So you’ve just purchased your first chunk of Bitcoin, or maybe you’ve been consistently investing over the years and have accumulated a healthy portfolio – either way, now it’s time to figure out how to store it safely.
Just as you would take precautionary measures to secure your fiat money (USD, GBP, EUR), you should be applying those same security principles to your cryptocurrency.
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A small investment in Bitcoin security and storage now, could prevent subsequent theft of all your holdings down the road. In this comprehensive blog post, we’ll explore the best Bitcoin wallets in the cryptosphere, the difference between hot and cold Bitcoin wallets, which Bitcoin wallets pair with your Android and iPhone, and how to get a Bitcoin wallet.
But, why? Why do you need to store your Bitcoin in a wallet?
It should be no surprise that as technological advances are on the rise, so are financial crimes and theft. A 2018 PwC survey on global economic crime and fraud reported nearly 49% of 7,200 global organizations polled have been a victim of economic crime or fraud within the last 24 months – a statistic which the report estimates to be grossly underestimated.
Think about it, these are regulated, multi-million and billion dollar corporations who spend substantial amounts on cybersecurity and the protection of highly sensitive financial information. If they are still subject to rampant financial crime and hacks, you can bet your bottom dollar it’s infinitely more prevalent in blockchain – a highly unregulated industry still in its infancy.
Look no further than the $530 million hack of Japanese cryptocurrency exchange ‘Coincheck’ in January, 2018, or $170 million hack of Italian exchange ‘Bitgrail’ in February, or the $31 million siphoning of investors’ funds from Korean exchange ‘Bithumb’ just days ago. And, these are just a few of the hacks that have already taken place in 2018.
You can read up further on some of the largest cryptocurrency exchange hacks that have plagued the blockchain ecosystem since its inception here.
1. Best Bitcoin Wallet: Cold Storage & Offline Solutions
Simply put, the best storage solution for your Bitcoin is in cold storage -completely offline storage devices, or cold wallets.
Cold wallets refer to the process of storing your Bitcoin and other cryptocurrency private keys offline and isolated from an Internet connection. For those unsure what a ‘private key’ is, it’s a highly sophisticated cryptographic number or form – known only to a holder (or HODL’er) – which allows users to access, manage, and spend their crypto.
Although the most costly of all Bitcoin wallets, cold storage and offline Bitcoin wallets are the most secure method of securing and storing your Bitcoins and other cryptocurrencies – additionally, they boast the highest degree of functionality.
So, when should you be securing your Bitcoin and other crypto investments with an offline wallet?
Cold storage and offline Bitcoin wallets should be utilized when you are holding more than 1 month’s salary on a cryptocurrency exchange, or simply are not comfortable losing the amount of crypto you hold.
Typically, offline Bitcoin wallets can be divided into two core types; hardware wallets and paper wallets. Below are the best Bitcoin hardware wallets and Bitcoin paper wallets out there.
2. Bitcoin Hardware Wallets
Hardware wallets refer to an actual physical device that keeps your private keys offline and may be connected to a computer when needed. When executing transactions with your hardware wallet, they will typically ask you to confirm each transaction by pressing a button on the device, thus ensuring your Bitcoin and crypto is truly at your fingertips.
Hacks against Bitcoin and cryptocurrency hardware wallets are extremely rare, and the most common method of overriding one’s private keys and ultimately taking ahold of one’s Bitcoin is through the physical procurement, such as theft. Think of a Bitcoin hardware wallet as your own personal bank vault, ultimately impenetrable, absent some highly peculiar and physically invasive circumstances.
The most comprehensive of all Bitcoin hardware wallets and geared towards portability, the CoolWallet S is bridging the gap between blockchain and everyday life through offline private key storage and mobile phone/tablet compatibility. The CoolWallet S allows for the seamless and secure store of value, and presently supports the storage of Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and ERC20 tokens.
Specifically made for iOS and Android, and having recently announced a partnership with JOYSO, the world’s first hybrid decentralized exchange, CoolWallet users are now able to trade on the go, making it a rarity in today’s cold storage marketplace. CoolWallet’s unmatched mobility and access to to a world-class crypto exchange, make it a top contender for one of the best Bitcoin wallets for Android and iOS.
And, if you’re worried about damaging or losing your CoolWallet S, don’t worry – the CoolWallet S’s durability is unmatched in the offline wallet arena, as it’s the only;
- Impact resistant, &
- Heat/Cold resistant wallet with safeguards in place for wallet misplacement and loss.
CoolWallet’s elimination of a single point of failure – requiring a malicious actor to gain control of not only your wallet, but your smartphone or tablet as well – combined with additional security and fraud prevention of the MetaCertProtocol – the world’s largest verified address database – leaves little debate as to who the best bitcoin wallet out there is.
One of the most established and recognizable names in the realm of Bitcoin hardware wallets, Trezor bills itself as the “original Bitcoin Hardware wallet” and supports over 500 coins and tokens. For their ETH Wallet, Trezor has partnered with MyEtherWallet, a free, open-source interface for interacting with the Ethereum blockchain.
Trezor places heavy emphasis on its incorruptibility, claiming that even computers infected with viruses actually pose no threat to your Bitcoin and crypto holdings. Furthermore, Trezor’s PIN entry mechanism is specifically designed to prevent untrusted computers and users from ever learning your actual PIN – doubling the amount of entry time after each failed attempt. For example, 15 failed attempts would take a total of 18 hours, according to Trezor’s FAQ.
With a total set-up time under 10 minutes, easy “plug-n-play” interface, support of 500+ coins and tokens, and highly professional support team, Trezor is a safe bet when choosing a hardware wallet to secure your Bitcoins and crypto.
Ledger Nano S
Typically mentioned in the same breath as Trezor, Ledger Nano S is a secure Bitcoin and Ethereum hardware wallet incorporating OLED display double-check for transaction confirmations and allowing users to connect to any computer via USB. In January, 2018, Ledger reported selling their millionth Nano S wallet (since their founding year of 2014), with revenue estimated over $90 million, making it one of the highest selling and most popular hardware wallets in crypto.
Ledger is the cheapest of the three options, priced at USD $92 (EUR $79), and supports the most coins of the bunch as well. Like Trezor, the Ledger Nano S is able to be used on computers which are infected with malware and employs a PIN entry/fail mechanism, which wipes the device after 3 incorrect guesses.
If you’re looking for a Bitcoin hardware wallet that has been tried and tested, has a durable (metal casing) build, and the most affordable price of the three, Ledger is one of the most attractive options of all Bitcoin wallets.
Paper & Steel Bitcoin Wallets
Paper and steel Bitcoin wallets are two other popular methods for securing your BTC and are as their name implies, they are the storage of private keys or QR codes onto a piece of paper/steel. Steel wallets are merely a more permanent version of paper wallets, and allow for a user’s private key to be engraved or etched into a piece of steel or metal.
Unlike hardware wallets, which carry higher costs and intermediary device to access your Bitcoin and crypto, paper and steel wallets are virtually free – minus the cost of a printer and ink or piece of steel – and eliminate the need for a third-party device or app.
However, one should keep in mind that paper and steel Bitcoin wallets are not without their flaws. Think about it, a piece of paper is highly subject to the elements, tearing, and destruction, while steel wallets, although infinitely more sturdy than paper, may still melt or corrode over time. Not to mention, there may be transcription errors when recording your private seed and handwriting may ultimately be hard to read or completely illegible.
Most importantly, if an investors Bitcoin paper wallet or steel wallet is stolen (i.e. their private seed), that’s it – there’s little actionable recourse to protect your funds.
3. Bitcoin Hot Storage & Online Bitcoin Wallets
Opposite to cold storage, which keeps a user’s Bitcoin and cryptocurrencies offline, is hot storage, where a user’s reserve of cryptocurrencies are held online and connected to the Internet. Online Bitcoin wallets and hot storage do have their place in the security ecosystem, and are typically utilized in cases where an investor is not handling large amounts of crypto or needs to transfer it quickly (for trading, liquidation, etc…).
As hot wallets are connected to the Internet, they are subject to numerous vulnerabilities associated with computer systems, such as:
- Phishing, &
- An assortment of hacks.
Three of the most popular types of online Bitcoin wallets for hot storage include: online wallets, desktop wallets, and mobile wallets.
Online wallets are generally considered the best option for those just starting out investing in BTC and crypto. They are easy to set up, easy to use, and accessible from anywhere in the world, and on any device – as they are typically accessed via your web browser.
Although all wallets that are connected to the Internet may be referred to as ‘online wallets,’ that would be a misnomer due to the sheer amount of ways for a user to connect to the Internet. Online wallets simply refer to wallets a user accesses via their browser and are typically used in conjunction with a cryptocurrency exchange. Not only are they fast, but most online wallets support the management of multiple cryptocurrencies.
Most online wallets offer sufficient security for a novice investor, and users can ultimately mitigate their chances of being hacked by enabling two-factor authentication and bookmarking the page (to prevent phishing scams). However, online wallets require users to rely on a third-party for support, and as mentioned in our introduction, it’s not unheard of for a cryptocurrency exchange to be hacked, resulting in the complete disappearance of one’s funds.
Additionally, online wallets are susceptible to:
- DDOS attacks,
- Outdated & archaic security measures,
- Viruses, &
- Insider hacking.
The most secure of the three, desktop wallets are a perfect wallet for investors who have some experience with Bitcoin and cryptocurrency wallets and are storing more than just a small amount. Desktop wallets are software programs downloaded and installed by users on their laptop or PC, and unlike online wallets, they are only accessible from the computer on which they were downloaded on.
Desktop wallets may actually be used as both online and cold storage Bitcoin wallets, depending on whether you download it on an offline computer. However, if you’re computer becomes “kissed” with an online connection, then it is no longer considered cold storage. Additionally, if you forget to backup your wallet and your computer dies, you likely won’t be able to recover your balances.
Below are three of the most common Bitcoin desktop wallets.
The most popular of all online Bitcoin wallets, Electrum is a lightweight wallet for Mac, Windows, and Linux, and has been around since late 2011. Electrum may be used in support of a hardware wallet, so they are a good transition wallet, for those not ready to shell out a little extra dough on hardware wallets.
Electrum may also be used as a cold storage or hot wallet, enabling users to generate a seed on a secure offline computer and import their public seed to a separately installed Electrum wallet for “hot wallet transactions.”
A notable feature of Electrum is the replacement of fees for broadcasted transactions in times of Bitcoin network bloat and latency. Such feature is extremely useful in cases where transactions are not confirming.
Proffered as one of the best desktop wallets to use according to Bitcoin.org, Bitcoin Core is a full Bitcoin node wallet – meaning you download the whole Bitcoin blockchain – and is recommended for experienced Bitcoin investors and ‘HODL’ers’. Because users have downloaded the entire blockchain, they are able to independently verify transactions on the network – eliminating mandated trust in a third-party.
Bitcoin Core users enjoy:
- Heightened security for their Bitcoins due to the validation of each block of transactions,
- Unique privacy features not available in other wallets, &
- Powerful UI features, including a clear overview of balances/transactions, fee slider, QR codes, and more.
Bitcoin Core takes a lot of patience and time to set up, making the barriers to entry a bit tougher. However, if you are willing to invest the time and effort into securing your Bitcoin and learning further about the Bitcoin blockchain along the way, then we highly recommend the Bitcoin Core wallet.
Having popped up in mid-2016, Exodus has gained serious traction in the Bitcoin wallet scene due to it’s sleek and easy-to-navigate user interface and integration with ShapeShift – a popular cryptocurrency exchange known for their omittance of personal data collection.
Exodus is a good alternative for users who find both the Electrum and Bitcoin Core wallets too overwhelming, as the interface is easy to understand and geared for users who have never used an exchange.
Furthermore, Exodus has been hailed for its attentive customer support – an essential for novice Bitcoin and crypto investors – and has over 100 explanatory articles for customers, explaining wallet features, transaction fee information, and providing general advice for newcomers.
Mobile wallets are software wallets which are downloaded onto your mobile device, either as an iOS or Android App. If you are looking for the best Bitcoin wallet for Android and iPhone, and aren’t in the market for cold storage, the following wallets are two of your best options.
Although a bit complicated for novice BTC and crypto investors, MyCelium is one of the most popular mobile wallets, as it boasts:
- Numerous integrations with third-party providers (including fiat handling and hardware wallets),
- Easy to-understand tabs,
- Synthesized market information and essentials,
- Straightforward payment addresses (along with QR code scanning), &
- The ability to transact in Bitcoin and crypto in a real-time manner.
Recognizing it’s easy-to-use interface, bank-grade security, continuously adapting storage model, MyCelium was named “Best Mobile App” by Blockchain.info in 2014 and retains a 4.5-star rating on the Google Play Store, making it one of the most highly sought mobile wallets in the cryptosphere.
Hailed as one of the simplest Bitcoin wallets for Android and iPhone out there, BreadWallet (BRD) is a fully decentralized wallet allowing users to connect to the blockchain via a 12-word paper key – meaning, no account setup, passwords to remember, or servers to hack.
Several core BreadWallet features include:
- Easy purchasing of Bitcoin with credit card, cash, checking account, and other cryptos,
- Fast support – often answering questions in less than two hours,
- Simplicity – all users need is a simple recovery phrase in order to restore their wallet on another phone if need be.
If you’re looking for a wallet for basic functions (i.e. sending and receiving Bitcoin) and an extremely easy setup, BreadWallet is one of the better mobile wallets to choose.
4. Final Thoughts
Think of cold and hot wallets similar to checking and savings accounts, where you store the core reserve of your Bitcoin and cryptocurrency holdings in cold wallets – your savings account – and store small amounts of Bitcoin and crypto needed for purchases, trading, and liquidation in your hot wallet – checking account.
In an industry ripe with volatility and instability, you should be taking as many precautionary measures as you can to secure your Bitcoin and crypto investments, and ultimately, your future.
As we’ve seen with crypto, history repeats itself and exchange security still has a ways to go before it even remotely becomes a realistic option for storing one’s crypto for a significant period of time – therefore it’s essential you start securing your investments with a hot or cold wallet today.