Most new investors who have made their first Bitcoin purchases struggle to find the best wallet to store their cryptocurrency assets. Guess, why? There are hundreds of bitcoin wallets available online, although not all of them are up-to-date, or even comply with all the security standards. Of course, you can simply leave cryptocurrency in the service you bought it. But it’s not a secret that such services are a major target for hackers. Just think about the cyberattack that happened to the Mt Gox exchange in 2013 when 850,000 bitcoin were stolen.
Today, one of the most secure ways to protect your assets is to store them in a digital wallet. That’s why it’s essential to understand how this technology works and what are the most popular bitcoin wallets. Here we are also sharing tips for choosing a bitcoin wallet.
Types of bitcoin wallets and how do they work
You can hold your digital assets and operate within a convenient interface of a cryptocurrency wallet that helps you to interact with the rest of the network. Everything is on track there: your current balance, as well as how much, where, and when you spent or earned.
Bitcoin wallets are similar to the safety deposit boxes that can store certificates, jewelry, or money. Losing keys to your safety box might lead to undesired outcomes. Luckily, with the advent of new technologies, there is no need to use this old-school method anymore. Instead of physical keys, the most popular bitcoin wallets use private digital keys. It allows you to protect assets appropriately and authorize transfers from your wallet.
A large number of bitcoin wallets have different formats, let’s check the most popular of them. If you want to invest in bitcoins that require long-term storage, then offline wallets can be a safer option. They include desktop, paper, and hardware wallets. On the contrary, if you plan to use them every day, you would prefer convenient mobile and online wallets. Let’s take a look at different kinds of digital wallets.
Hardware bitcoin wallets
Hardware wallets are secure offline devices aimed to provide an additional layer of security to your assets. They can’t be hacked because they operate offline.
Here’s how they work. Hardware wallets have a secure chip inside. It means that to send your bitcoins, you should connect them to a computer. There is no need to enter your private key there. A simple pin code input is enough for the hardware wallet.
In case something happened to your hardware (e.g. it’s broken or lost), you can quickly restore access to the assets on a new device. Usually, you’re provided with the ‘seed words’ that allow you to access your hardware wallet. Commonly, they look like random words. Big investors keep their hardware wallets in secure places, like bank deposit boxes.
As a drawback, hardware wallets aren’t free. Actually, it is the most secure online bitcoin wallet that’s why it has the highest price. Their costs range from $50 to $300. The price is worth it only if you have a significant number of bitcoins. That’s why they are not very popular, so there are just a few really famous models. Let’s check those!
Ledger Nano S
The Ledger Nano S is the cheapest and the most used bitcoin wallet among solutions created by Ledger Nano. It costs only 79€. The first version was released in August 2016. It is actually a compact USB device with a smart card. It has a screen so you can access your bitcoins even without connecting it to a computer. Although the software has fewer features as the models below.
Trezor
The Trezor hardware wallet was launched in 2013. It allows storing different currencies, such as Bitcoin, Litecoin, and Ether. It has a suite of advanced features, like passwords management and extra-safety properties that are considered to be the strongest. In combination with excellent user-friendliness, Trezor has become the most popular model. As usual with hardware wallets, its cost ($99) makes it worth only for those who own large amounts of currency.
KeepKey
KeepKey is a secure bitcoin hardware wallet that was released in 2015. It has more advanced features than hardware wallets mentioned above. It is an excellent choice for the already experienced user. Due to the high level of security, digital screen, and metal body costs $99. It has a larger size than Trezor and Ledger Nano S. It supports many currencies and is protected against both physical and digital theft due to top-notch security properties.
Desktop bitcoin wallets
Desktop wallets are just a type of software wallet that are based on computer software, so you need to run them only on your laptop or desktop. There are different formats of software wallets. Some of them are designed for only one currency. However, most of the best desktop bitcoin wallets can store multiple currencies. A few of them can only be downloaded while others require having a connection to the network.
The most famous of them are desktop, mobile and online wallets. Desktop wallets are software installed on your PC or laptop that stores your currency locally. It helps generate and keep private keys and bitcoin addresses and, of course, provides an opportunity to receive and send bitcoin payments. No third party interfaces are involved.
However, you need to be cautious. If your computer is hacked you might lose all your digital assets. That’s why a significant number of users prefer “cold” storages that imply using computers without access to the internet.
Also, desktop wallets are not so convenient in the case if you need to pay on the go. Especially now, when most users prefer mobile solutions. It is where mobile wallets stand out. Let’s see the examples of desktop wallets.
Bitcoin Core
This one is considered to be the most popular bitcoin wallet for desktop. It has a full pack of features that you might need. The core node that is attached to it gives all the control into your hands through a graphical user interface (GUI). Bitcoin Core creates a perfect balance between access and power.
Electrum
Electrum is easy to use, works at high speed, has robust security, and exceptional stability. These peculiarities make it probably the most popular desktop wallet. It has many cool features, like cold storage opportunity, integration with hardware wallets, connecting through Tor, etc. You can easily set transaction fees, create invoices, and much more. It is the best bitcoin wallet for Android. However, the interface is quite complicated that’s why it might be not the best match for beginners.
Exodus
Exodus offers to store different cryptocurrencies and has a built-in exchange feature. It’s one of its most tangible advantages. It allows exchanging currencies fast and efficiently.
Copay
There are both desktop and mobile versions available. Copay can only store bitcoin. Multiple users can access a single wallet. Copay has gained extreme popularity thanks to the high-security level and ease of use even for beginners.
Jaxx
Jaxx is another multi-platform (desktop & mobile) free wallet that can store lots of cryptocurrencies and provide an exchange between them within a few touches of the button.
Mobile bitcoin wallets
Mobile wallets usually look like mobile apps. The primary advantage is that they let you handle bitcoin transactions on the go. However, it is the least secure wallet due to a whole mobile phone security level.
There are two formats of funds storage: locally on your phone or by giving them access to your online storage. The first format is as safe as desktop wallets, the second one has almost the same safety level as online wallets.
Coinbase
Coinbase is considered to be the best iOS bitcoin wallet. It has a delightful and clean design. By the way, it offers the same online exchange properties as the Coinbase web version.
Breadwallet
It has a minimalist design and doesn’t require extra charges for making transactions. You don’t have to be a bitcoin guru to use it since it’s very user-friendly. Breadwallet stands out among the other mobile wallets thanks to its slick implementation.
Mycelium
Mycelium is a visually pleasing solution like Electrum and supports your Trezor wallet right from your phone. A micro USB to USB adapter is enough to transfer your assets to your phone. This is what distinguishes Mycelium from the other Android mobile wallets.
Online bitcoin wallets
Online wallets are web-based wallets. It means that they can be accessed from anywhere and linked to desktop or mobile wallets. It makes them the most convenient ones. Of course, nothing is perfect, and its biggest disadvantage is storing your private keys by the website owners.
GreenAddress
It is a bitcoin wallet that works on the web, desktop, Android, and iOS. It is compatible with the most famous hardware wallets. It requires a manual signature every time a transaction performed. Your coins won’t move anywhere without it. It provides better security.
Paper bitcoin wallets
It is the simplest bitcoin wallet. It is just a printed piece of paper that contains a cryptocurrency address and private key that can be accessed with a QR code. This is another form of cold storage. It is not connected to the internet, so it’s almost impossible to hack it. Not to mention, its cost in comparison to other forms of cold storage.
On the other hand, it is much harder to set up and use than software wallets. In case you lose your paper wallet without a backup copy being made, you won’t be able to restore access to your funds. It is not convenient for everyday use.
Bitcoin Paper Wallet
It is an absolutely free space where you can create private and public keys in order to store your bitcoins. You can use your home printer to print out your paper wallet. As a result, you will receive a certificate containing a QR code with all the keys.
How Bitcoin Wallet Apps Work
With the Bitcoin wallet apps, you can generate and store private keys to access different Bitcoin accounts.
Cryptocurrency wallets interact with blockchain and enable transactions between two parties. Such wallets do not store currency, they set up cryptographic keys. There are two types of keys: public and private. If you want to receive funds, you should share your public key. Private keys are kept in privacy and used only to sign transactions.
Most Bitcoin wallets are secured with a random twelve-word mnemonic seed phrase linked to your keys. You should store these words in a safe place where no one can reach them. Never store them digitally or take a photo of them. Also, we recommend not to store all the coins in one digital wallet. Try to use multiple wallets and combine offline cold storage with online wallets for more safety.
Here’s how the most popular Bitcoin wallet apps work:
- Set up a wallet
Before making a transaction, two parties need to set up a specific type of cryptocurrency wallet
- Enter the wallet address
A party making a transaction should input the receiver's wallet address and enter the amount of crypto to send, as well as the public key.
- Proceed to the mining process
During the mining, a transaction is verified and added to the latest block of the cryptocurrency’s blockchain
- Get the funds
After the block is added to the blockchain, a receiver will see cryptocurrency coins in their wallet
Also, there are wallets that have a QR code that you can scan, select an amount, enter the key, enter the amount of money to send, and make a transaction.
Conclusion
The popularity of bitcoin is gaining momentum today. However, there is the number one question still concerning all bitcoin owners: how to store them securely? There are many ways to do it, but digital wallets are the best of them. You can use one of the solutions already available on the market or create your own bitcoin wallet. In this article, we have considered the best bitcoin wallets and described how they work.
At S-PRO, we take software security very seriously when delivering products for our clients and understand your anxiety toward it very well. With deep technical expertise in creating digital wallets, our team can help you develop your own solution or just answer all your questions about it. Don’t hesitate to contact our experts to discuss it!
You can choose any method; just be sure to make and keep backups in a safe location!
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