If you are new to the world of cryptocurrencies and Bitcoin and you are wondering how to store your coins, then that’s the article you need to read. We will learn how to use a Bitcoin wallet, how they work, which are the different kinds of wallets and more.
In the article, we will analyze the most common type of Bitcoin wallet available in the market.
Table of Contents
What is a Bitcoin Wallet?
A Bitcoin wallet is a software program that allows you to store Bitcoin and/or other cryptocurrencies. There are different wallets and each of them has different characteristics. There are paper wallets, hardware wallets, desktop wallets and smartphone wallets.
Some of them have different layers of security and others are more useful to spend your cryptocurrencies.
There is no killer wallet that would be the best in the market. Nevertheless, the wallet that you will consider the best will depend on your necessities and needs. For example, if you just started with cryptocurrencies and you have a small amount of them, you will prefer smartphone wallets or to store your coins in cryptocurrency exchanges.
This type of Bitcoin wallet will not be as secure as hardware wallets. However, they will be very user-friendly for newcomers. This is why you should consider using them if you are just starting with Bitcoin.
If you are a wealthy individual with an important amount of Bitcoin, the best would be to store them in a hardware wallet. A hardware Bitcoin wallet is a physical device where you hold your private keys. This is the most secure and one of the best Bitcoin wallets you can have.
With a Bitcoin wallet, you are able to send, receive or store your currencies. It works in a similar way to other financial services. Think of it like being your own bank. You are in charge of your private keys (if you do not hold your funds in a custodial wallet). Custodial wallets include exchanges. That means that you are not the owner of your private keys. A third party is in control of your funds.
Mobile Wallets
Coinbase mobile Bitcoin wallet
This may be the first Bitcoin wallet that you can have. If you have a smartphone, you will feel very comfortable using them. In general, the most important feature of these wallets is its usability and portability. If you are a heavy cryptocurrency user and you want to spend your crypto in different shops, then this is one of the best wallets you can have.
You can access it very easily and it is portable. You just take it on your smartphone, everywhere you go. Like a real wallet.
A negative point of these kinds of wallets is that they are not so safe as hardware wallets. Due to the fact that your phone is in constant contact with the internet, it may be affected by a virus. This virus might be able to store your wallet information and steal your bitcoins (or another crypto).
If you prefer portability over security, this is a good choice for you. If you are a newcomer, this can be among the best Bitcoin wallets to start using. Furthermore, if you want to know how to create a Bitcoin wallet, this can be the right way to go.
Desktop Wallets
These are also popular cryptocurrency wallets. They are easy to use, as mobile wallets, and they give you the possibility to send, receive and store your cryptocurrencies from your computer. As the mobile wallet, this is not the safest way to store your cryptocurrencies, unless your device is not connected to the internet.
If the computer is affected by a virus or any malicious program, then the wallet is in danger and its funds can be stolen. Of course, you know how you use your computer, if you feel safe about it, then desktop wallets are very versatile.
Additionally, you can have a nice interface to manage your cryptocurrencies rather than a small screen on your smartphone. It is better for users that prefer to have everything on the computer rather than on the phone. This type of Bitcoin wallet is also very easy to use. If you consider your computer is free of virus, then this can be a great choice to store your BTC.
Hardware Wallets
White Trezor hardware Bitcoin wallet connected to a Macbook air and on a wooden table
These may be the safest option for individuals who want to store their coins very safely. These wallets are physic devices that store the private key of your coins. This is very important because the private key allows you to have control over the cryptocurrencies you hold.
These devices are similar to pen-drives that connect to your computer but they never share the information with it. The private key is always stored in the device. It is the safest way to store your cryptocurrencies because hackers do not have access to it and the owner of the wallet needs to physically hold the device to process a transaction.
If you have several cryptocurrencies, it would be the best option to have this wallet as the favourite option. If you do not plan to use your cryptocurrencies, then this is the right choice for you.
In recent months, however, Ledger and Trezor have been adding several features to their wallets. That means that if you hold virtual currencies, you might be able to access a wider range of services than before. If you want to know how to create a Bitcoin wallet, then these hardware Bitcoin wallets will also help you.
Other Cryptocurrency Platforms
Ledger Nano S Hardware Bitcoin Wallet
Traders, for example, hold their cryptocurrencies in cryptocurrency exchanges. This allows them to have access to their coins at any moment. But this is not the safest way to store your cryptocurrencies. Even when the different crypto exchanges have implemented different security layers, the truth is that several of them have suffered from hacks.
When that happens, cryptocurrencies are stolen and individuals lose most of their investments if not all. Furthermore, cryptocurrency exchanges may not refund investors after the attack.
Binance is among the largest cryptocurrency exchanges in the world. This platform will also work as a Bitcoin wallet. Holding your funds in an exchange could also be a good idea if you want to use other crypto services. If you are a trader, this would be the best option.
Coinbase is one of the most known platforms all over the world. There you can buy Bitcoin, Bitcoin Cash, Litecoin and Ethereum in just a few steps. If you want to know more about it, check this step by step guide. This can also help you if you don’t know how to set up a Bitcoin wallet.
Final Words About the Best Bitcoin Wallet
As we have written, there are many different wallets in the market. Most of them target a different kind of users. You can also have two different wallets or as much as you desire. You can leave some of your cryptocurrencies in an exchange and others in your hardware wallet.
At the end of the day, you are the one that decides where to keep your coins, how you protect them and which use you give to your wallet.
Images Provided by Coinbase, Trezor, Ledger Wallet.
Disclaimer: The information presented by www.CryptStorm.com and its writers is for informational purposes only. It should not be considered legal or financial advice. www.CryptStorm.com and its writers are not financial advisers. You should consult with a financial professional to determine what may be best for your individual needs.
www.CryptStorm.com and its writers do not make any guarantees or other promises as to any results that may be obtained from using their content. No one should make any investment decision without first consulting his or her own financial adviser and conducting his or her own research and due diligence.
Please always only invest within your means and do so responsibly.
