With cryptocurrency technologies, trends and values changing on a near daily basis, it can often be hard to keep track of the latest best practices. One of the most important considerations to make as a bitcoin (or alt-coin) investor or owner is where to store them. For that, you need to know the best bitcoin wallets.
Do you use a wallet linked to an exchange? Do you use a software wallet that’s local to your machine? A hardware wallet specifically designed for keeping your coins safe? Or even put it on a piece of paper and lock it in a fire-proof safe? There are various approaches to the cryptocurrency wallet, and all of them have their benefits and drawbacks.
The best option for those just getting started with bitcoin, online wallets let you store your cryptocurrency in a place that’s easily accessible from anywhere in the world, on any device you choose. Often linked to an exchange, they make trading for fiat currencies (like the US dollar), or other cryptocurrencies, quick and easy, and are straightforward to set up and get started with. Many also feature smartphone apps to give you easier access to your bitcoin.
Most offer decent security in terms of two-factor authentication, or better, and some will require forms of photo I.D. to sign up to confirm your identity. That does mean there’s less anonymity with these wallets than some of the other options on this list.
These wallets do make you more reliant on a third party for support. If the exchange is hacked and it loses all its funds, that money is likely gone. If the exchange is hit with heavy traffic or a DDOS attack, you may not be able to access your currencies. Since your bitcoin is stored remotely, hackers and social engineers may be able to steal your identity from you and access your account without your permission to make off with your coin collection.
For those reasons, these wallets are recommended for those just starting out with bitcoin trading, for those only trading small amounts, or only holding on to their coins for a short period of time.
Blockchain – Blockchain.info’s wallet system features an easy to understand interface, two-factor authentication, and various other security options. It comes with built in ShapeShift trading for easy conversion of bitcoin, Ether and Bitcoin Cash. Unlike some of the alternatives, it doesn’t require identification, though it’s encouraged to ease account recovery if necessary.
Coinbase – Quick and easy access to Coinbase’s various markets, including its GDAX trading platform where you can buy, sell and trade bitcoin, Litecoin and Ether. It was recently embroiled in a bit of a scandal involving Bitcoin Cash, so its reputation has taken a hit as of late, but it’s one of the better used and respected exchange platforms otherwise.
Offline software wallets
Offline software wallets, sometimes called “desktop wallets,” still retain some of the ease of use and access. Some are aimed specifically at use on desktop and laptop PCs, while others have a more mobile focus, and are app exclusive.
The big advantage of this approach is independence. Every exchange in the world can go down, yet and you still have technical ownership and access to your cryptocurrencies. It also means that you would have to be specifically hacked or attacked to lose access to them. Your identity is protected, with no need to sign up anywhere or provide some form of identification to set up, or access your wallet.
If it has a companion mobile application, you can transfer bitcoins easily between you and other owners, and even use them to pay for certain items in real-world stores.
That’s not to say these types of wallets are perfect, though. They are still software-based, so are susceptible to hackers and malware attacks. Those with an online component for ease of trading are also more public than the truly-offline hardware (cold storage) alternatives. If you’re storing a lot of bitcoin in one, that can draw unwanted attention.
Exodus – An all in one application that combines support for a variety of cryptocurrencies — bitcoin, Ethereum, Litecoin and more — with strong privacy and security features — Exodus is entirely free to use. It features built-in ShapeShift functionality for easy inter-trading of various cryptocurrencies, live charts and trackers, and is compatible with Windows, Mac and Linux. It does however, currently lack two-factor authentication.
Electrum – A fast and private offline software wallet, Electrum has been one of the most popular choices among cryptocurrency owners for years for good reason. It’s private and secure, with a fast interface and full ability to export your private key to use with another bitcoin client. It’s also compatible with hardware wallets through the use of third-party plugins.
Mycelium – A mobile-exclusive software wallet, Mycelium is an open-source wallet platform with full support for bitcoin. While it cannot be used with other cryptocurrencies at this time, it’s constantly being developed and expanded upon. It’s fast, easily accessible and though a little complicated for new users, offers a wealth of advanced options for the more confident bitcoin owners.
Bread Wallet – One of the most popular bitcoin wallet solutions on iOS, this wallet is now supported on Android devices too. With a straightforward interface and a setup process that takes seconds, this is one of the easiest mobile wallets to get up and going with quickly and without hassle. Paper key support means you can recover your wallet, even if you lose your phone.
For those who want to have the utmost security for their bitcoin investment, or plan to deal with a lot of high-value cryptocurrency in general, a hardware wallet is a must. By storing your bitcoin on a specific piece of hardware that is “cold,” I.E., not connected to the internet, you can be sure that no one will be able to steal your cryptocurrency. Hackers and malware will find it very difficult to infiltrate your wallet, and barring someone physically stealing the device from you, it’s almost impossible to lose access to it.