It’s very important to select the right moment to buy Bitcoin, as well as the best platform to do it on. However, it’s equally important to pick the best way to store your bitcoins after you’ve purchased them. The place where all digital assets are stored is called a cryptocurrency wallet and there are different types of wallets, each with its specifics. If you’re looking for a Bitcoin wallet and don’t know where to start, we may be able to help you. Here we’ll inform you what to look for when selecting a wallet for your bitcoins, as well as suggest some popular wallets you can consider.
What Exactly Is a Bitcoin Wallet?
Much like fiat money, the place where you store your digital money is also called a wallet, even though you can’t physically touch your cryptocurrency. You can own a physical wallet, though, but we’ll explain this in a little bit.
A cryptocurrency or a Bitcoin wallet is a digital system that stores a collection of your private keys which correspond to your blockchain address book. They are used to sign the Bitcoin transactions. Unlike public keys, seen by everyone, private keys are only controlled and known to you, the owner of the wallet. The name of this type of key hints that you should remain the only person who knows them. Otherwise, you may put your holdings at risk or even have them stolen.
If you forget or somehow lose your private keys, you won’t be able to access your wallet anymore. This is solved by wallets that provide storage for your private keys, though that may come with other risks.
The Types of Bitcoin Wallets Explained
Depending on your personal needs, you can choose the type of Bitcoin wallet to store your coins. Here we will explain what are the different types of wallets.
Hot Storage Wallets
Hot storage wallets, commonly referred to as “hot wallets” only, are wallets with a direct online connection. That’s why they are very easy to access, you only need an internet connection to get to your bitcoins. However, this also means that since they’re connected to the internet, they hold the risk of malicious online attacks, like hackers stealing your coins. You should consider this possibility if you’ve decided to get a hot Bitcoin wallet.
The types of wallets include web wallets, desktop, and mobile. They differ on how they’re connected to the internet, as well as who controls your private keys and the wallet’s safety.
Web wallets allow you to store, as well as send and receive, your bitcoins, using your web browser. The web wallet will be available on all of your devices that share the same browser. The provider of the web wallet manages the security of the storage of your coins, as well as your private keys.
Desktop wallets are installed directly on your computer. Unlike web wallets, where the provider stores your private keys online, on desktop wallets the keys are stored on the hard drive of the computer the wallet is installed on. This means two things – you’re the one controlling your private keys, and responsible for their safety; and you can only access them on the computer the Bitcoin wallet has been installed on.
As their names hit, mobile wallets are storage for your bitcoins that you install on your smartphone, using an app. The only thing you should consider is if your phone’s operating system and the app are compatible. Other than that, this is one of the fastest and easiest to work with types of wallets out there. Like desktop wallets, the customer is responsible for the security and the backup of the device.
Cold Storage Wallets
The other type of Bitcoin wallet, based on how your private keys are stored, is called cold storage wallet or “cold wallet”. This type of wallet is not connected to the internet, the user’s private keys are kept offline and used online only for transactions.
The device, created to store your bitcoins, is called a hardware Bitcoin wallet. These wallets are small devices, usually resembling USB flash drives. They are connected to a computer or online only when you’re making bitcoin transactions. That’s why they’re less likely to be attacked by hackers.
Paper Bitcoin Wallet
If you want to store your bitcoins completely offline, without using any electronic device, then you can choose paper wallets. This wallet stores your private keys on printed paper documents and contains a QR code to allow you to make crypto transactions. This type of wallet is suitable for people who don’t think even hardware wallets can be secured from online theft. However, there stands the chance of losing the printed document. In that case, your bitcoins will also be lost.
All wallets carry both advantages and disadvantages. They differ in how your private keys are stored and who controls them, as well as who is responsible for the security of your funds. Whatever wallet you decide to pick, prioritize the safety of your private keys first. They are the literal key to your cryptocurrencies and if you forget, lose or get them stolen, you won’t be able to manage your assets anymore.
What to Consider When Picking a Bitcoin Wallet
After you familiarized yourself with the different storage options for bitcoins, you should consider a few other things, before you make your final decision.
- Your personal priorities: When picking a Bitcoin wallet, you should consider what are the top things you want it to feature. If your biggest priority is security, then you can pick a hardware or even paper wallet. If you’re looking for quick access from anywhere, then you can choose between the hot wallet types. You can also get both a hot and a cold wallet and separate your cryptos to decide with time which one serves you better. Here you should also consider your budget, as many hot storage wallets are free, while cold wallets are paid.
- The reputation of the wallet: Consider the background of the wallet, as well as what other customers experienced while using it. If a wallet has a bad reputation, due to problems with the company, security or hacking issues, or bad customer support, definitely take that into account. Every trader has a different experience. However, if a service has performed poorly in the past and hasn’t tried to fix its issues, it’s very likely you’ll have problems with that Bitcoin wallet as well.
- Option for backup support: If you want to secure your assets, you should look for a Bitcoin wallet that offers additional backup support. Some wallets provide online or offline backup for your data. If you don’t want to be responsible on your own, you can trust the security of your bitcoins to a wallet provider.
- Supported number of cryptocurrencies: You’re currently looking for a Bitcoin wallet, assuming that you want to add bitcoins to your portfolio. However, if you consider the possibility to expand your holdings in the future by including new cryptocurrencies, you should think about it from now and apply it when picking your digital wallet. You’d want to find a wallet that supports a bigger amount of cryptocurrencies, that way you won’t have to get a new one if you decide to add other tokens to your bitcoins.
- Trading platforms offer wallets as well: If you don’t want to get a separate Bitcoin wallet, you can take advantage of a built-in wallet on the trading platform you’re purchasing your coins, if it provides one. If your priority is to save up time and effort, you can definitely consider that some places where you can buy the assets, also allow storage.
What Is the Best Bitcoin Wallet – Top 5 Picks for 2022
There are many wallets that allow you to store Bitcoin. The best one is determined by your own needs and preferences, considering the type of wallet and the factors we’ve listed above. Here we’ll present you with five options for a Bitcoin wallet you can consider when making your choice.
- Ledger Nano X and S
Electrum is one of the first digital wallets created, it emerged shortly after Bitcoin and was created especially for the first cryptocurrency. Electrum is a hot wallet that allows you to use offline storage as well. The wallet warns that you should update your version to the current one though because older versions of it are susceptible to phishing.
If you’re looking for a hardware Bitcoin wallet where you can later store more coins, Trezor may be suitable for you. It provides storage for bitcoin as well as other 1,500 cryptocurrencies. The company provides different types of devices that can be used on a computer and on a mobile phone. Trezor also provides offline backup for your bitcoins.
Mycelium is a modern mobile Bitcoin wallet in the form of a smartphone app. The service is free to use but may include fees on the exchanges that is used on. Users control their own private keys as well as can take advantage of offline storage and payment through QR codes.
Ledger is a very popular brand for hardware Bitcoin wallets. The most popular models, Ledger Nano X and Ledger Nano S resemble USB flash drives and can hold your bitcoins and over 1,800 altcoins. The difference between the two models is that X is Bluetooth enabled and supports more applications at the time, unlike the S version which is connected to your computer only by a USB port. The more premium model is also more expensive.
Exodus is a Bitcoin wallet that seems to provide storage, suitable for many people – it’s a desktop that offers a mobile app, browser extension, and a hardware option. The wallet supports the biggest cryptocurrencies and more than 180 other digital currencies.
What Trading Platforms Provide a Bitcoin Wallet?
As previously mentioned, some platforms for crypto trading provide the option to store your bitcoins on their built-in wallet after you’ve purchased them. Here are some platforms that offer storage for their users:
How to Pick the Best Bitcoin Wallet in 2022?
To choose the best Bitcoin wallet, you should consider your own preferences, as well as the security of your assets first. You now know that you can store your bitcoins offline, online, and even at the trading platform where you bought them if it provides it as an option. You should learn everything you can about the storage option you’re choosing because the security of your digital money depends on it.