Selecting the right Bitcoin wallet is just as important as choosing the right Bitcoin price to buy at or the best platform for crypto trading to make your purchase. But there are different types of wallets and specifics to consider. If you want help with choosing your wallet for Bitcoin, keep reading.
What Is a Bitcoin Wallet?
Bitcoin and other cryptocurrencies don’t have physical representation but just like fiat money, there are wallets where you store them after you buy them. A Bitcoin wallet, or a cryptocurrency wallet, is a digital wallet that stores a collection of private keys, corresponding to the blockchain address book of the user. The keys are used to sign Bitcoin transactions and only the Bitcoin wallet’s owner can control them. Unlike the public key, available to everyone and used to conduct transactions between two parties, you shouldn’t ever share your private key with anyone, or you risk your Bitcoin wallet getting hacked and your funds stolen.
If you lose or forget your private key, there’s no way you can access your Bitcoin wallet anymore, meaning you can’t spend, withdraw or transfer your bitcoins. Some wallets, however, can store the private key, but we’ll get to that in a bit.
What Are the Most Popular Types of Wallets?
You can store your bitcoins on different types of Bitcoin wallets, depending on what fits your needs. Let’s revise the different types of wallets to find out how they differ from each other.
Hot Storage Bitcoin Wallet
Hot wallets or hot storage wallets are the ones directly connected to the internet. You can access them the easiest, you only need an online connection. However, they hold the risk of online theft so you should be careful when choosing a hot Bitcoin wallet. The hot storage wallets are desktop, mobile, and web wallets.
You can install the desktop wallet for Bitcoin directly on your computer. The private keys on this type of Bitcoin wallet are stored on a hard drive, which means that you can access the wallet only on the computer it’s installed on.
The biggest advantage of this type of wallet for Bitcoin is that you’re the one controlling it – there’s no third party who can freeze your funds. However, this also means that it’s your own responsibility to protect it and if you end up losing your bitcoins, it’s on you.
With the web wallets, you can send, receive and store your bitcoins all on your web browser. This means you can use the wallet both on all of your devices that share a browser. Unlike desktop wallets, a provider here manages the security of the wallet as well as your private key. This means that you should do extensive research before choosing a web wallet because you’re trusting them with your bitcoin holdings.
Mobile Bitcoin wallets are apps that you can use on your smartphone to store your crypto. Among the three hot storage wallets, this type must be the easiest to navigate since you only need your phone to be compatible with the app. They are similar to desktop wallets in the way that you’re the one responsible for the backup of your device and the security.
Cold Storage Bitcoin Wallet
A cold storage Bitcoin wallet is not connected to the internet. The keys of this wallet are kept offline and used online only for the transaction process.
A hardware Bitcoin wallet is a device, created to store bitcoins. The most common way these wallets look is like USB flash drives. These wallets are less likely to suffer from malicious attacks than the hot storage ones because you only connect the device to your computer, and the internet, when you’re sending and receiving your bitcoins.
Paper Bitcoin Wallet
Paper wallets allow you to store your bitcoins completely offline. The way a paper Bitcoin wallet work is by allowing you to store your private keys on printed paper documents. The paper wallet also contains QR codes that you use to facilitate cryptocurrency transactions. They are similar to cold storage wallets but even more detached from the online space, meaning traders who worry about someone online stealing their bitcoins, can use the paper wallet to keep their crypto physically secure. However, if you lose the paper with the information, your bitcoins are also lost.
As you can see, there are advantages to all wallets, as well as they all carry their own risks. No matter what type of storage you choose for your bitcoins, you should always be careful with your private keys since they’re the password to your money and if you lose them, you lose your money as well.
Top Things to Consider Before Choosing a Bitcoin Wallet
Now that you know what are the types of wallets for Bitcoin, there are a few more things you need to consider when choosing a way to store your bitcoins.
- What do you look for in a wallet: Obviously, you first need to establish what features you want in your Bitcoin wallet. Do you want it to be fast? Then a hot wallet is your best choice. But if you want security over speed, you can opt for a cold Bitcoin wallet. You can have both a hot and a cold wallet and with time decide which one is most suitable for you and your bitcoins. You should also consider that hot wallets are usually free, unlike cold Bitcoin wallets, when choosing one.
- The wallet’s history and reviews: If you like a certain Bitcoin wallet but it has occurring issues with security and hacking, you may want to reconsider your decision. Learn what features the wallet you want offers but also get to know its reputation, how it responds to customers’ requests, and it how performed in the past. Check out online reviews of other traders who used it too. Everyone’s experience is different, but if the majority are saying the wallet is unreliable, you should take it into consideration.
- Does the Bitcoin wallet support backup for your coins: Some wallets allow you to backup your data, online or offline. This can secure your bitcoins if your computer crashes or your phone dies. If you don’t know how to back up the data yourself, you’ll want to find a Bitcoin wallet that does it for you.
- How many cryptocurrencies the wallet supports: Say you want to buy bitcoins now so you’re looking for a Bitcoin wallet. But consider will you want to expand your crypto portfolio by adding different digital assets in the future. If this is the case, then research if the wallet supports any other cryptocurrencies so you won’t have to get another one if you buy more cryptos later.
- Do you want to own a separate wallet: If you’re new to cryptocurrency and own a fraction of a bitcoin or you just don’t want to go through the hassle of owning a separate Bitcoin wallet, you can trust an exchange with a built-in wallet. Not all exchanges offer this option, but you can research them and find the best one for you.
What Are the Best 5 Bitcoin Wallets in 2022?
Considering the types of wallets and the factors to look for, here are some popular wallets you can check out when picking your best Bitcoin wallet.
- Ledger Nano X and S
Exodus is a desktop wallet that provides a mobile app, browser extension, and a hardware option. This means all types of users can benefit from the wallet. You can use this as a Bitcoin wallet as well to store over 180 different digital assets.
Ledger Nano X and Ledger Nano S are hardware Bitcoin wallets. They look like flash drives and you can connect them to your computer and check your bitcoins or other 1,800 cryptos. The difference between the X and S wallets is that the X is Bluetooth-enabled and holds more applications at a time, and naturally is more expensive than the S version.
Trezor is a hardware Bitcoin wallet that also supports more than 1,500 altcoins. You can use the device on both a computer and a smartphone and the company offers different models, depending on what specifics you’re looking for. Your bitcoins can be secured with the offline backup Tezor offers to avoid losses.
Electrum is one of the first bitcoin wallets, created shortly after the introduction of the first crypto. This is a hot wallet that also offers the option of offline storage. You should be careful though, as the site of the wallet warns that older versions of it are susceptible to phishing. To avoid any crypto scams, always update your hot wallets.
Mycelium is a Bitcoin wallet app for smartphones. It offers payments through QR codes, offline storage, and users’ control over private keys. The app is free to install but you may need to pay fees on the exchanges you use through it.
Bonus: Top Bitcoin Wallets Provided by Trading Platforms
As we’ve briefly mentioned, you may not need to get a separate Bitcoin wallet to store your coins, you can do it on some platforms. Here’s a list of some of the cryptocurrency trading platforms that provide wallets for their users:
How to Choose the Best Bitcoin Wallet in 2022
You should be very careful when choosing where to store your bitcoins. Picking the best Bitcoin wallet is essential for keeping your crypto safe and avoiding losses through theft or scams. We hope our article was a helpful guide for you to choose the best place to store your coins. Always be careful and remember – private keys are called private for a reason, don’t ever share them with anyone!