Best Bitcoin Wallet – which is the best bitcoin wallet
A Bitcoin wallet is a device or program that stores and manages a collection of private keys. It allows you to buy, sell and hold bitcoins. Bitcoin wallets can be custodial or non-custodial. Non-custodial wallets give owners access to their private keys, while custodial wallets do not grant users access to the private keys.
Bitcoins wallets are available in various forms and with different features. This article offers guidance for choosing the best wallet for you.
CONCEPT OF A BITCOIN WALLET
A Bitcoin wallet program operates using blockchain technology. These programs can function as apps on mobile and desktop devices and also as a hardware device.
The operation of a bitcoin wallet is similar to that of an email. Like emails, sending or receiving bitcoin requires an address that is unique to the receiver. This address is the bitcoin address and can be shared with anyone that wants to send bitcoins. Bitcoin addresses always start with “1” or “3”. Just like emails, bitcoin wallets also have passwords that owners should safely keep. This password is your private key and is chosen by the wallet.
The main function of the bitcoin wallet is to generate, store and handle a private key. A private key is a long string of letters and numbers used to generate the corresponding bitcoin address. It should be kept safe as whoever has access to this key controls the bitcoins attached to the key. It is best practice to store it on a flash drive or write it down on a piece of paper. With this, if the device housing the bitcoin wallet gets stolen or damaged, the coins can still be retrieved using a new wallet and the private key.
CATEGORIES OF BITCOIN WALLETS
Bitcoin wallets can be categorised under Custodial and Non-Custodial. As earlier mentioned, a non-custodial wallet gives the owner exclusive access to the private key, while a custodial wallet functions like regular accounts where the bank has more access to the customer’s money. Custodial wallets are highly risky as coins can be stolen, or the company can go bankrupt.
Another group of wallets that exist is Hierarchical Deterministic Wallets, HD Wallets. These wallets do not use private keys; rather, a set of common words (seed phrase) are generated to serve as the private key. With this, the chances of losing or forgetting your private key are reduced.
TYPES OF BITCOIN AND CRYPTOCURRENCY WALLETS
There are two specific wallet types: Cold Wallet and Hot Wallet.
Cold Wallet, also referred to as Cold Storage Wallet is a type of wallet that stores bitcoins offline, without using the internet. Offline storage protects the wallet from unauthorised access or hacking. All cold wallets are non-custodial wallets. Common examples of cold wallets are hardware wallets and paper wallets.
Cold Wallets are known to be the most secure way to store large amounts of cryptocurrencies.
Hardware wallets are offline devices that securely store private keys. A hardware wallet looks like a USB device and can be connected to the computer to send bitcoins. It is designed to protect the private key from malware. Some hardware wallets’ limitations are that they cost money and can be lost or damaged if mishandled.
Paper wallets are pieces of paper with a private key or seed printed on them. It is risky to handle paper wallets as they can easily be destroyed, misplaced, and become prone to human errors. It is advisable to keep multiple copies. Sending bitcoin to a paper wallet would require importing the private key to a digital wallet.
A hot wallet is any type of wallet that requires a connection to the internet. They can be found on a computer as a desktop wallet or mobile phone as mobile wallets.
Desktop wallets store private keys on the computer and are usually targets for internet hackers. Mobile wallets could be considered the least secure as the device can be misplaced or stolen. It is advised that every means of protecting the private key is utilised when using hot wallets.
While being considered the most convenient way to store cryptocurrency, they are not a good choice for storing large amounts of bitcoins.
Another form of hot wallets is web wallets. This type of wallet exists as exchange platforms, trading sites, etc. Bitcoins stored on these platforms are collected in these companies’ hot wallets. Web wallets are not secure because the wallets’ operators own the private key to all the bitcoins stored on their site. They are, however, convenient for the daily exchange and trading of cryptocurrencies.
THE BEST BITCOIN WALLET
The choice of the bitcoin wallet to use depends mostly on the needs of the user. Some questions to consider include:
- Do you need to save or invest your bitcoins?
- Will you use the wallet frequently?
- How many bitcoins are you buying?
- Is your privacy important?
- How careful are you with passwords?
- Are you willing to spend money to purchase a wallet?
Different wallets are available to solve various needs. Some are more security-focused, while others may be concerned with ease-of-use. A hardware wallet is most suitable for saving significant amounts of bitcoins, while a mobile wallet is more convenient for users with a small amount of bitcoin.
TOP BITCOIN HARDWARE WALLETS
Ledger wallets store digital coins offline. They offer users increased security. Transfer of bitcoins from the device is done by connecting it to a computer. This wallet supports multiple currencies and offers two varieties: Ledger Nano S and Ledger Nano X.
Trezor hardware wallet comes in two models- The Trezor One and Model T. It supports the storage of multiple currencies. This hardware wallet company offers ultra-security for your bitcoins and an easy-to-use design.
With a user-friendly and sleek design, KeepKey hardware wallet is a relatively secure hardware wallet. It is easy to set up and provides you with a PIN code and recovery seeds.
CoolWallet hardware wallet offers a secure and portable way of storing coins. It has a credit card design with a button on it. For maximum security, it requires proximity to your mobile app when carrying out transactions.
TOP BITCOIN DESKTOP WALLETS
Exodus is a desktop wallet with a simple user interface that allows you to store and manage multiple cryptocurrencies. It also offers options for trading on its platform.
This wallet is one of the best for beginners because of its simplicity.
Electrum is an open-source bitcoin wallet that offers users flexible usage options. Users can set custom transaction fees and can set the security level to use. It is suitable for more advanced crypto users.
Bitcoin Core is a full node desktop wallet that saves the bitcoin blockchain to the user’s computer. It is time-consuming and best suitable for advanced users.
Armory is a popular and highly-secure bitcoin wallet that is suitable for advanced bitcoin holders. It is also an open-source cold storage wallet and features many backup and encryption options.
TOP BITCOIN MOBILE WALLETS
Ledger Nano X
Ledger’s hardware wallet is one of the most secure options for storing cryptocurrencies on your mobile device. The wallet connects to the mobile app through BlueTooth.
This open-source mobile wallet supports multiple coins. It is beginner-friendly and highly secure while offering ways to buy discounted gift cards on its platform.
Coinomi wallet is secure and offers exchange options on its app. It is a privacy-focused cryptocurrency wallet.
BRD is an open-source bitcoin wallet. It is simple, secure and requires no registration on its platform to carry out transactions.
SECURING AND BACKING UP YOUR BITCOIN WALLET
Like your real-life wallet, bitcoin wallets also require safekeeping and proper handling.
Backing up your wallet protects you from malicious attacks and loss due to human error. It helps you recover your wallet even after experiencing loss or damage to your mobile device or computer. Use complex and unique passwords for your wallets, and ensure these passwords are easy to remember to avoid loss of funds.
For mobile and desktop wallets, it is recommended to only download open-source wallets with a large customer base and a good reputation as hackers sometimes develop wallet apps to steal from users. Also, carry only small amounts of funds in your mobile or desktop wallets as they are more susceptible to theft.
Hardware wallets should not be gotten from third-party sources but only from the manufacturer or authorised dealers. The device and not the manufacturer should generate the seed phrase for the hardware wallet tp avoid funds theft.
HANDLING TRANSACTION FEES
Every bitcoin transaction requires a transaction fee. The higher the transaction amount, the higher the fee required for processing. Also, the need for faster transactions by users tends to affect the transaction fee charged.
Some wallet offers users the option of setting up custom charges, while some don’t.
In my own opinion, Exodus is the most suitable desktop wallet for beginners; Edge provides more value to mobile users, while Ledger and Trezor have great features for users considering hardware wallets as a go-to. Lastly, the wallet’s compatibility with the cryptocurrency you intend on storing or trading is essential, as all wallets do not support some coins.