A bitcoin wallet — a tool that serves to keep your keys and interact with the blockchain — has been created as a type of bank where users can store their bitcoins, bitcoin cash, and other cryptocurrencies. The money of today — bitcoins, SLP tokens, and other digital currencies — needs an extra safe place to be kept. Continue reading to find out more about the product and how to use it best.
Bitcoin Wallet – What Is the Device?
A bitcoin wallet for cryptocurrency storage helps bitcoin owners not only keep their privacy rights intact but also lets them send and receive their cryptocurrency. You may opt for a wallet on your mobile device, desktop, or even separate hardware. This device works pretty much the same as your email — a unique address is created (which always begins with either “1” or “3”), you get a generated key (password), share the address with someone you’re willing to interact with, and exchange bitcoins or other currencies.
How Can I Safeguard My Wallet?
Never share the information about your private key unless you use a multi-sig. Normally, wallets create a wallet.dat file with your key as you perform transactions. Save it to a secure location — it probably won’t leak this way. If you use a hardware wallet, try Cryptosteel — a piece of metal with the key on it.
What Do We Mean by Private Key?
Private keys are automatically generated passwords that a cryptocurrency wallet owner receives to get access to their bitcoins. This key is a long combination of both numbers and letters that proves the Bitcoin network your intention to send cryptocurrency to another person.
Even though the algorithm uses the key to create an address, it is impossible to figure out what the key is from the address analysis. It is also highly advisable that you don’t keep the key, which cannot be created by yourself, somewhere in your computer — better store this info on a separate piece of paper.
Something to Know About Payments and Transaction Fee
A transaction fee has to be paid for each bitcoin transaction. It exists to incentivize Bitcoin miners to include the transaction in the next block of transactions. You need to check whether the fee is chosen automatically or you choose it yourself for your wallet and see if the wallet supports Segwit and RBF.
Be careful not to get hacked — sometimes, hackers upload fake wallets to online stores for stealing user funds. Never buy a hardware wallet from an unauthorized seller — a user has reported that he had lost bitcoins after buying a wallet through a non-licensed manufacturer.
HD Wallets And Mnemonic Phrases
Although normally, your private key will be impossible to memorize, if you choose to get yourself an HD wallet, it will generate a seed phrase for you. This seed is a set of 12 random words that you will use to get access to your crypto.
Types of Wallets
To begin with, we categorize bitcoin wallets into custodial and non-custodial ones. The first means that the company has access to your private keys and therefore is accountable for the safety of your bitcoins. However, one needs to understand that this may lead to leaking your private keys, the company’s bankruptcy (and loss of your savings), or the company committing fraud to steal your coins. Non-custodial wallets are chosen if you’ve decided to be the only person to know your private key.
There is another principle of categorizing bitcoin wallets as well: cold storage and hot wallets. Cold storage wallets work without an internet connection, which makes it impossible to hack them remotely. Cold wallets are:
- Hardware Wallets
These are separate flash drives that can be connected to your computer. To exchange crypto, their owners need to connect the wallet to a computer (which may even not be yours) and a web page or some software. Some of these offer hardware wallet support.
- Paper Wallets
These are ordinary pieces of paper containing your personal information. You may wish to opt for that as this is obviously impossible to hack through the Internet, though you might lose or have the wallet destroyed very easily. If a person you don’t want to share your private details with sees this wallet, you may get into trouble. Keep in mind that you will also need to have access to some type of digital crypto wallet to transfer coins.
- Brain Wallets
A hot wallet is basically a digital wallet, which exists electronically. Among the hot wallets, which are much more popular than the types described above, there are:
- Desktop Wallets
These are the wallets to store your bitcoin funds on a personal computer operating system. That’s apparently very convenient to have one, though you have to beware of any viruses or malware. Once your personal computer is in danger, the possibility that your coins will be stolen is very real.
- Mobile Wallets
Using a mobile wallet app is exceptionally easy. However, keeping substantial sums and a private key on your mobile is probably one of the most unsafe — cellphones are often lost or stolen, and your information may be stolen from the app as well.
- Web Wallets
These wallets are spread all over the world as the most convenient — having a web bitcoin wallet enables you to send and receive transactions almost instantly. Nevertheless, cybercriminals will never miss an opportunity to hack a badly protected web cryptocurrency wallet. If you are a beginner, don’t consider creating one unless you are sure that there is a proper system of authentication.
What’s the Best Bitcoin Wallet Then?
That goes without saying — the best bitcoin wallet suits your personal needs. Ask yourself a couple of questions first:
- What amount of money do I plan to keep?
- How often do I need to use my wallet?
- Will I store some other cryptocurrency apart from bitcoins (e.g., bitcoin cash, SLP tokens, or stellar)?
- How much am I worried about my privacy?
- How techy am I?
- Is there a necessity to share my wallet with another person?
- Do I need the company to be accountable for my savings, or am I ready to safeguard my wallet myself?
Having considered all these factors, choose one bitcoin wallet (or more). For instance, if you wish to have a wallet for your everyday needs, opt for a mobile one. In case you store a large sum of coins and are worried about your wallet and transaction history being hacked, get yourself a hardware one.
Where Can I Get a Bitcoin Wallet?
If you’ve decided to get a cold storage bitcoin wallet, order the one you consider best from a reliable online shop. If a user has chosen a desktop wallet with an advanced user interface, it has to be downloaded. To get a web wallet, simply pass the registration procedure on a website using a QR code.
List of Top Bitcoin Desktop Wallets
If a user of cryptocurrencies wants to store (and even trade) other types of coins, such as bitcoin cash, try Exodus. Exodus has a pretty and understandable interface. Read a complete review of Exodus here.
Not best-looking but very functional — you can use RBF and Segwit support (read Chapter 8 – Transaction handling for more info about it). Read this to know more about Electrum.
A full node wallet that may seem difficult to use for beginners.
A good choice for those who value safety and security features.
List of Best Bitcoin Mobile Wallets
A combination of safety and beautiful design. Manage different types of digital money, including SLP tokens. You can read a full review of Ledger Nano X here.
This is an open-source multi-currency mobile wallet app, which means you can store bitcoin cash, ether, or stellar as well.
Coinomi emphasizes that no identity linking is possible from within the wallet. Here’s a Coinomi review.
A simple open-source wallet app, which also makes it the one without special features.
List of Best Bitcoin Hardware Wallets
This company offers a variety of physical devices, including Ledger Nano S and Ledger Nano X (a Bluetooth hardware wallet).
Probably the most well-designed wallet. It is not only good-looking but functional, though — KeepKey supports a variety of coins to be stored. You may read a more detailed KeepKey review here.
This bitcoin wallet looks like a credit card. Make sure to keep it close to your mobile app to send your coins. Read our full CoolWallet review here to get more information.
Some Other Terms You’d Like to Know
Multisig or a multi-signature is a type of wallet that can be accessed by a number of people. However, each member of the group will use only his or her key, not knowing the keys of the others, which means that no one will steal the whole sum. SPV, unlike full nodes, don’t hold a full copy of the blockchain. They are quick and consume less disk space. Brain bitcoin wallets are those where the password is created by their holders. It is highly advisable to avoid using brain wallets, as it’s very easy to hack them, and a lot of cybercriminals do that well. There has been a case when someone lost four bitcoins from their brain bitcoin wallet.
So, what are truly the best bitcoin wallets? Here is a list of our top preferences:
Choose the one depending on your personal needs, and good luck using the wallets you like!
What is a Bitcoin Wallet?
A user can store their bitcoin in a digital wallet, hardware wallets, software wallets, or in a wallet app for your phone. All of them are used to keep, send, and receive your bitcoins from other users who possess cryptocurrencies.
How to Choose the Best Bitcoin Wallets?
Beginners should probably opt for those with a simple and pretty user interface and a number of basic features. Those users who wish to have more advanced features, such as QR-code payments, offline storage, etc., should consider less popular but better-developed wallets. A person who has some user experience may opt for two or more wallets to store cryptocurrencies, such as bitcoin cash, SLP tokens, or others, depending on their personal needs.
What is a Private Key?
The payments will never be authenticated without a private key — your personal code or a generated sequence of words. Everyone who knows your key is able to get access to your currencies. Thus, make sure to keep it safe and never share this information with people you don’t know well.
How to Get Yourself a Wallet?
If a user wishes to have a digital bitcoin wallet, download it from a reliable source page. If you want to get a web one, you will have to sign up. To purchase a hardware wallet, choose one from a shop and wait until it’s delivered. No matter which device you choose, be careful not to buy it from an unauthorized manufacturer.
What Bitcoin Wallets Are The Most Popular On Market?
Probably these are most frequently used: Ledger Nano X (including a Bluetooth feature), Exodus, Ledger Nano S, Ledger Live, Trezor Model T, and others. Electrum, for instance, has the advantage of being lightning network compatible.