How to choose the best Bitcoin Wallet
Choosing the right wallet to use for Bitcoin depends on your technical skills and your needs. The most important function of a Bitcoin wallet is to secure the digital assets it contains. Bitcoin wallet does not really store the coins; rather, it saves your private key. A wallet is a program, a software that stores your unique private key, the tool that allows you to prove ownership of the coins. The best Bitcoin wallet is the one that has your private key stored securely and is best applicable to your everyday use or holding style.
Not your private key, not your coins.
Bitcoin wallets come in different designs. Primarily they are separated into hot and cold wallets. The basic distinction is that hot wallets are connected to the internet and cold wallets are external devices kept offline; the main difference is the manner in which the private key is stored. A hot wallet is the best fit if you need to access your bitcoins regularly, while a cold wallet is great for storing cryptocurrency assets safely. Best practices show you should have them both, using a hot wallet for smaller amounts and frequent transactions and cold storage designated for bigger volumes. The concept is similar to having a card you use daily and a savings account for rainy days.
Hot and cold wallets can be broken down further. Cold wallets are meant to be secure and more of a storage tool. That is why they exist in paper form, with a private key and public address printed out on a sheet of paper, or as a hardware wallet, an external device like Trezor, Ledger Nano S, etc. Paper wallets are considered less safe and less practical for everyday use. They are great for storing, if you print them out safely. The most-used option for a cold wallet today is a hardware wallet; these can be used frequently or for storing only, secured with passwords and pins that have to be physically entered on a device. Hot wallets, on the other hand, are built to be used often. They are the most common and as they are continuously online, they are at greater risk to malicious attackers.
Storing Bitcoin on hot wallet is riskyHot wallets are all desktop wallets, mobile wallets and web (online) wallets. Desktop and mobile wallets get downloaded and your private key gets stored on the device where you downloaded it. Desktop wallets should be handled securely and are available for Linux, macOS or Windows, and mobile wallets are available for Android and iOS. Meanwhile, web wallets are responsible for the majority of online exchanges. The most well-known desktop wallets are Bitcoin Core, Electrum, Wasabi, etc. and they differ in the amount of technical skill they require and by operating type: Full Node or SPV (lite client). Some of the desktop wallets also offer a mobile equivalent but this does not mean they are the same. Some examples of mobile wallets are Electrum, Mycelium, Copay, BRD, Jaxx, etc.
The purpose of your wallet is a personal interface to the Bitcoin network (so you can carry out tasks like sending and receiving Bitcoins). It is important to differentiate between wallets where you have complete control over your assets (non-custodial wallets) and wallets where a private key is stored with a third party (custodial wallets).
Always do your best to maintain a high level of security for your cryptocurrencies.
There is no unique answer to what is the best Bitcoin wallet. The details we’ve provided above are technically great, but each has its own advantages and disadvantages. You certainly cannot go wrong with a hardware wallet, but it might not be the most convenient, so you should consider a good hot wallet too. Hold multiple wallets, one hot and at least one cold. The best Bitcoin wallet depends on you and your purpose with using Bitcoins. The criteria on which you base your decision should be security and accessibility, and bear in mind to always choose a wallet where you are in control of your private keys. Below is a list of questions and answers to guide you in your decision.
- How often do you move your coins? If you are doing it daily, a hot wallet is exactly for this purpose, but if you have some cryptocurrency assets sitting on the side (holding), mix using your hot wallet with a cold wallet.
- Will you be using your wallet only for Bitcoin? Not all wallets are multiple cryptocurrency wallets. For example, hardware wallets are designed to store multiple private keys while a paper wallet for Bitcoin is meant only for Bitcoin.
- How tech-savvy are you? Some of the wallets require higher technical skills. Desktop wallets are normally more secure than mobile but less secure than hardware wallets. Hot wallets are more vulnerable than cold, as they are online and therefore under higher risk of phishing, DDOS, malware and server breaches.
- How much will it cost? The majority of hot wallets are free and hardware wallets should be bought from the manufacturer directly. The unwritten rule is: If you have more than your monthly average wage in Bitcoin, buy a hardware wallet.
Before you start using a Bitcoin wallet be sure to read about what Bitcoin is and how it works to ensure you have the appropriate amount of knowledge on how to securely exchange your acquired assets. Make sure you take all the right steps to secure your wallet and the funds in it. Never forget that it is your responsibility. Choose your wallet carefully and use good practices to protect your cryptocurrency assets.