Cryptocurrency can be a scary place for those just getting started with so much to learn and seemingly danger everywhere of doing something wrong, and losing your money. A new user is likely to have a lot of questions, such as what is the safest way to store Bitcoin? What Bitcoin wallet to use? What is the best free Bitcoin wallet? What is the best offline Bitcoin Wallet? What is the best hardware wallet? What is the best Bitcoin wallet for Android? How do I get a Bitcoin Wallet? In this article I will explain the different types of Bitcoin wallets and review some of the most popular wallets from each category, to help you identify the best BTC wallet for you and how to set up Bitcoin wallets.
What is a Bitcoin Wallet?
A Bitcoin wallet is a place where Bitcoin is stored; if you are still learning about this then think of it as somewhere you create Bitcoin accounts. Without going into too much detail, every Bitcoin address has a public and a private key. The best analogy for explaining this is probably that the public key is like a username and the private key is like a password. So the public key is what shows up on the blockchain (the database which shows every transaction in Bitcoin’s history, including the public key of the sender and the receiver), and the private key is the password needed to allow a user to move their funds around.
You may have heard some of the horror stories of individuals who have lost vast amounts of money in Bitcoin. This is because they no longer have access to their private keys (or someone else has gained access and moved their funds to themselves/someone else), so even though they may be able to see the Bitcoin in their account, they can no longer access it. This is why how to store Bitcoin and protect your private key is such an important issue.
There are three different types of Bitcoin wallets – paper, hardware, and hot.
Paper Bitcoin Wallets
Bitcoin Paper wallets are wallets where the private key is printed/copied onto a piece of paper and then kept safely by the wallet holder; these are probably the closest you can get to a physical Bitcoin wallet. Rather than print the private key directly most users of paper wallets now copy a 12 or 24-word seed phrase – the seed phrase is a series of random words which can be used to access the wallet and to create arguably the most secure Bitcoin wallet possible. This is safer than printing the private key directly as users can copy the seed phrase themselves via hand which prevents the printer storing/logging what has been printed for a hacker to use to access the wallet. Paper wallets are also probably the best anonymous Bitcoin wallets as you can create them without signing up for accounts and having complete AML/KYC forms.
Bitcoin hardware wallets are wallets that store your private keys on a piece of hardware, which you then typically need a pin to access. The wallets also typically encrypt your private key with a 12 or 24-word seed phrase (a random combination of words which is created for the user when they first start using the wallet), this means if you lose the physical wallet you can still access your funds with a new one. While the 24-word seed phrase hardware wallets are technically more secure than the 12-word, the 12-word seed phrase wallets are still so secure that it probably should not be something which puts a user off using a wallet. The hardware wallets are kept offline but then plug into a laptop/PC when you wish to move your funds, think of them like a Bitcoin USB wallet.
Advantages of Bitcoin Hardware Wallets
The main benefits of cryptocurrency hardware wallets are:
- They are immune to computer viruses.
- They are password protected so even if the physical hardware wallet is stolen, your Bitcoin and cryptocurrency cannot be moved or taken unless the thief also knows your pin.
- They allow users to store multiple cryptocurrencies, whereas a lot of Bitcoin wallets enable Bitcoin only, so users holding other cryptocurrencies would need to find separate wallets to store those.
- All transactions require confirmation, so users are more likely to pick up on typos or mistakes that could lead to them sending the wrong amount of funds or losing them entirely.
Disadvantages of Bitcoin Hardware Wallets
The main drawbacks of Bitcoin hardware wallets are:
- They can be expensive – the majority of crypto hardware wallets are $50/£50+, so any new cryptocurrency users with small holdings may find themselves spending more on their storage than the wallet is worth.
- If the firm which makes the hardware wallet does not find all the bugs/vulnerabilities, your wallet could be vulnerable without your realizing – especially if you do not choose good wallet brands and opt for more unknown wallets to save money.
Bitcoin Hardware Wallet Options
Ledger Nano S Review
The Ledger Nano S is one of the best wallet brands when it comes to hardware wallets. The Ledger Nano S has been on the scene for a while and in terms of sales is the best Bitcoin wallet 2017 and 2018, with over 1.4 million units sold worldwide. This is based on available information, as Trezor is owned by a private company and chooses not to disclose unit sales. Although there is an excellent chance the Ledger is the best cryptocurrency wallet 2017 in terms of sales, as otherwise, Trezor would probably be more likely to disclose figures. The Ledger Nano S supports over 1100 cryptocurrencies, which is huge considering there are only approximately 2100 cryptocurrencies per CoinMarketCap – that’s over 50% and includes the vast majority of the legitimate projects, making it the best coin wallet in terms of the sheer number of coins supported. As well as the security provided by a hardware wallet provided above, the Ledger wallet Bitcoin is made of stainless steel so is extremely durable to any potential physical damage, making it one of the best Bitcoin hardware wallets available.
Trezor One Review
The Trezor One is the main hardware crypto wallet competitor to the Ledger Nano S, with support for over 500 cryptocurrencies. This is less than the Ledger Nano S however for the majority of investors/holders should be enough, with most of the most prominent and most legitimate cryptocurrencies supported. It should be noted that the Trezor One is made of plastic whereas the Ledger Nano S is stainless steel, so is not quite as durable, but it is still one of the top cryptocurrency wallets.
The KeepKey is a newer Bitcoin hard wallet competitor to the Ledger and the Trezor, and offers support for fewer coins, with currently only support for 40+ coins, with the majority of these being ERC20 tokens. A lot of the larger cryptocurrencies are not included on the list of supported currencies, such as Monero, EOS and Stellar to name a few. For those who have moved from Coinbase to other exchanges such as Binance and are wanting to store all their coins/tokens on one wallet, the KeepKey is unlikely to be the best cryptocurrency wallet, just due to lack of support for most currencies. The KeepKey would probably be fine for investors who only have a few of the main cryptocurrencies and ERC20 tokens but should they want to start storing other coins they will then need to find another cryptocurrency hardware wallet.
Hot wallets are wallets that are connected to the internet (offline Bitcoin wallets), so when users keep their cryptocurrency on exchanges, those are hot wallets. When users keep their funds on exchanges, they rely on the exchange to keep the private keys safe or cover any losses if they are unable to. One of the main issues with hot wallets is because exchanges keep lots of users funds in the same wallets these create ‘honeypots’ for hackers and are targeted more frequently as a result, so any exchanges with inadequate security will likely see their users’ funds stolen. With a hot wallet, your funds can be taken or moved without your permission if the exchange itself is hacked. As opposed to hot wallets, a wallet that is not connected to the Internet is known as Bitcoin cold storage.
Advantages of Hot Wallets
The main reason people use hot wallets (besides laziness or lack of knowledge) is because they allow users to take advantage of changes in price more quickly, particularly traders. If there is a sudden price movement, a trader wants to capitalize on, being able to execute a trade soon because the funds are already on the exchange and do not need to be moved there first, can offset the potential security risks. If you are a trader using hot wallets you should still be careful not to keep too large a proportion of your funds on exchanges, or if you do keep them spread across multiple exchanges to decrease your risk of losing your entire portfolio if one exchange is hacked.
Disadvantages of Hot Wallets
The main disadvantage of hot wallets is the security risk, as a user could do everything right to protect their username and password and still see their funds stolen if an exchange is hacked. As many people say in cryptocurrency communities; not your keys, not your crypto.
Hot Wallet Options
As previously explained, hot wallets are wallets which are connected to the internet, and these can expose users to additional risk such as hacks, or if a user ends up with malware on their phone or computer such as a keyboard logger, a hacker may be able to access their funds that way.
It is relatively easy to figure out how to get a Bitcoin wallet, make sure you don’t click on any spammy/fake websites when downloading or accessing wallets (for example if you Google ‘create Bitcoin wallet’ or ‘setup Bitcoin wallet’ the first link may not be a reputable website). A good tip is to bookmark any online wallet you end up using. Once you have made sure you are on the correct site for your hot wallet of choice, it should be reasonably intuitive how to make a Bitcoin wallet, as the wallets generally have clear instructions on how to set up a Bitcoin wallet with them.
For careful internet users who are willing to offset some of the security of cold storage for the convenience of hot wallets, there are different hot wallets which can be used. While this is not a definitive hot Bitcoin wallets list (for example you may prefer a local Bitcoin wallet such as Local Bitcoins where you can buy and sell from people in your country, which is excellent in more oppressive countries such as Venezuela). Here are a few of the most respected online wallets for those who are unsure which Bitcoin wallet to use:
Best Online Bitcoin Wallets (Bitcoin Web Wallets)
GreenAddress Wallet Review
GreenAddress is a Bitcoin wallet for desktop and mobile. GreenAddress has a few more features than most standard Bitcoin wallets such as two-factor authentication and multi-signature. GreenAddress also creates new addresses for every incoming transaction and as such is more secure and private than the majority of wallets. – Although this is probably a feature that most people do not need. So if you are starting, you may be better with a more straightforward wallet until you get the hang of things and then switching to GreenAddress once you are more experienced.
Blockchain Wallet Review
Blockchain.info is one of the oldest Bitcoin wallets; one of the largest Bitcoin wallets, and one of the most popular Bitcoin wallets in the cryptocurrency industry, with over 33 million Bitcoin wallet downloads. The Blockchain Bitcoin wallet is one of the easiest to use wallets, so it is excellent for beginners. However, the customer service is not rated quite so highly which could be an issue if you run into any problems. It is worth noting Blockchain also offer one the best Bitcoin cash wallets as well as Bitcoin wallets.
Coinbase Wallet Review
For those of you looking at this thinking, is Coinbase a wallet, or even is Coinbase a Bitcoin wallet? Coinbase is an exchange where a lot of new users open Bitcoin accounts. However the Bitcoin wallet Coinbase does have a vault feature, which allows you to add a second email address to approve withdrawals. This means you have an extra level of security in the event your account is hacked. However as with any exchange if Coinbase itself is hacked your Coinbase wallet could be compromised even if you do have the vault feature, so storing your Bitcoin on exchanges is not recommended. Despite being an exchange, Coinbase is extremely easy to use so would be an excellent place to start for newer users who are unsure how to open a Bitcoin account.
Best Mobile Bitcoin Wallets
Android Bitcoin Wallets
Samourai Wallet Review
Samourai Wallet is a security-focused Bitcoin wallet for Android (with an iOS wallet in the works). The private Bitcoin wallet features a stealth mode, which hides the app on your phone until a pin code is entered; to prevent anyone who shouldn’t be on your phone from seeing it is there and potentially trying to steal your Bitcoin. Samurai Bitcoin Wallet Android also features support for Segwit. This is arguably the best digital wallet for those who place the highest value on their privacy when selecting a wallet.
Mycelium Wallet Review
Mycelium is a Bitcoin wallet online which offers multiple account types, including ‘watch only’ accounts, where users can store an address without a private key, and therefore watch and transactions going out of the account. Due to the multiple account types and features, Mycelium may not be the most advisable wallet for less experienced cryptocurrency users.
Bread Wallet Review
Bread Wallet is probably the Android (and iOS) wallet with the slickest, most attractive and most natural to use interface, which could make it the best wallet for newer users. Bread Wallet also works without any signup so does not collect any information from its users – for the more privacy oriented cryptocurrency enthusiasts this could be a big draw.
Edge Wallet Review
Edge Wallet is a wallet which supports not just Bitcoin but dozens of other altcoins too, which a lot of the top Bitcoin wallets do not do. The Edge Wallet also offers in-app purchasing and selling of cryptocurrencies, which could be very convenient for investors looking to buy and store multiple cryptocurrencies.
GreenBits Wallet Review
GreenBits is an easy to use wallet with good user experience and security (including 2-factor authentication). GreenBits is not as well known as some of the other wallets, and while most of the Google Play store reviews are positive, it does seem like it can be a bit buggy for some users.
Bitcoin Wallet Review (Schildbach Wallet)
The Schildbach Wallet was the first Bitcoin Wallet USA app (and worldwide) in the Android/Google Play store, which is why it is called Bitcoin Wallet. It is also known as the Schildbach Wallet after its creator Andreas Schildbach. The Bitcoin Wallet is great for beginners, especially those who want a little piece of Bitcoin history on their phone, with an easy to use interface. However, as the Schildbach Wallet was the first Android Wallet, a lot of the later wallets have added additional features and are as such more suitable for more experienced users.
Jaxx Wallet Review
Jaxx is an all in one wallet with great user experience, and arguably one of the best Bitcoin wallets for Android. It is designed as the only stop for cryptocurrency users and enthusiast so is accessible on Android, iOS, and desktop. Jaxx also includes news, market movements, portfolio tracking and support for multiple cryptocurrencies. Of the Android wallets reviewed here, Jaxx looks to be the best Bitcoin app in terms of all-around user experience, especially for newer investors interested in multiple cryptocurrencies, rather than just Bitcoin.
iOS and iPhone Bitcoin Wallets (Bitcoin Wallet iPhone)
Mycelium Wallet Review
Mycelium is a Bitcoin wallet, which offers multiple account types, including ‘watch only’ accounts, where users can store an address without a private key, and therefore watch and transactions going out of the account. Due to the multiple account types and features, Mycelium may not be the best iOS Bitcoin wallet for less experienced cryptocurrency users.
Bread Wallet Review
Bread Wallet is probably the Android (and iOS) wallet with the slickest, most attractive and most straightforward to use interface, which could make it the best Bitcoin wallet for iPhone for newer users. Bread Wallet also works without any signup so does not collect any information from its users – for the more privacy oriented cryptocurrency enthusiasts this could be a big draw.
Edge Wallet Review
Edge Bitcoin Wallet iOS is a wallet which supports not just Bitcoin but dozens of other altcoins too, which a lot of the better-known Bitcoin wallets do not do. The Edge Wallet also offers in-app purchasing and selling of cryptocurrencies, which could be very convenient for investors looking to buy and store multiple cryptocurrencies.
Jaxx Wallet Review
Jaxx is an all in one wallet with excellent user experience. It is designed as the only stop for cryptocurrency users and enthusiast so is accessible on Android, iOS, and desktop. Jaxx also includes news, market movements, portfolio tracking and support for multiple cryptocurrencies. Of the Android wallets reviewed here, Jaxx looks to be the one with the best all-around user experience. However, this could be at the expense of safety. There are a lot of articles questioning is Jaxx wallet safe. The conclusion, unfortunately, appears to be no due to the way the private keys are stored, as they are protected with a pin, which is relatively hackable. For more information, you may want to search is Jaxx safe, but it looks like Jaxx have made a conscious choice to prioritize usability over security.
Bitcoin Desktop Wallets
Electrum Wallet Review
The Electrum Bitcoin Wallet Mac/Windows has been around since 2011 so is one of the oldest Bitcoin wallets there is. In terms of features, Electrum is a reasonably simple wallet, as the user through plug-ins can add any additional features. This gives Electrum a more intuitive experience for less experienced users still learning how to use Bitcoin wallets, while keeping the option for additional features for more advanced users.
Exodus Wallet Review
What’s the Best Bitcoin Wallet for You?
Which is the best Bitcoin wallet app or the safest Bitcoin wallet depends on the individual user? If you are a trader you may want to keep a proportion of your portfolio in hot wallets, some newer users may not trust themselves enough with paper wallets, or may not have enough money invested to justify purchasing a hardware wallet over using a free Bitcoin wallet.
To conclude, whichever option you decide, you need to think about what are the best crypto wallets for your individual needs. What is the best Bitcoin wallet for someone else might not be right for you? For example, with a paper wallet, you might not be able to sleep at night knowing if your house burns down so do your private keys, or if an exchange gets hacked so do you. Although there are lots of different features to consider when deciding the best online wallets, for example, the Ledger Nano S is probably the best cold storage wallet out of the three reviewed, due to its durability and a wider range of supported cryptocurrencies.
There is no perfect solution, but for whichever type of wallet, you want to make sure you take all the necessary precautions and look at multiple solutions. Rather than just going with the first type of Android wallet you see in the Google Play store, or the first iOS wallet you see in the App Store (so make sure you read plenty of Bitcoin wallet reviews before downloading any). Deciding how you store your crypto is one of the most important decisions you will have to make. Especially if you have a large amount of your wealth invested in cryptocurrency, so make sure you get it right and do what is best for you when figuring out how to create a Bitcoin wallet, that could be the difference between selecting a good Bitcoin wallet and an excellent Bitcoin wallet.