Which Bitcoin Wallet Should You Choose?

To store and spend bitcoins, you need a bitcoin wallet. Strictly speaking, bitcoins themselves are not stored anywhere, and the task of the wallet is to store digital keys that provide access to the bitcoin address and the ability to sign transactions. Remember that cryptocurrency transactions cannot be reversed, so if you plan to deal with electronic coins, you need to have a secure bitcoin wallet.

What kind of bitcoin wallets are there?

Storage methods can be different: from a sheet of paper with a key written on it to modern applications. The safety of digital money depends on how thoughtful your choice will be. If you lose or accidentally delete the private key, you will not be able to restore access to the wallet. This is why good bitcoin wallets offer backup and reliable data protection.

Types of wallets

The whole variety of wallets can be combined into several main types:

• wallets for PC
• for mobile devices
• hardware
• paper wallets
• online wallets

With the growing popularity of cryptocurrencies, bitcoin wallets have become available on all common operating systems: OS, Windows, Windows Phone, Linux, iOS, Android.

Best Bitcoin Wallets

Desktop wallets are special software that needs to be installed on a PC. Such programs are good because they offer the highest level of security. This type of wallet can be inconvenient if you plan on actively spending bitcoins away from home. There are two types of desktop wallets:

• “Thin”
• “Thick”

To work with a “thin” one does not require a powerful computer; for operations, third-party services are used. “Thick” downloads and stores the entire blockchain on a PC. Blockchain is a kind of journal that contains records of all transactions. It will take up a lot of disk space, and working with a wallet will require high system performance. Such desktop wallets as Bitcoin Core, YouHodler, Multibit, Armory, Electrum, Copay, Mycelium are popular.

Bitcoin Core is the first original wallet created that is considered official for the Bitcoin currency system. It was created by the same company that pioneered the emergence of cryptocurrency. He can not only make transactions, but also create bitcoin addresses. Among the shortcomings, it is worth noting the slow operation and the lack of some useful functions.

The Armory client allows you to expand the standard functionality of Bitcoin Core. The wallet offers users three modes:

• standard;
• advanced;
• for experts.

Security is ensured, among other things, through the use of an on-screen keyboard and transactions without a network connection.

Multibit client belongs to “thin”. It is compatible with Windows, Linux and Mac OS. The program interface is Russified. The application makes it possible to simultaneously manage several wallets. The functionality allows you to accept and send coins, view the balance and history of transactions.

Electrum is considered the best among thin wallets. It provides secure storage of data and allows you to recover your wallet after losing your password. When the user installs the program and selects the server, he is presented with a twelve-word phrase called “seed”. Thanks to this phrase, the wallet will not be irretrievably lost in the event of a computer breakdown or key loss. Versions of the program are created for all operating systems and are supported by mobile devices.

Copay is convenient to use due to the fact that the service is supported by all popular platforms. Nice design and clear interface simplifies work. You can back up your wallet.

Mobile wallets are handy if you want to pay with Bitcoin in real life. To get such a wallet, install a special application on your smartphone. If the application supports wireless data transfer, payment can be made simply by touching the device to the reader. In the app store you can find many wallets: Blockchain, BitcoinWallet, BitWallet, BreadWallet, Coinbase, HiveWallet Circle, Xapo, but the most popular of them is Mycelium.

Mycelium does not require downloading the entire blockchain to work, which allows you to save free space on your smartphone. Another feature is the high speed of work and connections. In addition to standard options, the application offers convenient additional options: QR scanner, address book, creating encrypted backup files. The wallet interacts with many payment systems and exchanges: Cashila, Coinapult and others.

Bitcoin Wallet is a simple and reliable wallet for Android devices. No centralized service is required to conduct transactions. Many convenient functions: payment by QR-code, displaying the balance immediately in the selected real currency, saving used addresses.

Web wallets store keys not on the user’s computer, but on a remote server. Access is over the network, so you can use bitcoins from any device available to you. There is a risk that the company that controls the servers will get hold of the customers’ bitcoins. The most popular online wallets are:

• Considered the most reliable blockchain, over 2,000,000 people use it. The service has a mobile application, its interface is translated into Russian.
• Coinbase gives you the ability to buy and sell coins directly.
• BitGo is distinguished by a high level of security and requires two signatures to complete an operation.
• Coinkite offers to pay with bitcoins for mobile communications, they can also be sent by SMS or e-mail.
• Xapo combines the security of server storage with easy access to data.

Hardware wallets are special devices for storing keys. They resemble a flash drive and connect to a USB connector.

There are several types of hardware wallets:

• DigitalBitbox;
• KeepKey;
• Trezor;
• Ledger Nano.

Each of them has a high cost, but guarantees the safety of data. Their advantage is that the keys are stored encrypted without access to the Internet. To use them, you need to enter a pin code. If the device breaks or the user loses it, access to the wallet can be restored using a password. This reliable and proven method of storing cryptocurrencies is often used for storing large amounts of money when security needs to be given special attention.

Selection criteria and how to choose a wallet

The main thing that is required from an electronic wallet is to securely store your data. When choosing a suitable way of storing data, think about how often you will use the wallet where you plan to pay: only on the Internet or pay for goods and services offline. In addition, several factors affect the safety of data.

Transaction control method

• You are solely responsible for the safety of funds.
• A third party confirmation is required for the transaction.
• A third party service is responsible for security, but you have access to funds.

Code transparency

• Does not provide a 100% security guarantee.
• Open source, any developer can check the security.
• Remote application. Security depends on the service from which the data is downloaded.

Check

• Takes little time and may be unsafe.
• Downloading the entire blockchain takes a long time and requires a lot of free disk space, but should provide more security.
• Centralized – carried out using special services.

Environment security

• Typical for desktop wallets.
• Most often these are mobile applications that store data in an isolated memory segment.

Anonymity level

• Information about your transactions is sent to other nodes, Tor cannot be used for confidentiality.
• You can use Tor, your data will not be sent to other nodes.

The summary table shows the main characteristics of the most popular wallets. To make it easier for you to make a choice.

Nuances and possible problems

With all the convenience and high level of security, users may encounter a number of problems:

• The wallet does not have reliable protection against theft.
• Changing the password does not guarantee security, because you can get access with the old password using a backup;
• Tt is possible to calculate the IP address from which the transaction was carried out;
• The possibility of hacker attacks;
• System errors.

Another important nuance: bitcoins are not banned, but not yet legalized in Russia. A bill is currently being considered that could streamline the purchase and sale of cryptocurrencies, but as of today, the government and financial institutions do not regulate their circulation.

Security measures

The security of a bitcoin wallet should be taken care of no less than the safety of a real wallet. It is the user’s responsibility to store the keys to access the coins. There are several ways to secure your e-wallet funds.

Use a complex password containing letters, numbers, and symbols, at least 16 characters long. A strong password can be generated using special programs. Take care not to forget or lose your password. Long sequences of characters are difficult to remember, so keep them written down in a safe place.

Encrypt your wallet. You can encrypt your wallet or smartphone using special services. This will protect the funds in the event that a stranger tries to remove them. This method will not protect against the actions of intruders who, using keyloggers, can track what characters you type on the keyboard.

Beware of online services. They are not yet reliable enough to store all their coins there. If you do use them, be careful with your choice and use double authorization.

Divide funds into multiple wallets. Leave some funds in a convenient and affordable wallet and put the rest in a more secure place. In this case, even if you become a victim of scammers, you will only lose a small amount.

Create a backup. The possibility of an error in the operation of the system or your computer cannot be ruled out, so create a recovery copy in advance. Make copies regularly so you don’t lose any of your Bitcoin addresses. The copy also needs to be encrypted.

Use cold storage, that is, a wallet that is offline. This is the safest way to keep your savings. To do this, you need to either purchase a special hardware device, or sign transactions on a computer disconnected from the network.