A cryptocurrency wallet is just like a bank account which is used to store, receive and send your digital currency to another wallet account or use it for the shopping purpose. Whether you want to trade in cryptocurrencies or want to have them as your asset, you must need to have a wallet account.
Cryptocurrency wallets come in several different forms and can span software, hardware, or even paper. But they’re all intended to store at least one kind of digital currency, and in the case of cryptocurrency, manage the cryptographic keys and other security considerations associated with key storage, digital currency transactions, and sometimes identity (ID) verification.
When you’re talking about the cryptographic keys associated with your cryptocurrency wallet, you’re referring to a very long string of numbers and letters that’s machine-generated, and is used to lock and unlock access to your cryptocurrency collection as well as to generate the addresses of your wallet. That’s a lot of power to attach to a key, so where these keys are generated and who controls them is something you should consider carefully when choosing your cryptocurrency wallet platform.
Table of contents:
- 1 What is a cryptocurrency wallet?
- 2 How do cryptocurrency wallets work?
- 3 Which Cryptocurrency Wallet Should I Use?
- 4 The Security Question
- 5 The Different Types of Cryptocurrency Wallets
- 6 10 Best Cryptocurrency Wallet 2018, App Reviews
- 7 Bitcoin Wallet Frequently Asked Questions
- 8 Conclusion
What is a cryptocurrency wallet?
A cryptocurrency wallet is a software program that allows you to store, send and receive digital currencies.
Because cryptocurrency doesn’t exist in physical form, your wallet doesn’t actually hold any of your coins — instead, all transactions are recorded and stored on the blockchain.
Some cryptocurrencies offer their own official wallets, while other products allow you to store multiple currencies within the same wallet.
But different digital currencies have different address types, and you’re usually able to send coins between like wallet addresses only. For example, you’ll need to send BTC to a bitcoin wallet address and Ethereum to an Ethereum wallet address.
How do cryptocurrency wallets work?
Instead of holding physical coins, a crypto wallet is electronic and includes a public and private key.
- Public key. This is a long sequence of letters and numbers that forms the wallet address. With this, people can send money to your wallet. It’s similar to a bank account number in that it’s used to send money to an account only.
- Private key. This is used to access the funds stored in the wallet. With this, people can control the funds tied to that wallet’s address. Like a PIN, you’ll need to keep your private key secret and secure. However, not all wallets give you sole ownership of your private key, which means you don’t have full control over your coins.
As well as storing your public and private keys, crypto wallets interface with the blockchains of various currencies so that you can check your balance and send and receive funds.
How wallets and blockchains interact
The blockchain of any cryptocurrency contains a public record of all the transactions made since it began. Your wallet address keeps a record of all your transactions, and therefore also tracks your crypto balance. By following the chain to today, a wallet can figure out how many coins you have.
For example, let’s say Alice sends Bob 0.001 BTC. After this transaction is verified and added to the blockchain, the ledger records that the amount of bitcoin at Alice’s wallet address has decreased by 0.001 and that the amount of bitcoin at Bob’s wallet address has increased by 0.001 BTC.
The amounts sent and received and the public wallet addresses are all public information.
Which Cryptocurrency Wallet Should I Use?
We typically suggest using an official (or officially endorsed) wallet for any given coin. So, for Bitcoin we would suggest using the Bitcoin Core Wallet, for Litecoin we would suggest Litecoin Core, and for Ethereum (ETH) we would suggest either Ethereum Wallet or MyEtherWallet.
With that said, some people tend to own a lot of coins. For those who want to use or invest in many coins, universal wallets / multi-coin wallets are a good choice. There are software wallets that are universal like Ethos and Coinomi and hardware wallets that are universal like TREZOR and the Nano S (hardware wallets are generally good choices for long-term storage).
In choosing a wallet you’ll also need to decide between a custodial and non-custodial wallet. That is, non-custodial wallets like Blockchain Wallet and MyEtherWallet where you control your private keys directly but use the wallet as an interface, and custodial wallets where you don’t control your private keys directly like Coinbase (although people are advised against keeping all their funds on an exchange, exchanges like Binance generally double as custodial wallets as well).
Lastly, you should also be aware there are wallets designed for specific networks and their functionalities. For example, Coinbase Wallet (a Coinbase product) and Trust are Ethereum-based wallets that let you store a range of Ethereum-based tokens and also act as web browser for the decentralized web (they allow you to interface with DAaps).
In simple terms, which wallet you choose depends on your needs. Generally speaking non-custodial offline wallets like TREZOR are great for long term storage, custodial wallets like Binance are essentially mandatory for trading, and a software wallet that you can use as an app like Coinbase, Blockchain Wallet, and Trust are solid choices for every day use. If you stick to the big names and use best practices, it is hard to go wrong and a lot boils down to choice.
NOTE: There is overlap between the above wallet types, for example Trust is a non-custodial decentralized software wallet that is universal in terms of Ethereum and Ethereum Classic tokens. We’ll cover a bit more about wallet types below, but that is the gist.
With the above in mind, if you are new to cryptocurrency, we suggest doing one or more of the following:
- Download the official (or officially endorsed) wallet from the official website.
- Sign up for a custodial wallet service like Coinbase or non-custodial wallet service like Blockchain Wallet (which handles a wallet and exchange with one account).
- Purchase a hardware wallet like TREZOR for long term storage.
- And/or, use a universal software wallet or other wallet that suits your needs like the ones noted above (for example, Trust for exploring the Ethereum ecosystem).
If you know what you are doing, there are a wide range of different wallets to choose from which offer different pros and cons.
TIP: There is no one single wallet that stores every coin. So you’ll need to figure out which wallets you need based on which coins you want to invest in or use (or vice versa).
TIP: You can store all ERC-20 tokens (tokens created on the Ethereum platform AKA Ethereum-based tokens) in an ERC-20 friendly wallet like MyEtherWallet, Trust, or Coinbase Wallet. Many Ethereum-based tokens also have their own wallets as well (check the coin’s official Github or website for official wallets). If you are investing an an ICO, you’ll likely need an ERC-20 friendly wallet to store / send tokens.
How to choose a cryptocurrency wallet
To choose the right wallet for you, consider your needs and compare wallets based on key factors that include:
- The type of wallet you want. This factor comes down to personal preference. For example, if security is your No. 1 priority, compare hardware wallets. But if you want to quickly and conveniently access your coins, a mobile or web wallet may be your preferred choice.
- Ease of use. Sending, receiving and storing cryptocurrency can be complicated and confusing, particularly for beginners. Your wallet should suit your tech knowledge and crypto experience. While crypto novices might focus on finding a wallet that’s simple to set up and use, experienced holders might look for advanced features, like an in-wallet exchange and multisignature transactions.
- Security features. Find out what security features the wallet includes, such as two-factor authentication and multisig functionality. Will your private key be stored online or offline? Has the wallet ever suffered security breaches?
- Other features. Does your wallet include the ability to exchange among currencies in your wallet or provide easy access to live fiat exchange rates or other market information.
- Supported cryptocurrencies. Are you looking for a wallet that stores just one crypto, like bitcoin, or are you in the market for a multicurrency wallet? Make sure the wallet you choose is compatible with the cryptocurrencies you need to store, and remember that some coins and tokens can only be held in an official wallet.
- The team behind the wallet. See what you can find about how long the company’s been in business. What qualifications do they have? Are they continually working to upgrade and improve the wallet?
- Costs. While most crypto wallets are free, choosing a hardware wallet means parting with some cash. Consider the upfront price and shipping costs when making your decision. Some wallets also charge a fee for every transaction you make. Read the fine print to see what you’ll pay.
- Reputation. What level of community trust does the wallet have? Check out independent online reviews to gauge how other users rate the wallet and whether they’d recommend it.
Wallet security is crucial for any crypto owner, so keep these tips in mind to keep your funds as safe as possible:
- Research before you choose. Don’t just choose the first bitcoin wallet you come across. Thoroughly research the security features and development team behind a range of wallets before making your final decision.
- Enable two-factor authentication. This simple security feature is available on an increasing number of wallets. It’s simple to use and provides an extra layer of protection for your wallet.
- Pick your password carefully. Make sure all usernames, PINs and passwords related to your crypto wallet strong.
- Consider a multisignature wallet. Multisig wallets require more than one private key to authorize a transaction, which means another user or users will need to sign each transaction before it can be sent. It can take longer to send funds, but you may find that extra peace of mind is worth the minor hassle.
- Update your antivirus protection. Your PC, laptop, smartphone or tablet should have the latest antivirus and anti-malware software installed. Set up a secure firewall on your computer, and never install software from companies you don’t know.
- Update your wallet software. Regularly update your wallet software to the latest security upgrades and protections.
- Make a backup. Store a wallet backup in a safe place so that you can recover your crypto funds if something goes wrong — like if you lose your smartphone.
- Check the address. When sending or receiving funds, use the correct wallet address. Similarly, if using an online wallet, make sure it’s secure by checking that the URL starts with “https.”
- Don’t use public Wi-Fi. Never access your wallet over a public Wi-Fi network.
- Split your holdings. Consider splitting up your crypto coins between online and offline storage. For example, keep a small portion of your funds in online storage for quick and convenient access, and store the bulk of your holdings offline for extra security.
- Private key protection. Never share your private key with anyone. Check whether the wallet you choose allows you to keep full control of your private keys, or if you have to surrender ownership to a third party, such as an exchange.
The Security Question
You may be wondering if cryptocurrency wallets are safe. Unfortunately, that’s not an easy question to answer. On a day-to-day basis, all of the cryptocurrency wallets I reviewed in this roundup are safe and employ a basic layer of security to protect your assets. But, yes, some are a little safer than others.
At a basic level, these cryptocurrency wallets all have password-controlled access to them, which is potentially another passcode or pin code to control access to your account (though most often this is one step, not two). They encrypt all transaction data via Secure Sockets Layer (SSL) while in transit, and they securely store your public and private keys, either encrypted on your local device or on the cryptocurrency wallet maker’s servers.
That’s the minimum level of security any cryptocurrency wallet should support, and surprisingly, it’s all that four out of our five reviewed cryptocurrency wallets can do. Only Coinbase and Copay Bitcoin Wallet added more security than what I just listed, even though many cryptocurrency wallet customers are asking primarily for two additional capabilities: two-factor authentication (2FA) and multi-signature support. What are these features?
- 2FA: This feature would generate a token or key from the cryptocurrency wallet maker that you’d need to know to access your wallet. Generally, this additional code is initially sent via an email or text. However, things aren’t over once you enter the code. Once this code is entered and you have full access to your cryptocurrency wallet, the two-factor system will keep generating new codes every few seconds. That means, to hack your account, malcontents would need to know not only your primarily account credentials but also your device itself. That’s significantly more difficult and dangerous for the bad guys to do, so it’s an excellent additional layer of security.
- Multi-Signature Support: This feature works like a joint bank account but at the key level. Typically, such a system is referred to as a “two out of three” system. That’s because it generates three keys: one controlled by the account holder (you), one that’s controlled by the service, and one that’s shared. To access the account, you need at least two out of the three keys. There are variations on this feature, including the 3-of-5 scheme that Coinbase uses for its Vault service.
The Different Types of Cryptocurrency Wallets
There are several types of wallets that provide different ways to store and access your digital currency. Wallets can be broken down into three distinct categories – software, hardware, and paper. Software wallets can be a desktop, mobile or online.
- Desktop: wallets are downloaded and installed on a PC or laptop. They are only accessible from the single computer in which they are downloaded. Desktop wallets offer one of the highest levels of security however if your computer is hacked or gets a virus there is the possibility that you may lose all your funds.
- Online: wallets run on the cloud and are accessible from any computing device in any location. While they are more convenient to access, online wallets store your private keys online and are controlled by a third party which makes them more vulnerable to hacking attacks and theft.
- Mobile: wallets run on an app on your phone and are useful because they can be used anywhere including retail stores. Mobile wallets are usually much smaller and simpler than desktop wallets because of the limited space available on a mobile.
- Hardware: wallets differ from software wallets in that they store a user’s private keys on a hardware device like a USB. Although hardware wallets make transactions online, they are stored offline which delivers increased security. Hardware wallets can be compatible with several web interfaces and can support different currencies; it just depends on which one you decide to use. What’s more, making a transaction is easy. Users simply plug in their device to any internet-enabled computer or device, enter a pin, send currency and confirm. Hardware wallets make it possible to easily transact while also keeping your money offline and away from danger.
- Paper: wallets are easy to use and provide a very high level of security. While the term paper wallet can simply refer to a physical copy or printout of your public and private keys, it can also refer to a piece of software that is used to securely generate a pair of keys which are then printed. Using a paper wallet is relatively straightforward. Transferring Bitcoin or any other currency to your paper wallet is accomplished by the transfer of funds from your software wallet to the public address shown on your paper wallet. Alternatively, if you want to withdraw or spend currency, all you need to do is transfer funds from your paper wallet to your software wallet. This process, often referred to as ‘sweeping,’ can either be done manually by entering your private keys or by scanning the QR code on the paper wallet.
An online wallet is sometimes referred to as a Web Wallet, and is one that you access via your web browser. This should not be confused with hot wallets, which, although they are online, does not refer to all online wallets. Online wallets also refer to mobile and desktop wallets, and are any that you access via an internet connection.
The same applies with hot wallets though, and online wallets should not be used to store large amounts of currency in, as they are more at risk of becoming hacked.
To help you decide whether an online wallet is for you or not, we have highlighted a few of the advantages and disadvantages…
- You can complete your transactions very quickly. This is because you have instant access to your wallet.
- Some have the ability to store and manage a range of different currencies and allow different transfers between them.
- Online wallets also allow your currency to be directly integrated into an exchange.
- If you only have small amounts invested in cryptocurrencies, online accounts are ideal.
- You can use a TOR network for added Privacy
- A TOR network is a well-known and trusted anonymity network.
- You do not have to install any software on your PC, as it is all stored online.
- One of the biggest advantages is that they are so accessible. There are often mobile apps that you can download onto your phone that will allow you to access your cryptocurrency wallet on the move.
- It is not a good idea to store large amounts of money in an online wallet, so if you are looking for a long-term place to store a high investment in, online wallets are not ideal and should be avoided.
- You are more at risk of being hacked and are susceptible to phishing scams, malware, DDOS attacks and outdated security measures.
- There are a lot of risks associated with doing anything online, as it leaves your computer completely open to viruses, which can affect your wallet. You can reduce this risk keeping your software up to date, and not using internet café’s etc – the usual things you would do to help keep any financial transactions secure. Take advantage of two step authentication, and always enable it if it is available to you.
- You do not have control of your wallet. Because it is online, it is effectively stored on a third party, which does not come without it’s risks.
As the name suggests, mobile wallets can be used on a mobile device, and allows you to access your wallet on the move. One of the great things about mobile wallets is that they can often provide more features than wallets that are purely internet based. That is not to say that they do not come without risks.
- They are among the easiest of the wallets to use, and much more practical. They can be used on the go, which is great if you are regularly making transactions.
- Just like the online wallets, you can use a TOR network, which will help increase anonymity and security.
- Many mobile wallets will offer additional features that simply are not available with other wallets, such as QR code scanning.
- Mobile phones are not at all secure, and there is nothing that will save your savings if your phone becomes maliciously compromised. It is wide open to malware and viruses, which can completely wipe out any cryptocurrencies that you have saved.
Desktop wallets are among the more secure cryptocurrency wallets; however, this does depend on how committed you are on keeping up to date with the latest online security measures.
Any laptop or computer; however old or young that has once been connected to the internet, even if it is not connected now, will come with a certain amount of risk, unless of course you completely clean the system, and install a new system on it. If you have a laptop that is completely clean – that is, it has never been connected to the internet, it can be used as a great cold storage method; which, if you remember from earlier is favoured to store large amounts of investment.
The great thing about desktop wallets is that a lot of people have old laptops lying around, which are not being used for anything, which are ideal for desktop wallets.
- It is associated with less risk, especially if the computer has never been connected to the internet.
- It is the ideal cold wallet to use if you are looking to store a large amount of currency somewhere.
- You are not relying on your private key to be stored on a third-party server, again, reducing the chances of your account being hacked and your money stolen.
- Desktop wallets are incredibly easy to use, unlike some.
- A TOR network can be used which will give you more anonymity and privacy.
- If your computer is connected to the internet, your privacy and security are at greater risk.
- Because everything is held offline, if anything happens to your computer, and you are unable to fix it, you could lose all of your investment.
- You have to regularly back up your computer for the same reason as above.
- Regardless of whether you are connected to the internet, and despite the fact that a desktop wallet is considered a lower risk choice, your computer is still open to viruses and malware, which result in you losing all of your coins; which is not good if you are using this as a cold wallet to store larger amounts.
Hardware wallets are a bit of a mixed drawer in terms of popularity, and along with it come many benefits and drawbacks.
They are marginally less user friendly than desktop wallets and web wallets; however, they are more secure than hot wallets, and easier to work with than paper wallets (see below).
Hardware wallets come in a number of different forms, so it is important that research is carried out into your chosen hardware wallet prior to placing any of your money in there. They are; however, great for storing large amounts of cryptocurrency, so long as you do not want to move it around often. They also offer great amounts of control.
- Some hardware wallets come with a screen, making them one of the most secure ways to store your cryptocurrency in the long-term.
- Even without, in general, hardware wallets offer greater security than many others.
- They are often quite difficult for beginners to use; however, if you have large amounts to invest, it really is the best one. However; because of this reason, hardware wallets are often sold out.
Finally, we are going to take a look at paper wallets. These used to be very popular for cold storage; however, since hardware wallets have come onto the scene, they are significantly less so.
That said, paper wallets are notoriously secure, so long as you undertake very strict security precautions when initially setting these wallets up.
A paper wallet is simply a document that contains all of the necessary data needed to generate Bitcoin private keys. This document can store a number of different keys; however, it allows you to keep a physical document containing this information.
- They are one of the most secure choices of wallet, and are virtually hacker proof.
- They are not stored on a computer, which would mean someone would have to physically break into your home to gather the information required to steal your money.
- You do not have to worry about your private keys being stored on a third-party server, because they are on a physical document in your home.
- You need to have a greater understanding of how wallets work
- Requires more effort if you wish to move your cryptocurrencies around.
10 Best Cryptocurrency Wallet 2018, App Reviews
Cryptocurrency wallets provide users with a digital solution for securely storing and managing blockchain assets and cryptocurrencies. These wallets allow users to spend, receive, and trade cryptocurrencies. While some cryptocurrency wallets may only provide support for a single cryptocurrency, many are multi-asset solutions, allowing users to hold multiple cryptocurrencies, including Bitcoin, Bitcoin Cash, Ethereum, and Litecoin, among many others. These solutions ensure that the owner of the cryptocurrencies and blockchain assets is the only entity who can access the funds by requiring elaborate passwords and other security measures. Users can view or access cryptocurrency wallets from smartphones and computers.
Cryptocurrency wallets do not physically store the blockchain assets; instead, the wallets store public and private keys. Public keys are segments of digital code that are attached to a decentralized blockchain, almost like a bank account number. Private keys are also pieces of digital code, but are unique to an individual’s cryptocurrency wallet, similar to an ATM PIN code. Private keys match and prove ownership of public keys. Owners use their private keys to conduct all transactions with the cryptocurrency that they own.
Cryptocurrency wallets can be utilized by businesses accepting payments through cryptocurrency payment gateways to securely store or exchange blockchain assets.
To qualify for inclusion in the Cryptocurrency Wallet category, a product must:
- Allow users to store private keys associated with a blockchain ledger
- Provide a way to interface with said blockchains to store, send, and receive cryptocurrencies, as well as monitor balances
- Offer security measures to ensure private keys are only accessed by owners of the blockchain assets
Ledger Nano S (Editor’s Choice)
Ledger Nano S is a USB sized hardware wallet specially designed for the cryptocurrency. As I have mentioned previously, the hardware wallets are expensive, so do this one but in return, you get a lot of features which are hard to find in any other type of cryptocurrency wallets, especially in terms of security and backup of your private key for the digital currency.
Ledge Nano S is not a plug and play type device. This means that you do not need to have a computer to use this wallet. The small LCD screen in the front of the wallet will allow you to operate your cryptocurrency wallet easily. It will allow you to do functions like transaction, exchange your digital currency, use the related apps and transfer money from one account to another account within seconds. The small size of Ledge Nano S will allow you to make it secure from the hackers or the thieves. Even in case of any lost; you can always get the backup and block the thief to get access to your cryptocurrency account.
The features of Ledge Nano S include:
- Multi-currency support: This wallet support almost all the popular cryptocurrencies and allow you to store more than one at the same time in the same wallet.
- Built-in Display: This means that you can physically see the transaction for the confirmation and verification purpose because of the LCD screen on the top.
- Easy to operate: While the size of this beautiful hardware wallet is small but still there are buttons to operate which are very easy and comfortable.
- Security: For the security purpose there are multiple options available including the option to lock your wallet with a PIN code.
- Backup and restoration: Do not worry about your cryptocurrency money if you have Ledge Nano S because it comes up with recovery sheet while the restoration process is easy and fast.
The Ledger Nano S comes up with a box in which you will get Nano S device, USB cable, instruction manual, recovery sheet and other accessories etc.
Trezor (Editor’s Choice)
Trezor is a hardware Bitcoin wallet that is ideal for storing large amounts of bitcoins. Trezor cannot be infected by malware and never exposes your private keys which make it as safe as holding traditional paper money. Trezor is open source and transparent, with all technical decisions benefiting from wider community consultation. It’s easy to use, has an intuitive interface and is Windows, OS X and Linux friendly. One of the few downsides of the Trezor wallet is that it must be with you to send bitcoins. This, therefore, makes Trezor best for inactive savers, investors or people who want to keep large amounts of Bitcoin highly secure.
- Pros: Good security & privacy, cold storage, easy to use a web interface, in-built screen, open source software, beginner friendly.
- Cons: Costs $99, must have device to send bitcoins
The first impression of Exodus was just WOW. I mean you just need to check that how advance the online web-based cryptocurrency wallet they are offering to the users. If you are looking for a wallet for your digital currency which has graphics features, reporting system, colorful and easy to use then Exodus needs to be on your list to use because it has all of this in a very sensible way. The other online wallets do provide almost the same features but their presentation style is not exclusive as the design of Exodus. They have shown also the screenshot of their wallet account for those who want to see how does their wallet account looks like.
The design is not the only thing which you should look for and ignore the other features. Exodus has all the advanced features which you expect to have in any advanced level web-based online wallet.
Features of Exodus:
There is a long list of features which Exodus is offering to their users. The complete list of features is listed on their website. Here I will talk about only exclusive and security-related features which you must know about before making an account on their website.
- One click exchange: There is not any verification or identification required to operate your Exodus wallet account. You can simply exchange your digital currency simply by one click only. This makes the transaction fast.
- Multi-currencies: Exodus allows you to store multiple digital currencies and other digital assets in your Exodus wallet without asking for extra subscription fee etc.
- Complete security: Exodus is not an online web-based cryptocurrency wallet but an offline wallet. Yes, through a website, you will create your own digital currency wallet which means that the information about your cryptocurrency will be stored on your computer, not on the Exodus server.
- 100% free: Exodus is 100% free for all users. Yes, they do have some premium services but in general, you can enjoy their wallet’s entire feature for free.
- Great design: The design of the wallet is the main reason which makes Exodus popular. It makes it very easy for a non-technical person to understand the complete details about his/her cryptocurrencies.
I wouldn’t be wrong in saying that Jaxx is a mobile-based wallet for the digital currency but it also works on the Windows and other operating systems in the same way as it works on the mobile devices. Jaxx is not specifically created for the cryptocurrencies but for all digital assets to store and make them secure from the hackers. Now digital assets could be anything including regular currencies or digital currencies etc. So, Jaxx works for the multiple digital assets at a time without any limit set by the company, but mostly known for the cryptocurrency only.
Usually, it is a myth that mobile wallets are not good because the person can lose the mobile. Well, it is true but today the mobile-based wallets are providing several security features which will allow you to get your digital assets in another account in case of an accident including if the person lost the mobile.
Features of Jaxx:
Most of the features, which Jaxx is offering, are same as any other wallet but some of the features are exclusively offered by Jaxx for their premium users. These features are mostly related to the mobile devices. The features of Jaxx include:
- You are in control: When you create the private key for the digital currency, it will not be saved on the Jaxx server or any other places online but it will be saved only on your local device wallet. Even the Jaxx will not able to see your holding or your funds etc.
- Easy to use: The online wallet account requires so many steps to make the transaction but Jaxx is free from all of this. They have not added the requirements like verification, personal information of using an onboarding questions etc. The privacy model of Jaxx is based on Nada privacy model.
- Exclusive design: Jaxx is not just another mobile wallet account for digital assets but it is easy for users, the company has added dozens of new features and options which can be easily seen because of the simple but stylish design of the Jaxx mobile app. It will satisfy all of your need.
- Jaxx is everywhere: Jaxx is not limited to Android and iOS only but it works on all the major operating systems like Windows, Linux and much more etc.
Electrum has been around since 2011 and works with Windows, Mac, Linux and Android. It’s one of the most popular ‘thin’ wallet clients, in that instead of downloading the entire Bitcoin blockchain, it connects securely to other servers to verify your BTC balance and process payments. This means you can set it up in minutes and it takes up very little space on your hard drive.
Electrum uses a ‘hierarchical deterministic wallet’, in that when you first launch the program it generates a random ‘seed’ of 12 dictionary words, from which it derives the keys necessary to spend and receive BTC. Electrum displays the seed as you create your wallet and requires you to write it down. This means that if you lose access to this version of Electrum, you can easily reinstall it on another machine and use the seed to restore your BTC.
Unlike the Bitcoin Core client, Electrum offers you the option to encrypt your wallet file during setup, although you can choose to leave it unencrypted if you wish. You can also use Electrum in ‘cold storage’ mode to create a ‘watching only’ wallet. This allows you to receive Bitcoin payments and see your balance, but not spend the coins, which may be useful if you’re buying BTC as a long-term investment.
As a ‘thin’ client, Electrum relies on other servers for payment information, making it more vulnerable to certain types of hacking than ‘full nodes’ such as Bitcoin Core. See here for more information about how Electrum tries to protect you from this.
- Lightweight and easy to set up
- Recover your BTC using a wallet seed
- Relies on servers to verify transactions
Bitcoin Core is the original BTC client and is available for Windows, Mac and Linux. Core is a ‘full node’ Bitcoin client, meaning that on first-run it will download the current version of the blockchain (currently around 160GB) by connecting to other nodes. It will then continue to download and process data about Bitcoin transactions.
One advantage of this is that it’s much more difficult to link a specific BTC payment address to your identity as Core downloads data about all Bitcoin transactions everywhere. This also protects you against certain types of fraud such as someone trying to spend the same BTC twice, or fooling you into believing you’ve received funds you haven’t actually got.
Core comes preconfigured to run through the Tor anonymizing network. This makes it very difficult for anyone to link sending or receiving BTC to your home IP address, ensuring your privacy. All this requires huge amounts of bandwidth – Core must be connected to the internet every day to stay in sync with the network.
On first launch, Core will create a wallet file (wallet.dat) containing your private keys. By default anyone can access it, but you can encrypt the wallet with a password if you wish. (We’ve got a handy guide on setting up Bitcoin Core).
- Original Bitcoin client
- Provides better protection against fraud
- Requires large amounts of space and bandwidth
GreenAddress (Web Wallet)
Web wallets store your private keys online, where they are encrypted with a user-selected password. Although they offer the lowest level of security, online bitcoin wallets have the advantage of being accessible from any internet connected device.
GreenAddress is a multi-signature Bitcoin wallet available on the web, desktop, Android, and iOS. GreenAddress is compatible with hardware wallets like TREZOR, Ledger Nano, and the HW.1.
“Multi-signature” in this context means that the site requires a manual confirmation from you for your coins to be moved; this greatly improves security.
Copay (Web Wallet)
The Copay Bitcoin wallet is a popular free software wallet that may be used for storing Bitcoin only. It is available as a desktop and mobile (ioS, Android and Windows) wallet and allows for multiple users to be able to access a single wallet. Developed by BitPay, a leading cryptocurrency payment system, Copay is considered to be one of the most secure wallets that is easy to use for beginners and anyone that uses their Bitcoin on a regular basis as a form of payment.
Samourai Wallet (Android Wallet)
Samourai is 100% the best available Android wallet. It has the most features, the best privacy and its developers are constantly working to add the latest Bitcoin features to the wallet. Samourai Wallet has been around for more than 3 years and its code is fully open source.
A paper wallet is simply a printed piece of paper that contains a cryptocurrency address and private key that are accessed using a QR code. The advantages of paper wallets are that they take the form of cold storage, as they are not connected to the internet and thus reduces risk of hacking. In addition, they are also one of the cheapest options for cold storage.
However, paper wallets are considered to be more confusing and complicated to set up and use than software wallets and, if you lose the paper wallet and have not created a backup copy, there is no means of restoring your access to your currency. In addition, as stated above, as you still need to use a device to access your currency if you are using a paper wallet, and if your device is compromised or hacked then your currency could still be vulnerable.
Finally, if you are regularly using the currency for trading or purchasing products, it can be somewhat of a hassle to access your currency through the paper wallet on each occasion and, if you’re not familiar with how they work, you could end up locking yourself out from accessing your own currency.
Bitcoin Wallet Frequently Asked Questions
Bitcoin wallets. What are they?
Bitcoin Wallets let us send, receive and store Bitcoin amounts all the way down to the Satoshi unit.
Wallets secure funds by guarding our private keys. These private keys act as the proof of ownership for our Bitcoins. As such, a Bitcoin wallet is like a key to your safe deposit box on the Blockchain.
What is a private key?
Private keys emerged as a way to communicate securely through insecure communication channels.
Historically, before the advent of public key cryptography, the greatest cryptographic weakness was the inability to communicate the ‘key’ that makes sense of encrypted messages. As a solution, the use of two keys (public and private) entered the picture.
It’s a nifty little trick.
Keys come in pairs. The public key is used to encrypt the message whereas the private key decrypts the message. The only person with the private key is you. Everyone else is free to have your public key. As a result, everyone can send you encrypted messages without having to agree on a key beforehand. They simply use your public key and you untangle the gibberish by using your private key.
Why should I care about private keys?
At the end of the day, all of this can go over your head without much danger. Just remember that it’s good to know what you’re dealing with. Bitcoin wallets make use of a fundamental cryptographic principle that we use for things ranging from https for websites or sending anonymous tips to Wikileaks. Most importantly, by understanding private keys you’ll have a much easier familiarizing yourself with Cold Storage wallets.
What is a Bitcoin address?
A Bitcoin address is like an account number, just better. The address denotes which wallet the coins should be sent to. Like a bank account number, where the difference lies in the wallets having multiple addresses. These can be customized by including payment request information such as an amount and a date of expiration.
What should I know about addresses?
Bitcoin wallet addresses are case sensitive, usually have 34 characters of numbers and lowercase letters, start with either a 1 or a 3, and never use 0, O, l and I to make every character in the address as clear as possible. That’s a lot to take in. But don’t worry. What they consist of is largely irrelevant to you. Just know they’re a string of characters that denote a destination on the Bitcoin Blockchain.
How do I generate a Bitcoin address for my wallet?
How to generate a new Bitcoin Address varies between wallets. Some manage your addresses for you. Others give you full control. As with many other Bitcoin technologies, the option to dirty your own hands is always open.
If you do end up taking the easier route, just press a button to generate a new address for your wallet.
Some wallets, like Electrum, allow you choose in how many blocks your transaction should be confirmed. The faster you want your payment to go through, the more you will have to pay miners for confirming your activity. We find here another difference between Bitcoin wallets and Bank accounts. Given the right wallet, the control and oversight that we have over our transactions is far more extensive than that of the traditional banking system.
How do I fund a Bitcoin Wallet?
First, acquire some Bitcoins. Go through an exchange in your country, ask an acquaintance to share, if you want as seamless of an experience as possible. The purchased coins can then be sent to your wallet by specifying one of its addresses.
Some wallets, particularly online ones, also let you buy coins. Keep in mind that these come with larger exchange margins which are best left alone.
Are Bitcoins safe?
Is Bitcoin a safe way to store value digitally? Are we wise to save our coins on our computer? It’s true that online wallets are necessarily more dangerous than offline wallets. However, even offline wallets can be breached, meaning that security in the Bitcoin world depends largely on following good practices. Just like you would avoid flailing your bills about in a dangerous place, you should make sure to keep your passwords and keys as safe as possible.
How do I secure my Wallet?
- Secure your computer
- Restrict unsupervised access. Set a strong password and close all ports and maintain a strict firewall.
- Frequently change address. Use a different address for every transaction.
- Multiple Signatures (Multi-sig). Multiple private keys to deter breaches.
Where are Bitcoins stored?
Bitcoins simply consist of a string of data. That’s why they can be stored anywhere. You could paint Bitcoin on a wall with your blood. Nobody does that though. Hopefully.
Instead, we store BTC on computers because we need them handy to trade. After all, we need to be connected to the internet to send value from one wallet to another over the Blockchain.
How do I open a Bitcoin account?
To some readers this might seem like a weird question. Truth is, people coming from a financial or business background are likely to expect Bitcoin to be a direct alternative to our current financial system. This is not the case.
You don’t need a Bitcoin account. There is no such thing really. You just need a wallet. The only accounts you might encounter are online wallets that are separated into various accounts via a user system.
How do I know which wallet is best for me?
Let’s be honest. It’s unreasonable to expect anyone else to make this decision for you. After all, your preference depends entirely on your personality and needs. So just be honest with yourself.
Frankly, you shouldn’t need anything complicated if you’re using the wallet for simple internet expenses or as a way to save money.
If, however, you’re planning to run a Bitcoin centered business make sure to use advanced wallets that support automated mass payments.
Any common mistakes to be careful of?
First of all, don’t rest your money in an exchange wallet. Keep your coins in an environment where you have complete control.
Secondly, don’t keep all of your coins in one place. You’ll be crushed if you lose access to a wallet with all of your funds.
Thirdly, double check the target address. Bitcoin transactions cannot be reversed, so don’t lose your coins forever to a stranger!
Last of all, use trusted online wallets (if at all). Don’t just trust anyone with your money. Make sure that the online wallet provider has a reputation of upholding the highest possible security standards.
Security Risks with Hardware Wallets
Hardware wallets are more secure than any other software wallet, like one that runs on your Android or iOS device, or desktop. However, hardware wallets have some unique security risks to be aware of.
Tampering of the Device
We always recommend to order directly from the hardware seller. This is because someone can buy a hardware wallet, tamper with it, and sell it used. They could program it to steal any bitcoins or add a back door.
Most hardware wallets add some special kind of tape on the packaging to try to make any tampering more noticeable. This is another reason we recommend only ordering from the hardware wallet company, and not from a website like eBay.
Bad Random Number Generator
Bitcoin private keys are based on cryptography. Random number generators, also called RNGs, are used to create the private keys that secure bitcoins.
If the random number generator is not random enough, that means someone else can recreate the private key of the hardware wallet easier. This attack has happened in the past with blockchain.info, a web wallet. Over 300 BTC were lost because blockchain.info did not use good RNG, so a hacker was able to generate the private keys again and steal coins.
One way to help prevent this is to use the hardware wallet’s custom 25th word. TREZOR, for example, allows you to add a 25th word to the 24 word seed. This means that you can technically add your own RNG to the computer generated RNG to ensure your private key will be truly based on good RNG.
What happens if the hardware wallet company goes out of business?
All hardware wallets listed above work with other wallets. So, if the hardware wallet company goes out of business you will still be able to use your wallet with a different wallet like Electrum.
Let’s say you use TREZOR with TREZOR’s myTREZOR wallet. TREZOR goes out of business and no longer supports myTREZOR wallet and it gets shut down.
You could, in just a few minutes, download Electrum on your computer. Once installed, you’d setup your TREZOR and all of your transaction history and balance would get imported and be exactly the same. This is because Electrum will use the same 24-word seed you generated with TREZOR on setup.
Which wallets can be used for each device?
Ledger Nano S, KeepKey and TREZOR all work with:
- Mycelium (Android version only)
- Electrum for Mac, Windows and Linux
- Multibit HD
Do these hardware wallets work for Ethereum?
Yes, all of these wallets work with Ethereum, Litecoin and many other coins.
TREZOR and Ledger both have blog posts explaining their integrations with various Ethereum wallets.
The hardware wallet tells me to write down the 24 word seed on paper.
Should I take a picture of the seed with my phone as a backup?
NO, NO, and NO!
The seeds generated by hardware wallets are meant to be written down only. By taking a picture of your seed with an internet connected phone, you put your entire wallet on a device that is connected to the internet and easier for hackers to get into. Please do not do this!
Why do the hardware wallets have buttons?
The buttons are used to confirm transactions. In order to send a transaction, you must physically press or hold buttons on the devices. This is a security feature. If a hacker were to access the hardware wallet somehow, the hacker still would not be able to send a TX without physical access to the buttons. Read more about this in TREZOR’s security philosophy.
Do hardware wallets work with Coinbase?
One of the most frequent questions we get asked is how Coinbase works with hardware wallets.
It’s a trick question!
Coinbase does not work directly with hardware wallet. You should, however, send bitcoins from Coinbase directly to your hardware wallet once you buy. Never store bitcoins on Coinbase or any other exchange for long periods of time.
Too many people in the past have lost money from hacks like Bitfinex and Mt. Gox.
So, yes, use a hardware wallet in conjunction with Coinbase. Buy on Coinbase, then send to hardware wallet.
Also, what we said above goes for ALL exchanges. Use Bitstamp? Cool! Once you buy bitcoins on Stamp, send the coins to your hardware wallet. The same goes for Kraken, Poloniex, or any other exchange or service that holds your coins!
What other kinds of wallets can I use?
Other wallet types are hot wallets. This means they are wallets run on an internet connected computer.
Android wallets, iOS wallets and desktop wallets are all examples of this.
How many backups of my seed should I create?
We recommend keeping at least two backups of your seed in multiple locations.
You can also laminate your seed to protect against water damage or any other damage.
Keeping your seeds in fire proof safes can help protect in the event that the storage location is burned down.
Another option is to put your seed into metal manually using stamps, or using cryptosteel.
Although no method is ever truly 100% safe for storage of your currency, the ever-increasing range of wallets that are becoming available provide users with a greater range of products that can be used for storing currency depending on their requirements. If security is your primary concern, choose a hardware wallet. If convenience is most important to you, choose an online or mobile wallet.
The ideal method would be to combine a number of options to provide the greatest level of security. For example, if you have $10,000 dollars in savings, you don’t generally carry it around in your pocket all day. This principle applies in the same way to cryptocurrency. For large amounts, perhaps consider a method of cold storage or a hardware wallet, with which you can transfer smaller amounts for everyday use into your mobile or online wallet.
Whichever method you use, make sure that you make backup provisions. Although hacking is a real and definite risk in the cryptocurrency world, when it comes to cryptocurrency, there is far more currency lost due to personal carelessness than as a result to hacking. Always keep backups of your details in a safe place. If your wallet has ‘seed’ words, then make sure you never lose them.
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