Which Bitcoin Wallet Is The Best?

Whether you’re planning on mining cryptocurrency, purchasing it, or getting into cryptocurrency trading, the first thing you need to get your hands on is a Bitcoin wallet.

They are an absolute must for anyone involved in the cryptocurrency business, since without one, you’re not able to send, receive, or store Bitcoins.

You won’t actually be storing the coins in the wallets, but rather the private keys associated with particular Bitcoins, which provide access to your funds. The coins themselves are stored on the blockchain.

Each Bitcoin wallet comes with the minimum of two keys – the public key which lets you transfer to and receive Bitcoins from another user, and a private key that gives the wallet holder the right to use those coins.

Since the private key provides access to every coin associated with that wallet, it’s imperative to keep it as secure as possible. There are various types of Bitcoin wallets, with varying degrees of security.

This blog post will give you an overview of each one, so you can make an informed decision and pick the one that best suits your needs.

Hot & Cold Wallets

The primary classification of wallets is based on whether they’re connected to the internet. Wallets directly connected to the internet are often referred to as ‘hot’ wallets, whereas the term ‘cold’ implies that the wallet is offline or disconnected from the internet.

‘Cold’ wallets are generally considered a more secure option, since they don’t run the risk of being hacked or affected by malware. ‘Hot’ wallets have their own benefits as well, such as providing quick and easy access to funds, and are suitable for people who make frequent transactions.

An unspoken rule is to use the ‘cold’ wallets to store a larger amount of Bitcoins for an extended period of time, and ‘hot’ ones if you’re planning to access your account regularly.

Software Wallets

You can think of software wallets as applications designed to be used on a laptop or a personal computer. The user of a software wallet has complete control over the application and their private keys.

They are relatively easy to obtain, since all you need to do is find the wallet you wish to use, download and install it.

Bitcoin Core, the original Bitcoin client, comes with a built-in software wallet, which allows you to create a Bitcoin address, and can be used to send and receive the currency, and store your personal key.

Nowadays, the most popular among software wallets is certainly the Bitcoin Armory, due to its cold-storage and multi-signature support, which provides first-rate stability and security.

Multibit might be another option to consider, especially since it doesn’t require you to download the complete blockchain before installing, and runs on both Windows, Mac OSX, and Linux.

Those that are more concerned about anonymity, might want to give DarkWallet a try. This software uses a browser plug-in to provide additional security measures such as “coin mixing”, to make transaction considerably harder to track.

Keep in mind that a software wallet is only as secure as your PC/laptop. Given the fact that hackers are constantly attacking more and more Bitcoin wallet holders, this may not be the safest option.

Mobile wallets

Very similar in function to software wallets, mobile wallets add another layer of convenience, allowing you to access your funds on the go.

They run as an app on your smartphone, enabling you to perform payments in Bitcoins directly from your phone.

One thing to note about mobile wallets is that they are not full Bitcoin clients. A full client typically downloads the entire blockchain, which is several Gigabytes in size, and constantly growing.

Most phones would have trouble support this much data… Instead, mobile wallets are often designed with simplified payment verification (SPV) in mind.

They only download a small subset of the blockchain, and rely on other, trusted nodes in the Bitcoin network to ensure that they have the right information.

So, if you want to make quick and easy payments on the go, with just your mobile phone, we recommend breadwallet for iOS, and MYCELIUM for Android. They’re both very intuitive and simple to use.

Online Wallets

Web-based wallets fall into the ‘hot’ wallet category, and offer great functionality, since they are stored on a server, don’t require a download, and can be accessed from any of your devices.

At the same time, they are subject to a cyber-attack, and are generally considered less secure than ‘cold’ wallets.

Another drawback is the fact that, if they aren’t set up correctly, the wallet can mistakenly put the party that provides the service, in charge of your private keys, relieving you of control over the coins.

Typically not the best option for long-term holding, they can (and do) provide great convenience when it comes to more frequent transactions.

Here’s are a few we know are secure and safe to use:

Blockchain is a popular open-sourced hybrid wallet that puts the focus on your private key security.

Coinbase is another great online wallet, which supports integration with your bank account and credit/debit card, and allows users in US and Europe to conveniently purchase Bitcoin through its exchange service.

A few more worth checking out are Circle, Strongcoin, and Xapo.

Physical wallets

Although it might be counter-intuitive to store a digital currency in a physical wallet, paper wallets are actually quite good for holding a substantial amount of Bitcoins in long storage, for extended periods of time.

To generate a paper wallet, you will need to use sites such as Bitaddress.org or Blockchain.info. You can simply print them out on a piece of paper, and safely store them in your deposit box, or keep them on your person at all times.

The problem with this is that you’re kind of committed to a long-term investment. It’s not recommended to uses paper wallets if you’re planning on trading your coins or exchanging them for a different currency in the near future, since they’re by far the hardest one to access.

Hardware wallets

The newest addition to the Bitcoin wallet family, hardware wallets are quickly growing in popularity among users, and for a good reason too!

They are physical devices designed to generate Bitcoin private keys offline, meaning that no one else can access your private keys without your device.

Furthermore, the manufacturers focus on security, employing top-grade cryptography and malware protection, keeping your private keys safely locked behind a PIN code.

They are essentially USB devices which combine the best of both worlds, giving you the convenience of mobile wallets, while maintaining (and even surpassing) the security of offline wallets.

They keep private keys separate from internet connected devices, and are maintained in a secure offline environment.

Pioneered by Ledger Wallet, the hardware wallets are quickly taking over as the best Bitcoin wallet type currently available on the market.

Which one would you choose and why? Let us know in the comments below.

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