Bitcoin is one of the most popular cryptocurrencies and often the first currency that comes to mind when people think about crypto. Bitcoin investors use electronic wallets that allow you to store, receive, manage and send their Bitcoin securely. A wallet is essential since a wallet address is needed to trade and transfer cryptocurrency.
As an investor, you have a wide variety of Bitcoin wallet types and options to choose from. To help you determine the best wallet for your needs, we have put together this guide, introducing you to the most popular Bitcoin wallets, how they work and how they stack up against each other in terms of cost, security, and other features.
What is a Bitcoin wallet?
A Bitcoin wallet can be a physical device or program that enables you to store your Bitcoin’s private keys which are needed to sign Bitcoin transactions and send or receive Bitcoin. This is important in terms of security, since anyone in possession of your Bitcoin’s private keys can control the coins associated with them. Wallets come with multiple security measures, including password protection, to prevent others from accessing your data and currency. At the same time they allow you to manage your investments and transactions.
Types of Bitcoin Wallets
A hardware wallet is a physical device, typically of small dimensions, that stores Bitcoin offline. In cold storage wallets, bitcoin is stored in a wallet that isn’t connected to the Internet which prevents remote access from external sources. Being offline, Bitcoin cold wallets greatly reduce the number of possible attacks and security breaches.
Software wallets are divided into custodial and non-custodial wallets. Custodial wallets are used on the web, allowing the digital wallet service to keep your private keys and backup your assets. This type of wallet conveniently allows you to restore access to your wallet in case your phone or computer is damaged or your passwords are lost, since your account is backed up.
On the other hand, non-custodial wallets are installed locally on your computer or mobile device, giving you complete control over your private keys. In this case no third-parties have access to your Bitcoin; however, you are also fully responsible for not losing your private keys and protecting your investment.
Let’s take a look at some of the wallet types that fall under the “software wallet” category:
Desktop wallets store your Bitcoin private keys in software that is installed directly on your computer. The security of your Bitcoin, in this case, correlates with the security status of your desktop. As long as your computer is malware free and has strong security measures in place, your Bitcoin will be protected from threat.
Mobile wallets store your Bitcoin private keys on software running on your mobile devices. This type of Bitcoin wallet is extremely convenient since it allows you to access your Bitcoin, trade and complete transactions anywhere anytime. However, keep in mind that since phones are at frequent risk of being lost, stolen or damaged, security can be a concern. Additionally, phones can also be affected by hackers, malware and viruses. It is always recommended to password protect and backup your mobile Bitcoin wallet.
Web wallets run completely online and are considered custodial wallets, since they are managed by a third-party. The major advantage offered by web Bitcoin wallets is their accessibility, since you can access your Bitcoin from any device with internet connectivity, even if you are on the go.
Best Bitcoin Wallet
Trezor Model T
Trezor Model T is Trezor’s latest hardware wallet device, offering support for additional coins as well as a better user interface with a color touch-screen. Well known for its extensive security features, this is one of the best hardware wallets on the market to store your Bitcoin offline. Additionally, your device can be plugged into your computer where you can manage your cryptocurrency from a desktop app. You can purchase this hard wallet for $195.
Exodus is a free software wallet created for desktop (runnin on Mac, Windows and Linux computers) with a mobile app available for both iOS and Android users. While your bitcoin is stored online, Exodus users have exclusive access to their investments which can only be accessed using a private key. Additionally, this wallet integrates with hardware wallets allowing you to benefit from offline storage. The Exodus wallet allows you not only to store bitcoin, but also exchange it directly from their software.
Mycelium is a mobile Bitcoin wallet which is free for Bitcoin storage and haswia built-in exchange offering customizable transaction fees.. in terms of security, your Mycelium wallet can only be accessed with your exclusive private key and PIN.Additionally, Mycelium works with hardware wallets, giving you the advantage of offline storage for your coins, while still benefiting from their mobile interface for management.
When it comes to Bitcoin wallets, Electrum is one of the oldest options on the market. While not very beginner-friendly due to its more complex user interface, Electrum is a very safe way to store your Bitcoin.Running on desktop, Electrum provides encryption for Private keys and also gives you the option to store your Bitcoin keys offline while keeping track of your investment online with a watch-only wallet.
Best Bitcoin Wallet: The Verdict
Overall, the best Bitcoin wallet will depend on your priorities. For those concerned with security, cold wallets or hardware wallets are the gold standard, offering you the most protection and giving you the most control over your assets. However, these devices can be more complicated to use when completing transactions and place greater responsibility on you as a user. On the other hand, wallets running online reduce the responsibility of backing up and protecting your assets yourself and give you greater accessibility to your funds. However, in the case of custodial wallets, it comes at the cost of having a third-party as the keeper of your private keys.