
Best Bitcoin Wallet: Why is Security so Important?
The world is full of good and bad people. Similarly, the internet is filled with lots of good and bad individuals, too. These bad people on the internet are called hackers — and they constantly wait for opportunities to steal your information.
There are lots of hackers out there that are after one thing — Bitcoins! After all, Bitcoin’s are worth a lot of money. Therefore, it is your job to protect your Bitcoin wallet.
Just like how internet banking allows you to access your account using a username and password, in order to access your Bitcoin wallet, you are given a Public Key (username) and a Private Key (password). To hack your Bitcoin wallet, hackers need to get access to your Private Key. You need to make sure that the best Bitcoin wallet of your choice is secure.
In June 2011, hackers got access to the Private Keys of Mt. Gox's (a cryptocurrency exchange) and stole 2609 Bitcoins. The second attack on Mt. Gox happened in 2014. This time, hackers stole around $350 million worth of Bitcoins.
Yes, you read that right - $350 million! The mistake was that Mt. Gox stored their Bitcoin in an online wallet — this made it easy for hackers to access. If they had stored their Bitcoins in an offline wallet, these hacks would not have been possible.
These aren’t the only cases of Bitcoin’s being stolen, though — it happens often. This is because people do not keep the password (private key) to their Bitcoin wallet safe enough. The only thing you can do is learn from these mistakes and prevent them from happening to you.
So, what is the best Bitcoin wallet for you? What are the differences? How do you safely store your Bitcoins offline?
Let’s get into that now…
Storing Bitcoins Online VS Offline
There are two ways of storing traditional money. You can choose to store it in your bank account, or you can cash it out and store it in a secure place. The money that is in your bank account is connected to the internet and can be hacked/stolen.
However, the cash that you have in your wallet doesn’t have any connection to the internet. So, it's impossible for anyone to hack it.
In the same way, we can store Bitcoins online and offline. Offline wallets offer much higher security compared to online wallets. This is because offline wallets are not connected to the internet and online hackers can't steal something that is not there.
We can store Bitcoins online in two ways:
- Web-Wallet: Website wallets can be accessed from anywhere and on any device, as long as it has an internet connection.
- Software wallets: Download the software onto your computer which allows you to manage your Bitcoins. These are more secure than web wallets.
Offline wallets also come in two forms:
- Hardware wallets: This is just like a thumb drive (USB) where you can store your Bitcoins and keep your Bitcoins offline. You should store the hardware (USB) wallet in a safe place where no one can find it.
- Paper wallets: These allow you to store your wallet information on a piece of paper, completely off the internet. This way hackers cannot get access to your wallet information and so can’t access your Bitcoins.
Let’s help you decide what is the best Bitcoin wallet — we’ll take a look at the advantages and disadvantages of them all.
Storing Online (Web Wallets, Software Wallets)
Advantages:
Easy to use
Web wallets are like websites such as Facebook — you open your web browser, go the website and then log in with your username and password. Easy!
Software wallets are like Microsoft Word — you open the application from your desktop and then you’re in. You might have to put your password in, though.
Both options are easy to access and use. They are not complicated, and are good for beginners!
Quick Access to Bitcoins
Because online wallets are easy to log in to and offer a user-friendly platform, you have instant access to send and view your Bitcoins.
Note: A lot of web wallets allow you to purchase Bitcoins from them as well (such as Coinbase).
Free to use
Web wallets and software wallets are both free to use, that's a step towards being the best Bitcoin wallet.
Disadvantages:
Security Risk
Online wallets are always connected to the internet, so they are always prone to attacks.
Web wallets offer low levels of security because all accounts are stored on a central server. This means that hackers can log into your account and access your coins from any computer, if they have your password.
Software wallets offer higher levels of security than web wallets because your information is downloaded on to your personal computer. So, your Bitcoins are stored in one location — they are online, but not accessible on the internet.
Storing Offline (Hardware Wallets, Paper Wallets)
Advantages:
High Security
An offline wallet is not connected to the internet. So, it is impossible for hackers to get access to it. The only way someone can access your Bitcoins is if they get hold of your hardware wallet and are able to unlock it. They are incredibly safe.
Double Confirmation
Bitcoin hardware wallets come with extra security and protection. To view or send funds, you must type a password/code into a physical device. So, Bitcoins can only be transferred to other accounts if the sender has access to the physical device.
Disadvantages:
No Quick Access
You can't start eating frozen food immediately, you need to defrost it first. Similarly, offline wallets are in a frozen state, it takes some time to unlock them!
Physical Damages
Here’s an example: If you keep your Bitcoin paper wallet in your pocket and forget to remove it before you do the washing, the contents will be destroyed. Since there is no online copy of your wallet details, you will never be able to recover it. Which means one thing — all your Bitcoins are gone forever.
A similar thing could happen to a hardware wallet in the case of a fire, flooding, etc. So, it’s important for you to keep multiple copies of your wallet information secured in different locations. Don’t just put them anywhere, though — just in the places where only you know where they are.
Difficult to Setup
Setting up your cold-storage wallet can take some time.
Price
Hardware wallets average at a price of around $70. So, you might want to look at other options if you’re only storing a low amount.
If this hasn’t answered your question of “what is the best Bitcoin wallet”, then let’s take a deeper look, shall we?
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Using a Web Wallet - Not the Best Idea
Using a web wallet is like asking someone to manage your money for you. You have limited control, but as an advantage, you don't have to worry about managing it yourself.
These wallets are easy to use. You can log into them just like you would your email account. You will be able to access them from anywhere and at any time. All you need is a computer or mobile with internet access.
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Table: The security features of the Ledger Nano X and the Trezor Model T
You need to be cautious when choosing a web wallet, though, because some might not be your best Bitcoin wallet options. If you use a website that has limited security, then your Bitcoins will be in danger. It’s simple! Always choose a wallet that has a good reputation. The two web wallets that I recommend are Blockchain.com and Coinbase.
Blockchain.com
Blockchain.com claims to have more than 23 million active wallets. It supports coins such as Ether and Bitcoin Cash and takes “less than three minutes” to set up.
This is how simple it is to set one up and send/receive Bitcoins!
Go to Blockchain.com on your browser, and click on the “Get a Free Wallet” button at the top right of the page.
Once you have filled the form in, click “Continue”, and your wallet will be ready.
On the left-hand side, you have options that allow you to buy and exchange Bitcoin. On the right-hand side, you can see the price history of Bitcoin.
Imagine you want to send your friend some money… what would you need? You’d ask them for their bank account details, wouldn’t you?
Well, that’s how it works when you want to send Bitcoins. Instead of an account number, though, we use a public wallet address. You can see your wallet address by clicking on the request button.
Note: It is important that you don’t get confused between a Public Address and a Private Key. Your Public Address (or username) is usually 34 characters in length, but your Private Key (or password) is 64 characters in length.
In the above image, "15B1yuveuA9Ri3Rt..." would be your public wallet address. This is the address you would give to your friend if you wanted them to send you some Bitcoin.
To send Bitcoins to your friend, you would need to click the "Send" button on your dashboard and then enter their public wallet address into the “To” field. This is a similar process to how you would send money to another bank account.
Coinbase
Coinbase is another web-based wallet. It doesn’t just offer Bitcoin wallet services though, it also offers Bitcoin Cash, Ether, and Litecoin wallet services. The process of sending and receiving coins is similar to Blockchain.com.
Online wallets take a fee for transactions, though. So, if you want to do lots of transactions, it will cost you a lot in transaction fees.
Online wallets don’t give you full control of your private keys. Instead, they are accessed using the normal username and password method. This means they hold the private keys to your wallet, so if they get hacked, so do your private keys. And when a hacker has access to your private keys, they have access to your funds.
Anyway, let’s move on to the safer version of online wallets — software wallet.
Software Wallets - the Better Alternative
With software wallets, they allow more control over your wallet when compared to web wallets. You access your wallet using a piece of software that you download onto your PC. Could it be your best Bitcoin wallet?
Software wallets can’t be accessed from different computers, though. They can only be accessed on the computer you downloaded it from. If you are going to use a software wallet, then I recommend that you keep your computer up-to-date with protection software. There are viruses out there that can give hackers easy access to your funds!
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Table: The main features of the Coinbase Wallet and Exodus
It is important that you back up your software wallet, too! If not, then physical damage to your PC could cause you to lose your coins forever.
Here are two of the most popular software wallets: Exodus and Electrum.
Exodus
Exodus supports multiple cryptocurrencies and has an integrated exchange that helps you exchange different coins with one another.
It has made great progress since it was launched and is available on Windows, Mac, and Linux operating systems. It gives you the control you need over your crypto assets and requires no technical knowledge to set up. Not to mention that it has a nice, user-friendly layout, making it perfect for beginners!
It is very simple to use and makes storing, sending and receiving Bitcoins easy! You can also set up recovery options, which means your wallet is safe if your computer stops working.
Electrum Bitcoin Wallet
The Electrum Bitcoin wallet is also one of the most popular software wallets and has been operating since 2011. It offers a good level of security and a cool range of features.
It is a decentralized software wallet, which means that there is never any downtime (and it also adds extra security). Your private keys are also encrypted, making them harder for hackers to break in to and steal your funds! You can even export your private key so that you can access your wallet on other Bitcoin clients.
Overall, Electrum is a great choice if you’re looking for a free and secure software wallet!
Offline Storage is the Answer
Finally, the bosses of cryptocurrency protection – the offline storage wallets.
If you’re looking to stay safe from online hackers, then your best Bitcoin wallet is a Bitcoin hardware wallet or a Bitcoin paper wallet. They prevent vicious malware or viruses that steal your private keys. They also protect you from nasty websites that try to steal your private keys (otherwise known as “phishing” sites).
The only disadvantage of using these types of offline storage is that they don’t protect you from physical theft. So, it’s super important for you to keep your hardware or paper wallet in a secure place.
Ledger Nano S
The Ledger Nano S wallet is a device that looks like a normal USB drive. The only difference is — you need to protect it as your life depends on it!
It isn’t too difficult to set up. All you need to do is connect it to your computer, go through the security settings, transfer your coins on to it, and boom! Your coins are now safe and sound.
The USB has a screen on it — this screen is what helps you authorize transactions and log in to your Ledger Nano S dashboard. This is a great added feature that provides extra security to your probably best Bitcoin wallet!
Unfortunately, this level of security does come with a price tag of around $70. But it is most certainly worth paying if you have a large portfolio of coins!
The Ledger Nano S has been discontinued - the wallet was replaced by the new-and-improved Ledger Nano S Plus.
Trezor
The Trezor was the first Bitcoin hardware wallet created and is known to be one of the safest methods for storing your Bitcoins!
It is like the Ledger Nano S and offers a similar range of features. The initial set up isn’t too difficult, and it allows you to back up your wallet in the case of physical theft!
Additionally, the company has two new models that provide top-notch security: Safe 3 and Safe 5. Both cold hardware wallets introduced a completely new feature, the EAL6+ certified Secure Element chip, designed to protect your assets from brute-force attacks.
What is cool about these two models is that they have a BTC-exclusive version. Simply put, Trezor Safe 5 and Safe 3 are designed to be the ultimate hardware wallets for Bitcoin users. In addition, both devices come with orange-anodized aluminum backplates.
That said, you can also purchase the regular Safe 5 and Safe 3 models with different colors and simply install a Bitcoin-only firmware. However, it’s important to highlight that you won’t be able to install the regular firmware on the BTC-exclusive version.
Again, this level of security does come with a price… The Trezor Safe 3 costs around $79, while the Safe 5 is around $169.
Bitcoin Paper Wallet
I recommend for you to use the following wallet generator — WalletGenerator.net. This wallet generator will create a new wallet with a public key (username) and private key (password), which you can then print onto a piece of paper.
The keys generated are long, so typing them manually is difficult. That’s why the wallet generator also prints a QR code (like a barcode), which makes it easier for you to access.
It is impossible for online hackers to steal your password (or private key) because it doesn't exist online. However, this doesn't prevent physical theft.
So, What Is the Best Bitcoin Wallet for You?
If you are just getting started with Bitcoin, I recommend that you begin with an online wallet like Blockchain.info or Coinbase. You can make your first Bitcoin purchase using these wallets, too.
However, if you are buying more than $100 worth of coins, I recommend transferring your coins straight over to a software wallet.
If you are really concerned about the security of your Bitcoins or you have a large amount invested, then I recommend moving over to an offline storage wallet, I believe it would be the best Bitcoin wallet for you.
Another thing that I would suggest is that you own multiple wallets. This way, you give yourself extra security. I’d only recommend this if you were storing more than $3000 worth of crypto coins. I know it might be tough keeping track of them all, but it’s better to be safe than sorry!
Did you know?
Ever wondered which crypto wallets are the most secure for your crypto assets?
Conclusions
Your security is your responsibility. With all wallets, you must be careful. If you carelessly expose your private key, you could be at risk of losing all your funds! Just remember the following points to choosing the best Bitcoin wallet:
Online wallets:
- Easy to use, especially for beginners
- Low levels of security
- You can purchase Bitcoin from them
Software wallets:
- Offer an okay level of security if your computer is virus-free
- Easy to use and get access to
- Can often offer different cryptocurrency wallets, too
Hardware Wallets/Paper Wallets:
- Highest level of security
- Stores your Bitcoins offline so hackers can’t get into it
- Must make sure you keep the physical device or paper secure
And that’s all, folks! So, you should now have a better understanding of which wallet is most suited to your needs. Whether it be Trezor or Ledger, I wish you the best of luck in growing your crypto portfolio!
The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.
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