After reading this article, you will have a better understanding of what a crypto wallet (or a bitcoin wallet) is, what kind of crypto wallets we know, how these bitcoin wallets are different from each other and what the best bitcoin wallet for your needs is.
Basic Question: What Is a Bitcoin Wallet?
A Bitcoin wallet (or a crypto wallet) will store your private key. With this private key, you can access your cryptocurrencies and use them for your needs (purchase, sell, transactions).
Imagine that it works similarly to your bank account. The bitcoin wallet does not physically store your cryptocurrencies, but instead, it protects the access to your currency on the web. Which are the most popular cryptocurrencies?
It is very important to reiterate that a crypto wallet doesn’t store your coins. It stores the private keys required to spend those coins. The coins, which are in the form of unspent transaction output, exist only on the blockchain.
Tip: There are many different types of crypto wallets, each with its own weaknesses and advantages. They can be categorized into mobile, hardware, desktop and third-party (online bitcoin account) wallets. The latter often have an additional function and they serve as exchange offices, so think carefully about what your actual needs are. Learn more about these crypto wallet groups here.
How to Secure My Cryptocurrencies in a Bitcoin Wallet?
All crypto wallets can be categorized into two main types: a hot wallet and a cold wallet. A crypto wallet that is connected to the Internet, is called a “hot wallet”. When a crypto wallet is offline or not connected to the Internet, it is called a “cold wallet”.
Cold wallets are generally more secure, therefore it is recommended to store large quantities of your digital coins in cold wallets. A hot wallet is more suitable for frequent access to your assets, as is the case with day trading.
Tip: As an example of good practice, use a cold wallet for long-term safekeeping of your cryptocurrencies, and a hot wallet for regular use and trading.
If you are interested in purchasing cryptocurrencies, you can use Kriptomat. A regulated and licensed platform which is fast, safe and easy to use.
How to Choose the Best Bitcoin Wallet for Your Cryptos?
|Wallet type||Easy to use?||Safety||Privacy||Accessible on||Price||Total score|
|Cold Wallet||Yes||Very good||Good||Sold out||96%|
|Varies||No||Adequate / Good||Good||Free||86%|
|Cold Wallet||No||Good||Good||Sold out||82%|
|Hot Wallet||No, steep learning curve||Satisfactory||Good||Free||85%|
Comparison of the Best Bitcoin Wallets, How to Use Them, and How Many Currencies They Support
- Download the Chrome plug-in from the web.
- Use the supplied USB cable to connect your Ledger to your computer.
- Select your PIN code (you need it for each use) and securely store your master code (seed)!!! If you lose your seed, or if it gets stolen, you will lose your funds.
- Your wallet is ready to use. You now have access to your cryptocurrency and can send or receive bitcoin.
- For more information, you can also watch this instructive video on how to set up the popular Ledger Nano S.
- Ledger supports more than 20 popular cryptocurrencies!
- Download and install the Trezor plug-in.
- Use the supplied USB cable to connect your Trezor to your computer.
- Install the software and follow the instructions.
- Once installed, select the PIN number and securely store your master code (seed)!!!
- Your wallet is ready to use.
- For more information, you can also watch this short instructional video.
- Trezor supports more than 10 popular cryptocurrencies.
- Download the MyCelium application on your mobile phone.
- Create a new wallet. Now you have access to your public address and your QR code.
- Under “Settings” you can change the desired currency, change the PIN code and securely store your master code (seed)!!!.
- Your wallet is ready to use.
- For more information, you can watch this short instructional video.
- In conjunction with Trezor, MyCelium supports more than 10 popular cryptocurrencies.
- Download the Chrome plugin for the wallet.
- When you click on a plug-in, connect your KeepKey to your computer via a USB cable.
- Select and confirm the PIN code and securely store your master code (seed)!!!
- Your wallet is ready to use.
- KeepKey supports more than 5 popular cryptocurrencies.
- Download the Armory app from their homepage to your computer.
- Create a new wallet.
- Select the desired password and securely store your master code (seed)!!!
- Armory will now synchronize with all transactions on the Armory Network, which may take several hours. During this time, you can already send or receive bitcoins.
- Because the Armory wallet is more complex, they offer a lot of informative footage on their website.
- Armory only supports Bitcoin.
- Download the Coinomi app to your mobile device.
- Create a new wallet.
- Follow the instructions and Make a backup copy of the master code and follow the instructions.
- Once you choose a wallet password and which currency you want to use, you can start sending and receiving.
- This short video will give you more information if needed.
- Coinomi supports more than 50 popular cryptocurrencies.
- Download the Xapo application to your mobile phone (you can create your account with your Facebook or Gmail account.)
- Follow the instructions and choose your PIN number and password.
- For the final step, the application also requires you to do a selfie as an additional security step.
- For more information, see the short clip.
- Xapo only supports Bitcoin.
- On their home page, open a new account with your email address and password.
- Select a username and confirm the received email.
- Once you enter the security code (you get the code after registering), you can start sending and receiving cryptocurrency from your bitcoin address.
- It only supports Bitcoin.
- CoolWallet works with every device that has a Bluetooth.
- With Bluetooth enabled, connect your phone or computer to your CoolWallet.
- Enter the number shown on your CoolWallet and open a new account.
- Write down a backup of this number and verify the data through the application.
- Your account can now be accessed and you can start receiving and sending cryptocurrencies.
- For more information, watch this short video.
- CoolWallet only supports Bitcoin.
- First, enter a strong password for your crypto wallet and download the file to your computer.
- When you start the wallet, you can back up your private key and select how you want to access your wallet.
- After you select how you plan to access your wallet, you can access your wallet-account and start sending and receiving cryptocurrencies.
- For more information, check out this informative footage.
- MyEtherWallet supports more than 50 different cryptocurrencies.
- Download the Jaxx application from their site and run the wallet application.
- Create a new wallet, where you can choose the advanced installation (select the desired cryptocurrencies) and which fiat currency you plan to use.
- Securely store your master code (seed)!!!
- Jaxx supports more than 50 different cryptocurrencies.
- Download the software from the Electrum site and run it.
- Create a new wallet and securely store your master code (seed)!!!
- Re-enter the backup copy and select the password for your wallet.
- You can now receive and send your cryptocurrency.
- For more information, you can watch this short video.
- Electrum only supports Bitcoin
Tip: Before choosing your crypto wallet, explore your options. Do you prefer to use a computer or your smartphone? Do you buy long-term, or will you trade often?
Crypto Wallets – Pay Attention To …
The most important thing to understand about the security of your crypto wallet (and your cryptocurrencies) is the understanding that the private key gives you complete access to your credit.
Take care of your private key and never store it in a text file on your computer!!! Write it down (or memorize it) and keep it somewhere safe and private. Don’t share its location with anyone you don’t fully trust with your finances.
If anyone else can somehow get access to your private key, your cryptocurrencies will almost certainly get stolen.
Tip: You can also print or copy a private key on a sheet of paper, on a USB stick, or any other media that is not connected to the Internet. As long as you have your private key, you can access your bitcoin wallet and your cryptocurrencies.
Crypto Wallets – Where to Start?
In the beginning, your wallet will be empty, so you will first have to buy some cryptocurrencies. You can simply transfer some fiat to the exchange of your choice and start purchasing cryptocurrencies. Those can then be sent to and stored on your private wallet.
Check out our blog on how and where to buy cryptocurrencies.
Below you will find a basic description of different forms of crypto wallets, along with their potential strengths and weaknesses.
Hot and cold wallets (as mentioned above) are divided into additional categories:
1. Mobile Bitcoin Wallets
Most of us use our mobile phones for daily tasks, so crypto wallets are adapted to your smartphone and therefore very convenient. Blockchain and Mycelium are available on Android and iOS. For Blackberry, Bitcoin wallet is one of the few options available.
One of the advantages with mobile wallets is the ability to use QR codes for direct payments.
2. Desktop Bitcoin Wallets
The desktop wallet is designed to be transferred and used on both laptops and stationary computers. It gives us easy access and usability even when your computer is not directly connected to the Internet. Desktop wallets are available for different operating systems – Windows, Mac OS, and Ubuntu. One of the more popular desktop wallets is currently Armory, mainly because of its security features.
Others include Multibit, mSIGNA and Hive.
The disadvantage is that they require a steeper learning curve as they are often intended primarily for those with a higher degree of technical knowledge. These wallets are generally not suitable for beginners.
3. Web-Based Bitcoin Wallets
Accessible by companies, who offer a crypto wallet service (like MyEtherWallet). A crypto wallet on these platforms is accessible exclusively via internet browsers.
The potential danger or disadvantage of the online wallet is that — sometimes — third parties are responsible for maintaining privacy and protecting your wallet’s private keys.
4. Paper Wallets for Your Digital Currency
Paper wallets can safely store your cryptocurrencies in physical form an extended period of time. In other words, there is no risk of any hardware failure.
Keep in mind: if your hardware malfunctions, you can still access your coins if you keep your private key. Therefore it is advisable to store your hardware wallet (like the Ledger Nano S) and your private key in separate locations.
To create a physical paper wallet, you can use a site like Blockchain.info or Bitaddress.org. Once you create it, you simply print this wallet on the sheet of paper.
5. Bitcoin Client
Bitcoin client is the original Bitcoin wallet.
The first Bitcoin wallet created is BitcoinQt. Many people believe that this client was also used by Satoshi Nakamoto. With this client, you play an important role in the general state of the network. The second — and the more advanced — client is Electrum.
Use: Suitable for more advanced users. Transfer the crypto wallet to your computer and follow the instructions.
6. Digital Hardware Wallet
Trezor and Ledger, both portable physical wallets, are steadily increasing in popularity.
Hardware wallets are very small USB devices, whose first task is to safely store your cryptocurrencies. Developers of these physical wallets use the most advanced cryptography and constantly monitor performance and improve it with regular software updates.
At the end of the day, it is the responsibility of the owner to ensure the security of his data.
Now that we know more about the crypto wallets and how to use them, let’s see how we can buy cryptocurrencies.
What are your thoughts? Write your comments below!
The text is of informative nature and does not apply as a recommendation for an investment. It does not express a personal opinion of the author or service. Any investment or trading is risky, past returns are not a guarantee for future returns – risk only those assets that you can afford to lose.