Bitcoin/Cryptocurrency: Selecting a Wallet [GUIDE]
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There are two main steps when you start thinking how to choose a Bitcoin wallet. First decide whether you need an online wallet, an offline wallet, or both. Then you can consider specific wallets and find the best Bitcoin wallet for you.
Wallet types are mainly about security and convenience: online wallets are more suitable for daily use but aren’t very secure, while offline wallets are less convenient for frequent use yet are more secure.
What kind of wallet do I need?
Look for an online Bitcoin wallet (aka “hot”) that’s web-based and runs as an app on your phone (one can find a bitcoin wallet for Android and a bitcoin wallet for iOS) or a program on your computer if:
– You only need to store a small amount of bitcoin, which wouldn’t be too painful to lose;
– You’re looking for a good user experience;
– You can only afford a free wallet;
– You’re not concerned about privacy;
– You want web access to it from a mobile device or computer;
– You trust a third party to safeguard your wallet;
– You need to share the wallet with someone else.
Consider an offline (aka “cold”) wallet for storage (e.g., paper bitcoin wallet or hardware bitcoin wallet), if:
– You need to store a large amount of bitcoin and security is a top priority;
– You don’t need to use it often or access it anytime, anywhere;
– You prefer to safeguard your funds yourself rather than trust a third party;
– You’re ready to pay for hardware (typically from about 50 to a couple hundred dollars);
– Privacy is very important for you.
You can, however, use both types of wallets: a cold one for storing bitcoins, and a hot one for spending them.
How to evaluate a specific wallet
Ask these questions:
– Does it only support Bitcoin or can it store other cryptocurrencies as well?
– If it’s a web wallet, does the address begin with HTTPS? That offers greater security than an HTTP wallet.
– How secure is authentication? Does it offer two-factor authentication (username and password plus some piece of information only you have)?
– Does it have a multi-signature feature (if you want to use a wallet with multiple owners)?
– Is the wallet “hierarchical deterministic” (HD), meaning it will always use a new Bitcoin address to receive payments and so enhance the security of your money?
– How transparent is the wallet provider? Do you know who they are?
– Has the company behind the wallet published the wallet’s code and is it open source?
– Is the wallet simple to use?
– Is there a way to backup the wallet?
– What does the community have to say about the wallet? Check forums like Bitcoin Reddit or Bitcoin Forum.
– For a hardware wallet, what do you think about its design, user interface, manufacturer reputation, and price?
Note that this information is only for general educational purposes. You should always carefully consider the latest available information when choosing a wallet.
You might also find the official website of the Bitcoin Foundation Bitcoin.org to be of help. It provides a list of wallets to choose from. Also, don’t forget whether a wallet supports your country – if you are looking for a bitcoin wallet in India, make sure it’s on the list of supported countries.