First decide whether you need an online wallet, an offline wallet, or both. Then you can consider specific wallets. Wallet types are mainly about security and convenience: online wallets are more suitable for daily use but aren’t very secure…
There are two critical steps to finding a Bitcoin wallet that is right for you. First, you need to decide what sort of crypto wallet you need, and then you consider specific wallets to find the best one for you.
Bitcoin wallets differ by security, convenience, coin support, level of privacy and anonymity, user interface, customer support, fees, built-in services, and other variables.
The most common distinction between Bitcoin wallets is whether they are cold or hot. Cold wallets refer to offline storage, while hot wallets are connected to the internet most of the time.
The online wallets are more suitable for daily use but aren’t secure, while offline wallets are less convenient for frequent use yet are more secure.
However, the distinction between the Bitcoin wallets doesn’t end there.
Five main types of Bitcoin wallets
There are five sorts of Bitcoin wallets that you can choose from: hardware, desktop, mobile, web, and paper wallets.
Hardware wallets. These are Bitcoin wallets that store your private keys on devices like USB sticks. Hardware wallets are mostly cold and very secure, but they also cost a bit of money, so it’s recommended to get one only if you plan to store over $1000 value in crypto assets for a long time.
Popular hardware Bitcoin wallets include devices by:
- Ledger
- Trezor
- KeepKey
- BitLox
Desktop wallets. Desktop wallets are installed on personal computers or laptops. If the device is constantly connected to the internet, they classify as hot. Generally, they are regarded as secure, yet they are vulnerable to various malware and computer viruses.
- Electrum
- Jaxx
- Exodus
- Wasabi Wallet
Mobile wallets. Mobile wallets, like desktop ones, are software wallets. Unlike desktop Bitcoin wallets though, they are significantly smaller and simpler. They serve as a convenient on-the-go wallet for daily usage.
- Jaxx
- Breadwallet
- Exodus
- Electrum
- SamouraiWallet
- MyCelium
Web wallets. These are online wallets that are considered less secure than other types of wallets, yet they can be highly convenient. Web wallets include browser plugins, website wallets, exchange wallets, and others. When it comes to the security of web wallets, it is not recommended to keep substantial amounts of Bitcoin there.
Popular web wallets include:
- Coinbase
- Guarda
- GreenAddress
- Binance
- Xapo
- Rahakott
Paper wallets. Paper wallets are generally classified as cold storage. The term “paper wallet” generally refers to a physical copy or paper print of your public and private keys. Other times it means software used to generate a pair of keys along with a digital file for printing. Whichever the case, paper wallets can grant you a relatively high level of security. You can use Bitcoin Paper Wallet Generator to generate a paper wallet for Bitcoin.
The main risk that comes with Bitcoin paper wallet is that it may not be durable enough, so you should consider its storage conditions before making one.
What kind of Bitcoin wallet do I need?
Look for an online Bitcoin wallet (aka “hot”) that’s web-based and runs as an app on your phone (one can find a bitcoin wallet for Android and a bitcoin wallet for iOS) or a program on your computer if:
– You only need to store a small amount of bitcoin, which wouldn’t be too painful to lose;
– You’re looking for good user experience;
– You can only afford a free wallet;
– You’re not concerned about privacy;
– You want web access to it from a mobile device or computer;
– You trust a third party to safeguard your wallet;
– You need to share the wallet with someone else.
Consider an offline (aka “cold”) Bitcoin wallet for storage (e.g., paper bitcoin wallet or hardware bitcoin wallet), if:
– You need to store a large amount of bitcoin and security is a top priority;
– You don’t need to use it often or access it anytime, anywhere;
– You prefer to safeguard your funds yourself rather than trust a third party;
– You’re ready to pay for hardware (typically from about 50 to a couple of hundred dollars);
– Privacy is very important to you.
You can, however, use both types of wallets: a cold one for storing bitcoins, and a hot one for spending them.
How to evaluate a specific Bitcoin wallet
Ask these questions to evaluate a specific Bitcoin wallet properly:
– Does it only support Bitcoin or can it store other cryptocurrencies as well?
– If it’s a web wallet, does the address begin with HTTPS? That offers greater security than an HTTP wallet.
– How secure is authentication? Does it provide two-factor authentication (username and password plus some piece of information only you have)?
– Does it have a multi-signature feature (if you want to use a wallet with multiple owners)?
– Is the wallet “hierarchical deterministic” (HD), meaning it will always use a new Bitcoin address to receive payments and so enhance the security of your money?
– How transparent is the wallet provider? Do you know who they are?
– Has the company behind the wallet published the wallet’s code and is it open source?
– Is the wallet simple to use?
– Is there a way to back up the wallet?
– What does the community have to say about the wallet? Check forums like Bitcoin Reddit or Bitcoin Forum.
– For a hardware wallet, what do you think about its design, user interface, manufacturer reputation, and price?
– Are there any fees that you will have to pay for the provided services? If so, what are they?
Note that this information is only for general educational purposes. You should always carefully consider the latest available information when choosing a wallet.
You might also find the official website of the Bitcoin Foundation Bitcoin.org to be of help. It provides a list of wallets to choose from. Also, don’t forget whether a wallet supports your country – if you are looking for a bitcoin wallet in India, make sure it’s on the list of supported countries.
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