Bitcoin Wallets: What and how to use them
If you plan of buying, sending, or receiving Bitcoin, you need a wallet. It’s the only way you’ll be able to use Bitcoin!
The best way to think of a Bitcoin wallet is to look at it like a bank account. Sure, without a bank account you can have money – but you’ll find it a lot harder to make payment or receive money – and pretty much the only way to do things is using cash.
Now, Bitcoin wallets are made up from private keys – secure cryptographic codes, that allow you to securely spend your Bitcoin – and it’s actually these code that allow you to spend Bitcoin.
A Bitcoin Wallet is more the graphical user interface – the codes are what allows you to spend money.
In this comprehensive guide we’re going to take a look at what Bitcoin wallets are.. which are the best… and how you can begin using them.
Types of Bitcoin Wallet
There’s a few different types of Bitcoin wallet, and we’ll look at them – and their benefits and disadvantages below. We’ll also show you which wallets come recommended, for each of the wallet types.
A hardware wallet is a physical, electronic device, which is manufactured for the sole aim of actually storing bitcoins.
The reason why hardware wallets are so popular is that they must be connected to your computer, phone, or tablet before you’re able to spend the bitcoins held on it – and this means there’s no risk of being hacked.
What’s better, the keys to the bitcoins stored on the device are stored separately, in a non-digital document, and this means that even were you to plug the device into a computer infected with malware and viruses.. your bitcoins will still be safe.
Benefits of Hardware Wallets:
- Safest way to store bitcoins
- Easy to backup
- Ideal for those investing in Bitcoin, and those with large quantities
Best Hardware Wallets
One of the leading hardware wallets, the Nano S comes complete with a screen, giving you total control over your bitcoins, and it’s backed by Ledger – one of the biggest and most well-trusted Bitcoin-tech companies on the planet.
Perhaps the most well-known wallet, Trezor was first launched in 2014, and it’s become known as the “industry standard” for affordable, secure storage of bitcoins.
One of the newer hardware wallets, KeepKey was just the second to offer a screen, and this gives you additional two-factor-authentication to ensure your coins are super-secure.
Hot wallets are the most popular type of Bitcoin wallet, and these run on internet-connected devices like computers, laptops, or mobile devices.
In the same way that a hardware wallet does, hot wallets also generate a secure key – although it’s worth noting that it’s not actually considered a secure key, as they’re generated online, so you never know who has access.
A hot wallet is the type of Bitcoin wallet you’ll probably have used before, if you’ve bought or sold Bitcoin, and it’s an ideal way for beginners to get started, free.
Benefits of Hot Wallets
- Free to use
- Easiest way to begin spending and receiving Bitcoin
- Login across multiple devices
Best Hot Wallets
GreenAddress is a hot wallet that offers multi-sig transactions (the ability for form contracts etc), and it’s available on almost all devices, including desktop, Android, and iOS.
What’s more, GreenAddress is fully-compatible with hardware wallets like TREZOR, Ledger Nano, and the HW.1, and this is ideal for those wanting good cross-between from their hardware wallet to web wallet.
For those looking for additional privacy and security – but who don’t want to fork out cash to buy a hardware wallet – a desktop wallet is the perfect solution, and as the name suggests, this type of Bitcoin wallet is installed and stored on your personal computer.
Of course, this means you’ll need to download the Blockchain – which can take anywhere from a few hours, to a few days, dependant on its current size and the speed of your Internet Connection.
Remember to scan your computer regularly for malware and viruses if you take this option, and Bitcoin is becoming a common target for thieves, and you’ll want to ensure YOU don’t open yourself up to hacking.
Benefits of Desktop Wallets
- Ideal for those looking for privacy
- Easy to setup and install
- Can adjust transaction fees easily
Best Desktop Wallets
There’s pretty much only one name you’ll ever hear people say when it comes to desktop wallets, and that’s Electrum.
Electrum is a lightweight, open-source, and reliable Bitcoin wallet that works across Windows, Mac, and Linux devices, and it’s one of the oldest and most reputable names in the Blockchain-tech world, first founded back in November 2011.
One of the biggest benefits of using Electrum, is that you don’t actually need to download the Blockchain to your device to begin using it. You can also set varying transactional fees, and it’s fully-compatible with many of the hardware wallets we looked at earlier.
Android is a global community that’s made up from coders, developers, and entrepreneurs… and many of the “nerds” who work on Android projects also are involved with Bitcoin, Blockchain and Ethereum technology too.
This has thankfully lead to a number of popular Bitcoin wallets to become available on Android devices, and thanks to the way Android works, most of these apps are open-source, meaning the code of the app is all public – ensuring no foul play or back-doors are created by the developers to steal your coins.
Benefits of Android Wallets
- Easy and Quick to setup
- Free to use
- Secure and privacy-centred
Best Android Wallets
Mycelium is arguably the most popular Android-facing Bitcoin wallet, and it’s not hard to see why. Payment-sending is made incredibly easy, thanks to the one-touch-payment facility, and the app is completely open-source, allowing for full transparency and openness.
Originally built for iOS, Breadwallet is now available for Android users, and it offers you the ability to control your own private keys, along with offering a visually great experience. Geared towards intermediate/advanced users.
Airbitz is the less-well-known name on this list, but that’s probably going to change soon as more people realise the potential of the app. Airbitz is available on both iOS and Android devices, and it automatically backs up your wallets to your chosen storage space, meaning should anything ever happen to the app, or your device, you can recover your coins at a later date.
In 2014, Apple stunned the cryptocurrency communities by banning Bitcoin apps from its App Store… although later that year they went on to reverse their decision.
Today, there’s an abundance of apps available to download, and what’s great about iOS Bitcoin wallets is that many of them allow you to secure your wallet using the TouchID feature – meaning it’s very hard to anyone but you to get access to your bitcoins.
Benefits of iOS Wallets
- Use wherever you are
- Secure – fingerprint login ensures only you can access your wallet
- Free and easy to use
Best iOS Wallets
Like we saw above, Breadwallet is compatible with both Android an iOS, and the iOS app is particularly good-looking. It’s easy to use, it doesn’t use much processing speed, and the TouchID feature ensures no unwanted person ever can access your coins.
Another Android and iOS-friendly wallet, Airbitz is also well-suited for Apple users, and it’s familiar-looking login screen makes it very simple and easy for you to get access to your coins and start making transactions!
Which Wallet is Right For You?
If you’re just starting out, it’s probably best to begin with one of the hot wallets we discussed. These are completely free to setup, offer great security built-in, and will enable you to begin sending and receiving bitcoins in just a matter of minutes after you first set it up.
If you’re planning on dealing with a larger quantity of bitcoins, then you’ll probably want to take a look at one of the hardware wallets we talked about earlier on also. While the cost of these can vary up to as much as $400, for many, the investment is well-worth it, as hardware wallets are virtually impossible to hack.
The only way you could lose our money using ah ar5dware wallet is if you were to lose the wallet itself, lose the backup paper that comes with it, AND forget the secret passphrase. Pretty secure, right?
Don’t be afraid to take a look around and figure out what’s best for you. There’s no rush, and you can take as much, or as little time as you want.
And, of course – try different wallets! You don’t have to stay restricted to just one type of wallet, so sign up to a couple (using different passwords) and get a feel for what you prefer.