Bitcoin Wallets

Bitcoin Wallets

What's in this guide?

Choosing a bitcoin wallet is no longer simply a matter of choosing security or simplicity. Using different wallets for different purposes is becoming commonplace, as is using different accounts when dealing with fiat currencies. A few years ago, several main types of wallets stood out, and new developments continue to emerge. Therefore, choosing a wallet for those new to cryptocurrency is only getting more complicated. In this article, we will try to briefly classify wallets according to their purpose.

A Bitcoin wallet is, in the simplest case, a pair of two large and complex numbers. The first number is the public key and the second is the private key.

  • The public key will be your wallet or address to which you can send Bitcoins.
  • The private key is an encrypted, non-public key that is used to validate transactions within the blockchain.

Types of bitcoin wallets

Bitcoin wallets are not limited to one option, there are several types. To store these wallets you need to download and install a special application on your computer. In this case, you will have local storage for the key file, and you will need to handle the security settings yourself. The only exceptions are hardware wallets.

Types of wallets:

  • Web wallets;
  • Mobile (installed on smartphones, etc.);
  • Local (installed on a PC or laptop);
  • Hardware (as a separate device);
  • Paper.

We will look at all types and you can choose the best option for you in terms of reliability and difficulty of use.

For cold wallets, you need to download a complete blockchain and constantly load new blocks. This type of wallet has a number of disadvantages for the average user:

  • downloading takes a very long time - more than a day when used for the first time because the entire transaction register is downloaded from the first day of Bitcoin's existence;
  • volume - it takes about 100 GB of hard disk space because it includes the entire cryptocurrency blockchain;
  • there is a risk of complete and irretrievable loss of the wallet itself if the hard drive is damaged, as all information is stored only with you.

Hot wallets (also known as easy wallets) do not require the downloading of the entire blockchain history, as all the necessary data can be operated on third-party services. This method is convenient when using a wallet on a mobile terminal. But here the security of using BTC is already lower, because you will need to entrust some of the necessary data to third-party resources.

Hardware wallets. Hardware wallets such as Trezor, Keepkey and Ledger Nano S, provide convenient access to bitcoins with a high degree of security, because private keys are stored only in the wallet's memory. While these wallets may cost $60 or $100 to use, they allow transactions to be made in a way that hackers cannot get to them.

Wallets with this degree of security are ideal for receiving and storing bitcoins. Once bitcoins are in the wallet, some of them can be transferred elsewhere for permanent use, while the bulk of them will be safely "stashed" in the hardware wallet.

There are 5 factors that characterise each bitcoin wallet

  • Safety
  • Transparency
  • Privacy
  • Payment verification
  • Control of funds

You should choose a wallet based on what you want to do. If for example you want to store a large amount of cryptocurrency then a hardware solution is better, if you want to do some quick transactions or explore the possibilities then wallets like Blockchain.info will suit you.

For maximum privacy use wallets that load full blockchain, if wallet uses centralised servers then your transaction group can be tracked very easily by IP, even if you use Tor. Don't keep the whole amount in one wallet, try to spread it out to increase storage security. Ideally divide the money into 5-10 pieces, and not just into different wallets - but into different computers.

Online bitcoin wallets

Online Bitcoin wallets have a number of advantages:

  • You don't have to download all the blocks of the network, as this takes a large amount of time, both when first downloading and during each run of the always-on local wallet.
  • You will be able to operate on a variety of devices, regardless of your location, as long as you have free access to the internet.
  • Most of these services offer additional conveniences to their users. You will be able to conduct transfers to other users of the same service with your email address or phone number. You will also be able to send notifications and use address books.

But, as good as it is, you should not forget that using any online wallet means entrusting your funds to an unauthorised resource. Therefore, their safety no longer depends on you alone. If such a service is hacked, your coins can simply be stolen.

There are cases where the owner is not a confident computer user and is not able to configure the security of his wallet. Or the computer is too weak to use a "cold wallet", or maybe a person just does not want to install software on his computer, because he does not operate with large amounts of money. There may be different reasons - in that case, it makes more sense to use Blockchain.

Advantages and disadvantages of online Bitcoin wallets

Advantages

Disadvantages

  • The easiest way to store small amounts of bitcoins
  • Easy to send and receive payments
  • Some online wallets allow an account to be used on multiple devices at once
  • It is dangerous to store large amounts of bitcoins

Let's look at some popular online Bitcoin wallets:

Coinbase

Coinbase is one of the best wallets that focuses primarily on ease of use. It allows you to store not only bitcoins but also other cryptocurrencies.

coinbase logo

Wallet name: Coinbase

Year Founded: 2012

Website: coinbase.com

The Pros

The Cons

  • Easy to use
  • Free registration and storage of crypto
  • Decent commission
  • Support for major cryptocurrencies
  • Reliable security
  • Small number of supported cryptocurrencies
  • Hot wallet - requires constant Internet connection

A good fit for

Coinbase is widely regarded as the best cryptocurrency wallet for first-time users. Simple registration, ease of use and high security set it apart from many competitors.

For a detailed review of the Coinbase Wallet, see our article

Blockchain.com

Blockchain.com is one of the most popular Bitcoin wallets in the world. More than five million people use it. The wallet does not require any applications to be installed on your computer. Your bitcoins are stored encrypted on its servers.

Wallet name: Blockchain.com

Year Founded: 2011

Website: Blockchain.com

The Pros

The Cons

  • Simple and intuitive web interface
  • Support for multiple cryptocurrencies
  • Built-in swap. Users can swap supported crypto-assets directly within the interface.
  • Small number of supported cryptocurrencies

A good fit for

Blockchain.com is a convenient online wallet with a simple interface for storing cryptocurrencies. Because it is one of the first cryptocurrency wallets, it is very popular among users, and as such its interface is translated into more than 20 languages. Initially the wallet only supported Bitcoin, now the list of supported cryptocurrencies includes Ethereum (ETH), Bitcoin Cash (BCH), Stellar (XLM), Paxos (PAX). This is ideal for experienced users.

Cryptopay

Cryptopay is an online wallet where you can easily store your money in the form of bitcoins, pounds sterling, euros or US dollars.

Wallet name: Cryptopay

Year Founded: 2013

Website: cryptopay.me

The Pros

The Cons

  • Functionality - crypto wallet for storing currencies, exchange in any direction
  • Fiat support
  • There are mobile apps
  • Good reputation
  • It is possible to order CryptoPay prepaid card and pay with it in shops and withdraw cash
  • A small number of fiat and digital currencies.

A good fit for

Cryptopay is an actively developing cryptocurrency wallet that supports fiat money. Its smart interface, low fees and competent support make it a good choice for both experienced and novice users.

Hardware wallets

Located on a separate physical device, they look like a thumb drive or tablet.

Hardware wallets are secure offline storage. They store your private keys without an internet connection, which means they cannot be hacked. This means that you can use hardware wallets even on compromised or unprotected PCs.

To send bitcoins from such a wallet it must be connected to the computer where the wallet software is installed. If that program communicates with the blockchain without intermediaries, it's OK. Otherwise, you won't be able to send money when you need it.

Trezor Model One

Trezor, established in 2014 in the Czech Republic, is one of the most reputable and trusted cryptocurrency security companies. Trezor-branded cold wallets are developed and manufactured by SatoshiLabs, which was founded by crypto veteran Marek Palatin.

Trezor Model One is the first ever hardware wallet for cryptocurrency storage.
The Trezor wallet operates on a 'zero-trust' principle. This makes the device one of the safest ways to store crypto keys.

Wallet name: Trezor Model One

Year Founded: 2014

Website: trezor.io

The Pros

The Cons

  • OLED display
  • Multi-level access protection
  • Ability to sign offline transactions
  • Open-source firmware
  • Private key support
  • Compatible with platforms such as MyEtherWallet, MyCellium and Electrum
  • No mobile application
  • Plastic case

A good fit for

Trezor Model One is the first hardware wallet for storing cryptocurrencies. It is not easy to learn, but it has a wide range of features, and due to Open-source firmware it can be considered the most reliable hardware wallet. It is ideal for experienced users.

Ledger Nano S

Ledger Nano S is one of the most popular crypto wallets on the market. Ledger was founded in 2014 in France, by experts with experience in hardware security development. It took two years to develop the company's first cryptocurrency wallet. The popularity of Ledger Nano S has long been due to the fact that it supported a much larger number of cryptocurrencies than Trezor.

Wallet name: Ledger Nano S

Year Founded: 2014

Website: ledger.com

The Pros

The Cons

  • Ledger Live mobile app
  • Possibility to connect a second account with its own password and PIN
  • Ability to verify and sign payments
  • Durable steel case
  • Closed source firmware

A good fit for

Ledger Nano S is the main competitor to Trezor's hardware wallets. It is very user-friendly due to its form factor (essentially a USB-stick, no need to use a separate cable) and the presence of a mobile app. The Ledger Nano S is powered by proprietary software, which may be of concern to some users, but on the other hand it has the advantage of making it harder for hackers to break into the software. Ledger hardware cryptocurrencies are great for users who prefer ease of use.

For a detailed comparison of cryptocurrency hardware wallets, see our Trezor Vs Ledger - Which Is Better?

Local bitcoin wallets

As mentioned at the beginning of this article, easy wallets do not require blockchain downloads. The point is that all the data is available to you on the server that the client uses. Such wallets are most convenient to manage from a laptop or tablet. They are fast and easy to use.

But keep in mind that all the data that needs to be verified is done by a third party, which has a negative impact on security. But you control the keys yourself.

Electrum

This is one of the most popular Bitcoin wallets for personal computers. It is very fast and easy to use. Electrum uses third-party servers to validate transactions, and this reduces the amount of data uploaded, but it also reduces security and anonymity, as your data is sent to centralised servers that speed things up, but allow you to link actions to your IP address. You could say that this is the best bitcoin wallet.

Wallet name: Electrum

Year Founded: 2011

Website: electrum.org

The Pros

The Cons

  • Decentralisation.
  • Control over private keys. Their import or export.
  • Cold storage.
  • Wallet recovery using a seed-phrase from which private keys are generated.
  • Transparency ensured by publishing open source software code.
  • Manually set fee.
  • Mass transfers.
  • Multilingualism.
  • Functionality.
  • Complicated for beginners
  • Security problems

A good fit for

The Electrum Wallet is an excellent choice for storing crypto-assets with a focus on security and availability of all basic options. It is easy to install and easy to use. The private keys are stored on the client side, which provides additional assurance that the funds are safeguarded.
The application takes up little space and is fast and reliable. There are versions for all popular operating systems. It can be safely used by both experienced and novice users.

For a detailed review of the Electrum Wallet, see our article

Exodus

Exodus is an anonymous multicurrency wallet for storing and transacting virtual coins. The desktop app is designed to be installed on devices running Windows, MacOS and Linux operating systems. A mobile app (Android, iOS) was released in 2019. The cryptocurrency wallet supports the storage of the most sought-after and liquid coins. As of autumn 2021, Exodus supports more than one hundred cryptocurrencies and tokens: Bitcoin, Ethereum, Bitcoin Cash, Litecoin, TRON, Dash, Binance Coin, Ethereum Classic, EOS, Zcash and others.

Wallet name: Exodus

Year Founded: 2015

Website: exodus.com

The Pros

The Cons

  • Easy to use
  • Has customer support
  • Great choice of cryptocurrencies
  • Software wallet
  • Built-in exchange function
  • Vulnerable to security problems
  • Commission can be quite high

A good fit for

Exodus is a reliable and convenient multicurrency wallet that boasts a wide range of features. Exodus works on all operating systems: Windows, Linux, MacOS. This wallet also has an app for smartphones running iOS and Android. Exodus also supports a large number of altcoins. This wallet can be safely recommended to all users.

For a detailed review of the Exodus Wallet, see our article

Bitcoin wallets for smartphones

We have understood a little bit about what a Bitcoin wallet for computer and internet is. Now let's look at what a mobile BTC wallet is. It is installed on smartphones running on iOS or Android. Mutual payments can be made using QR codes or NFC technology, wherever you are, at any time of the day or night.

Let's take a look at two of the most famous Bitcoin wallets for smartphones:

Mycelium

Mycelium was created by a group of engineers in 2008. The team was interested in working with blockchain as Bitcoin was gaining popularity in those years. It is a wallet designed for Android smartphones. It allows you to store the currency securely while conducting various transactions with it and exchanging it for fiat money.

Wallet name: Mycelium

Year Founded: 2008

Website: wallet.mycelium.com

The Pros

The Cons

  • Reliable
  • Open source
  • Supports multiple accounts
  • Difficult to navigate.

A good fit for

Mycelium is not an easy wallet to use. It was created by cryptocurrency enthusiasts and has a truly incredible set of features. At the moment, in addition to Bitcoin, it allows to work with Ethereum and meaningful ERC-20 tokens. Keep in mind that Mycelium only works on Android smartphones; all applications found in the iPhone AppStore under that name have nothing to do with Mycelium. it is an ideal choice for experienced users.

Breadwallet

Breadwallet is a multi-currency hot wallet for bitcoin and altcoin storage, available on iOS or Android operating systems. The wallet was developed in 2015 by two developers, Aron Voisin and Adam Treidman, originally from Switzerland.

Wallet name: Breadwallet

Year Founded: 2015

Website: brd.com

The Pros

The Cons

  • Simple user interface
  • Wallet based on mobile app
  • Custom PIN codes are available
  • Can store Bitcoin, Ether, Bitcoin Cash and ERC-20 tokens
  • Slow customer service responses
  • Supports few cryptocurrencies

A good fit for

Breadwallet is a beautiful, secure and easy-to-use wallet. To make payments, it is better to buy some BRD tokens, the wallet's own tokens. They will come in handy for paying commissions. Breadwallet is one of the best and well-established wallets on the market and is ideal for experienced users and beginners alike.

Cold wallet for Bitcoin

This type of coin storage is considered the most secure. Here, it is up to you to safely manage the storage of your own money. All your client has to do is download all the blocks and verify their authenticity. He makes sure that each successive block has a link to the previous one.

It is your sole responsibility to store the keys. Therefore, remember to back up your key file in a timely manner

Bitcoin Core

Almost all modern cryptocurrency wallets allow you to store and transfer bitcoin. However, 10 years ago, the situation was radically different: back then, there was only one application for interacting with the network of the main cryptocurrency - Bitcoin Core. Today, despite the emergence of many alternative wallets, this software still plays a critical role in the operation of the first blockchain.

Wallet name: Bitcoin Core

Year Founded: 2011

Website: bitcoincore.org

The Pros

The Cons

  • The official app from the developers of the bitcoin network
  • Simple installation and intuitive interface
  • Strong encryption, new addresses for each incoming payment and local storage of private keys provide a high level of wallet security
  • SegWit support
  • Fee control
  • Availability of versions for all popular operating systems
  • The ability to participate in the life support of the Bitcoin network
  • The availability of a console that is receptive to multiple commands makes the application attractive to developers
  • Supports Bitcoin only

A good fit for

Bitcoin Core only supports one cryptocurrency, Bitcoin. It is not easy to learn, it requires a lot of free space on your hard drive, and it takes a very long time to sync with the network. It is not friendly for beginners, despite its user-friendly interface. However, Bitcoin Core can be considered one of the most reliable cryptocurrency wallets.

Paper wallets

Yes, don't be surprised, there is this way of storing bitcoins, but it is not the most convenient, but if you are not going to make transactions, but take cryptocurrencies for a very long time, this way might suit you.

A paper wallet is a paper on which private and public keys are printed in the form of a QR code. To use these keys you will have to scan them.

Paper wallets are generally better and safer than any other type of wallet. Here are some reasons for using them:

  • They are easy to use. Creating a paper wallet doesn't require much effort or technical knowledge. A few simple steps will greatly secure your coins. Using hardware wallets is much more complicated.
  • They are self-contained. Such a wallet is inaccessible online to hackers and fraudsters, so it lies in your locker. Your currency is in the form of a piece of paper with your keys printed on it. Such a wallet is like an expensive cashier's check with which you can use the funds or pass them on to whomever you want.
  • There is no problem with the equipment. Paper wallets are more secure and safe than hardware wallets, which can be damaged and may have software malfunctions. A paper wallet is the easiest form of cryptocurrency storage.
  • It's easy to pass on to someone close to you. If something were to happen to a cryptocurrency owner, their loved ones would be unlikely to have access to their exchange or hardware wallet. However, a paper wallet can easily be stored as part of his valuable assets in his locker or physical space.

You can make a paper cryptocurrency wallet at bitaddress.org

How to make bitcoin wallet storage as secure as possible

In order to make your cryptocurrency storage in your wallet more secure, you need to remember a few rules:

  • Encrypt data - almost every bitcoin client has this feature and there is nothing complicated about it, just encrypt with the same TrueCrypt software, Bitcoin Core has an encryption feature in its standard features. This will greatly secure your wallet, but it is not guaranteed to be completely inaccessible to hackers.
  • Backups are one of the best ways to be secure, apart from complex passwords and two-factor identities. Regularly try to make backups of your wallet and drop them in several places, preferably different devices (flash drive, drive), not just different folders on your computer.
  • Two-factor identification and complex passwords - as with any website or wallet, try to come up with passwords not of the qwerty123 type, but at least 8-10 characters with the presence of numbers, and two-factor identification and a keypad password when making payments in the same Blockchain is excellent additional security.
  • Cold storage - for added security, you can also take your bitcoin wallet offline so that the wallet cannot be accessed by attackers from the network. This type of wallet keeps the private keys offline, so they cannot be stolen over the internet.

Conclusion

In this review, we looked at the best Bitcoin wallets: hardware, local, mobile, browser-based and paper-based. Any user can choose a Bitcoin wallet of their choice. However, the most important thing to remember is that the security of a Bitcoin wallet needs to be taken care of just as much as that of a real wallet. It is the responsibility of the user to store the keys to access the coins.

Jack Evans


I became a crypto asset owner in 2014, when the industry was in its infancy. Before that, I was working in the classic US and European stock markets. Since then, I have gained extensive experience in both cryptocurrency investing and day trading. I am happy to share with readers my experience with crypto exchanges, DeFi and NFT instruments.
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