When you start searching for Bitcoin Wallet on google, the first web page will immediately show you tons of different wallets: cold wallets, hot wallets, exchanges, web extensions, paper wallets, nodes and more… You need to find your way somehow to interact with cryptocurrency. Given the diversity, the only question that remains is how to choose Bitcoin wallet that you really need?
Let’s take a look at the main aspects of cryptocurrency wallets and pick the best one for HODLing your BTC in it.
There are plenty of options to store your Bitcoin in it. Let’s take a look on the different types of cryptocurrency wallets.
Hot Wallets, the most popular for users. Works as websites which provide you with a service for funds management, exchange, buy crypto and cryptocurrency trading.
Examples: Coinbase, Bittrex, Binance, BitPay and others…
You can restore your funds and have access to them at anytime. Support exchange options and buy crypto with a card.
Centralized. You don’t have access to your private keys. Your funds are stored on the server and a company controls them. KYC/AML is required in the most cases for registration. You need to keep your email protected from hackers.
Cold Wallets, work as a software application that allows you to sign transactions and store funds offline with low risks of hacking.
Examples: Paper Wallets, Bitcoin Core, etc.
No internet required. You can store your BTC on the hard drive, USB device, on a piece of paper, etc.
Well-protected (no online thefts). No special application/device required. Free.
Not convenient to use it to send funds to other addresses or use it on a daily basis.
Hardware Wallets, represent a special USB device that stores your funds offline on it and can sign transactions to send them to other addresses. They usually have an additional software application allowing you to manage your cryptos and sign transactions. Basically, it’s the same thing as regular cold wallets, except for that your private keys are encrypted in a hardware wallet.
Examples: Trezor, Ledger.
You control your funds. Well secured. Convenient to everyday use. May support exchange and other services.
High price against completely free light wallet applications.
Light Wallets, are desktop / mobile applications that are not necessary require access to the internet and provide many options to manage different cryptocurrencies. They can also support different services (exchange options, buy crypto, trading desks and more). In general, light wallets are non-custodial and keep your private keys on your device. This allows to use light wallets as a cold storage.
Examples: Atomic Wallet, Exodus, JAXX, Electroneum.
You can handle different cryptocurrencies in one application.Provides you a full access to your funds. In the most cases your addresses are generated from seed phrase. Often supports additional functions as Exchange or Buy Crypto. In the most cases provide a friendly UI.
You need to take care of your seed phrase. (To store it safely)
1. Security. Wallet security means the way your funds are protected from frauds and hacking, how you manage private keys and what security technologies a particular wallet supports.
Let’s compare hot and cold wallets in terms of security.
In hot wallets, you don’t have access to your private keys, as those are stored on the servers of that wallet providers. Accounts on exchanges like Binance or Coinbase are considered to be hot. Although, some of them don’t expose you to a high risk of hacking, the best practice is to store your bitcoins in small amounts. Basically, the security depends on your personal trust level to such services. Some of them proved their security through years, some of them don’t. For example:
In cold wallets, your fully control your private keys. Each time you send / receive money, the wallet assigns your transaction to broadcast it to the blockchain. Some of the wallets support MultiSig (when several approvals are required for transaction processing).
2. Accessibility. This feature implies simplicity in use and the ability to withdraw your funds from the wallet. A friendly user interface is a vital point for new users. When choosing a bitcoin wallet, pay attention to its interface and the amounts you are able to operate with. Some wallets allow to withdraw funds only partially. It concerns mostly custodial exchange accounts.
3. Functionality. If you want to choose a good BTC wallet, check it for multi-services support, ability to exchange cryptocurrency/ buy bitcoin and other crypto with a bank-card/paypal, and etc.) In some wallets, like Atomic or Exodus, it’s possible to exchange your funds right in the application without visiting third party websites.
4. Customer Support. This is a very important feature. Good customer care is a sign of a good product. How fast will the support team help you, if you have any troubles? Crypto market is too volatile to wait days/weeks someone to fix the issue. The 24/7 customer support is the best practice.