To safely store your bitcoins you will need a wallet. A bitcoin wallet is a program that allows you to send , receive and store bitcoin. There are many types of wallets and in order to choose the best one for your needs there are many factors to take into account. In this guide we'll cover everything you need to know about bitcoin wallets and also compare the best bitcoin wallets around.
Bitcoin Wallets: Quick Summary
A bitcoin wallet is a program or a device that stores your private keys and allows you to interact with bitcoin blockchain via sending and receiving Bitcoins. It’s important to known that a physical bitcoin wallet such as Ledger is always a much safer wallet than an application wallet on your mobile or desktop.
Top wallets from each category:
What is a Bitcoin Wallet?
Bitcoin wallet is a program for sending, receiving and storing bitcoins. Bitcoin wallet programs are available for desktop, mobile phones, and as a standalone piece of hardware (safest wallet). To explain this better, Bitcoin wallet is works similarly to how email works. In order to receive and send emails, you need a program such as Outlook or Gmail. Just Like emails, for receiving Bitcoins you need a unique address.
This unique address is called Bitcoin address, and—just like your email address—you can share it with anyone who wants to send you bitcoins. So now you have the address but you also need a password which is called private key. Private key acts like a password to your email and is randomly chosen. Never share your private key with anyone. It is best to keep your private key offline, meaning you should not store it on your computer or phone. Best practise is to have a secure hardware wallet such as a Ledger wallet which is disconnected from the internet and therefore cannot be broken into.
What is a Private Key?
A private key is a long string of characters that acts as the password to your cryptocurrency wallet. Your wallet uses private key to understand when you want to send your bitcoins to someone else. Remember the person who knows your private keys has control over your coins. Private key is also used to generate your Bitcoin address however there’s no way to find out what the private key is just by examining a Bitcoin address.
The core function of a wallet is to create, store and use of the private key. In simple words it automates Bitcoins cryptography and blockchain interactions for you. The wallet itself is not that important and the private key is the only thing that matters. Let's just say you have a bitcoin wallet on your smartphone and you lose the phone but you've written down your private key somewhere on a piece of paper, well all you need to do is,
- download a new wallet or get a physical wallet
- import the private key
- regain control of your bitcoins
Bitcoin Wallet Types
There are 2 types of wallets - Cold Storage & hot wallets.
Type 1: Cold Wallets (Safe & Secure)
Cold storage (cold wallets) refers to a wallet detached from an Internet connection and therefore it cannot be hacked remotely by attackers. Great examples of cold storage wallets are hardware wallets and paper wallets.
Hardware wallets are physical devices in the form of flash drive that connect to your computer in order to send, receive and check your bitcoin balance. Hardware wallets are not connected to the internet and therefore they cannot be hacked. Ledger is the most secure and affordable hardware wallet currently available.
Hardware wallets are built to keep your private key secure and you can even use these on an unknown or hacked public computer and your bitcoins will be safe. In order to send your bitcoins to someone else using a hardware wallet you'll have to plug it in to a computer and then launch the software to control your wallet. Hardware wallets offer a perfect balance of security and ease of use.
A paper wallet is a piece of paper where your private key or seed phase is written. Paper wallets are very secure however it is very easy to lose a paper wallet and you wont have anymore access to your funds. In order to send funds from a paper wallet you'll need to insert your private key into a desktop/mobile wallet or use a hardware wallet such as ledger for more security.
Type 2: Hot Wallets: (Convenient but Unsafe)
A hot wallet simply means that your Bitcoin wallet is connected to the internet in some way. This can be a wallet that is installed on your computer , on your phone or a web service such as an exchange. Hot wallets are the most popular type of wallet however they are also least secure because they can be easily hacked via internet connection.
This is a wallet installed on your computer and your private keys are stored on your computer too. You computer must be kept clean of malware and viruses for your bitcoins to be safe. We all know this is hard to accomplish and even the safest computers get broken into.
This is a wallet installed on your phone and your private keys are kept on your phone which is also connected to the internet therefore you bitcoins are never safe. We do not recommend storing a large sum of bitcoins on mobile or desktop wallets.
This is an online wallet for example your wallet on an exchange or a betting site. These type of wallets are the least secure because the owners of these websites own your private key and are always targeted by hackers.
The Best Bitcoin Wallet?
Our number one Bitcoin wallet is the Ledger hardware wallet, it is the number 1 most secure wallet for storing BTC & other cryptos. Get it straight from the manufacturer below.