The bitcoin – and cryptocurrency overall – market is still at its early stage, and investing in cryptocurrencies must be done with caution. The cornerstone of any investment in cryptocurrency is security, and choosing a right wallet is likely to matter even more than selecting a right cryptocurrency exchange. Our article will provide you with insightful information about how to choose a wallet for cryptocurrencies (and especially bitcoin), as well as tips for securing a wallet with your funds.
Types of Bitcoin Wallets
When it comes to the question how to choose a wallet for cryptocurrencies, one is likely to seek the most secure and easy way of storing bitcoins and other cryptocurrencies. In the case of cryptocurrencies, however, the terms “easy” and “secure” seem to be contradictory – at the present time at least. Therefore, we highly recommend you to stay away from very convenient wallets (such as web or mobile wallets) or hold there the amount of money you can afford to lose. Any larger investments with such wallets are not recommended.
Our guide will help you to find out how to choose a wallet for cryptocurrencies in a right way
In order to give you a clue about how to ensure security of your bitcoin wallet, we provide this simple info you should remember: your private wallet keys are the thing that allows transactions with your bitcoins. The better those wallet keys are hidden, the lesser is the chance of your bitcoins (or another cryptocurrency) to be stolen. The descriptions of the most widespread wallets, published below, will help you to get to know how to choose a wallet for cryptocurrencies in a right way.
The name of this type of wallets is quite self-explanatory, as these are the wallets you can store on your mobile phone. There are several reasons that may prompt beginners to fall for such a type of wallets. First of all, any beginner can grasp how to use such wallets within a couple of minutes. Secondly, an ability to scan QR codes allow you to send your bitcoins within seconds. Such a convenience allows users to hold small amounts of bitcoins/cryptocurrencies in this kind of wallets, which enables them to send a portion of their funds quickly when it’s needed.
However, mobile wallets are considered to be among the most dangerous ones. Usually, wallet apps update on their own, without permission of the mobile phone owner. So if anyone hacks and infects a certain wallet app and reuploads it Google Play or iTunes, millions of wallets risk to be stolen. So when wondering about how to choose a wallet for cryptocurrencies, don’t fall for simplicity and convenience.
At the present time, these are the most popular mobile wallet apps:
- Mycelium Bitcoin Wallet. One of the best wallet apps that allows an integration with cold storage devices.
- Coinbase. A wallet app developed from the renowned cryptocurrency exchange.
- Copay. Copay is an ideal app for having more than 1 user with more than 1 private keys, as it provides you with fine flexibility and convenience of using multiple wallets, keys, or users.
- Airbitz. This app promises to provide the most secure wallet for bitcoins, claiming that neither the company itself nor any third party is able to access your data or personal information.
- Breadwallet. Even though this app doesn’t have that many features, its user-friendly interface makes it to be a perfect choice for beginners.
- GreenBits. This app is a mix of many wallets, combining strong privacy and security, multi-signature features, and user-friendly interface.
- Bitcoin Wallet. This is the first app to hold bitcoins that was developed by Bitcoin, and it features simple interface and design yet has very few features.
- Bitpay. An app that helps users to accept bitcoins for their enterprises, enabling them to spend bitcoins in dollars.
- Samourai Wallet. This newly developed app is claimed to feature the strongest privacy and security among all wallet apps in the market.
Web wallets are the wallets that are provided by exchanges or other services. Typically, all the largest exchanges (check the best places to get bitcoin) provide web wallets. Yet, it means that the private keys of yours are stored on the servers of a particular exchange. Considering that hackers tend to aim large exchanges for their attacks, it doesn’t appear to be surprising that such servers often get hacked. This makes storing your bitcoins in web wallets the least safe option.
Therefore, it is recommended not to hold large amounts of bitcoins or cryptocurrencies in web wallets. Before you decide to store your bitcoins in a web wallet, you must make sure that you trust this service or exchange. Storing small amounts of cryptocurrencies in web wallets allows you to make transactions fairly quickly.
Apart from the exchanges mentioned in the article “Best Places to Get Bitcoin,” the following services provide web wallets as well:
- The Standard Wallet from Coinbase. Popular among many customers thanks to its location in the United States. Doesn’t charge fees for sending bitcoins between users of the Coinbase standard wallets.
- The Vault Storage from Coinbase (aimed at advanced users). It is an extremely safe version of the previously mentioned wallet with additional features.
- GreenAddress. This is just another multi-signature wallet.
- SpectroCoin. This exchange offers a fairly convenient and user-friendly wallet.
- info. Based in Luxembourg, this service is popular thanks to the absence of a need of user verification and user-friendly interface.
Desktop wallets appear to be quite safer than web or mobile wallets, and they allow you to store pretty larger volumes of bitcoins or other cryptocurrencies. These wallets are installed right on your laptop or desktop PC. Though, Windows is considered the least safe operating system and it is recommended to install a wallet on a PC with Linux.
A couple of years ago, desktop wallets were considered to be the most secure ones. Not anymore. Yet, they stand as a relatively safe alternative to other types of wallets. Here, you can get desktop wallets:
- Exodus. This desktop wallet appears to be easy-to-use and features instant exchange between various cryptocurrencies.
- Electrum. This wallet appears to be the most popular desktop wallet nowadays, which is caused by its simplicity and user-friendly design. Advanced users can also take advantage of such features like cold storage or TOR.
- Bitcoin Armory. An old-tested desktop wallet, which tends to be very secure but also hard-to-understand for beginners.
- Bitcoin Core. This desktop wallet is a full node one, which means that it downloads the entire blockchain. Even though it tends to be the most private bitcoin wallet, expertise and a lot of patience are needed for setting it up.
If you are seeking the most secure wallets when looking for how to choose a wallet for bitcoins, paper wallets are something that you should consider. There are only two things needed to trust to: the software you are using for creating paper wallets and the location for storing it (such as a safe box at your home). It doesn’t tend to be very comfortable to use it if you carry out many transactions – you need to change a paper wallet every time you make a transaction. Yet, if you are going to save your funds in bitcoins this way, then a paper wallet is likely to be the best option for you.
These websites will help you in generating paper wallets:
- Guide to creating bitcoin paper wallet.
- Two client-side generators of paper wallets: Wallet Generator and BitAddress.
Hardware wallets are sophisticated systems of semi-cold bitcoin storage, which means that the bitcoins are stored mostly offline and the internet access is used only when carrying out bitcoin transactions. Even though hardware wallets are extremely safe, they must be purchased by you.
The most popular hardware bitcoin wallets include:
- Trezor. A pioneer in the world of hardware bitcoin wallets, which can be used with a number of apps, such as Multibit HD, Mycelium, and TREZOR Wallet.
- Ledger Nano S. This hardware wallet features OLED interface, backup seed recovery, and a flash drive.
- KeepKey. It is just an alternative to the above mentioned wallets, but it’s much larger in size and twice more expensive.
This is the final type of wallets in our “How to Choose a Wallet for Cryptocurrencies” article. Multi-signature wallets require more than one signature in order to make a transaction, which provides an extra layer of security. It works as the following: in order to carry out a transaction, you need to sign a transaction in the first place, which later must be signed by another person. Neither that person, nor you can make a transaction with only one signature.
Multi-signature wallets can be different:
- Armory, Bitcoin Core, or Electrum desktop wallets.
- GreenAddress, Copay, CoinKite, and Blocktrail mobile wallets.
- Coinbase and Carbon Wallet web wallets.
This table will eventually give you more insight on how to choose a wallet for cryptocurrencies:
|Type of wallets||Convenience||How Difficult to Use||Safety||Price|
|Mobile||Extremely convenient||Easy||Not safe||Free|
|Web||Extremely convenient||Easy||Not safe||Free|
|Paper||Not convenient||Difficult||Extremely safe||Free or a small fee|
|Hardware||Average||Average||Extremely safe||From 70 to 450 USD|
|Multi-signature||From average to not convenient||Difficult||From safe to extremely safe||Free|
With the help of this table, you are able to gain a better understanding of how to choose a wallet for cryptocurrencies and which type of wallets is more secure.
How to Choose a Wallet for Cryptocurrencies: Hot vs Cold
The terms “hot wallets”and “cold wallets” refer to whether a wallet has the internet connection. Even though it tends to be easier to send money with a hot wallet – i.e. the one that has access to the internet connection – it is much easier for hackers to gain access to your data if they find a vulnerability. Mobile, web, and partly desktop wallets are considered to be hot wallets.
Cold wallets are the ones that store private keys offline, and this type of wallets includes hardware wallets and paper wallets. While some cold wallets allow you to send bitcoins while remaining completely offline, other wallets require to get connected to the devices. It tends to be much more difficult for hackers to gain access to the private keys, stored in cold wallets.
As you could notice, it doesn’t appear to be easy to find out how to choose a wallet for cryptocurrencies
There is also a term “warm wallets,” which means that those wallets are basically offline wallets, yet they require connection to the internet in order to carry out transactions.
Recommendations for Keeping Bitcoin Wallets Safe
These recommendations put an end to this “How to Choose a Wallet for Cryptocurrencies” article and they will help you to ensure that your wallets are safe enough:
- Always have at least several separate wallets.
- Favor cold storage over hot one, especially when it’s going about large sums.
- Don’t use public Wi-Fi networks for accessing your account or carrying out transactions.
- Be aware of phishing scams via the Google Ads and don’t click on the company’s web addresses in the ads.
- Take advantage of 2-factor authentication.
- Disable auto updates.
- Check the address you are sending the funds to at least twice.
- Make sure you are having an SSL connection, if you are using a web wallet.