Knowing how to best safeguard your bitcoins can be tricky since many different solutions exist for various needs such as privacy, simplicity, and long term storage.
Choosing a bitcoin wallet is no longer a simple matter of settling between security and simplicity. Using a few wallets for different purposes is becoming the standard, much like using different types of accounts for fiat money.
Bitcoin Banks Are for Convenience Alone
However, since you do not control your private keys, they are best treated as on-ramps and off-ramps to owning bitcoin only and should not be considered long term storage of your coins for any serious amount.
Walking Wallets Are Fun and Full of Features, but Don’t Keep Much in Them
Mobile or web-based wallets are easily set up and have many unique features making them attractive to new bitcoin users. Blockchain wallet is the world’s most popular bitcoin wallet with over 10 million installs, largely because of its super-simple and private interface. Airbitz and old-school favorite Mycelium wallets allow buying bitcoins from inside the app. Airbitz also offers vendor discounts and has built-in mobile top-up. There are many others such as Breadwallet, Copay, Jaxx, and Greenaddress; all have something unique to offer.
However, these wallets are considered lower security, ‘pocket money’ wallets even though some now offer two-factor identification and other security measures making them pretty secure. Most experts still advise to only keep an amount of bitcoin on them that we can afford to lose, such as $100 or less, since they are not kept offline and could be subject to hacking.
High Privacy Wallets Make Anonymity Using Bitcoin Easier
For those who make privacy their highest concern, a few wallets were made to add extra anonymity layers to accessing stored bitcoins. For example, some support the anonymity network TOR, while others offer coin-mixing schemes like Coinjoin.
Darkwallet was the infamous first attempt, but development on it has stopped and it is not considered safe. Samourai wallet is fun and full-featured. The most popular option for dark web users, however, has been the highly-configurable wallet Electrum, which offers a few privacy options while allowing for offline storage.
Full Wallets Support the Bitcoin Network
Those active in the bitcoin technical community who do mining or run a node to support the network may want to run one of a few “full wallets.” These wallets download a whole copy of the blockchain and act as a peer-to-peer node for the support of the community. A few different versions exist such as Bitcoin Core and Bitcoin Unlimited. Each one represents a different view of how the bitcoin protocol should behave.
Hardware Wallets Offer Above-Average Security With Convenient Access
Hardware wallets like the Trezor, Keepkey, and the Ledger Nano S, offer convenient access to highly secured bitcoins kept fully offline. Although they can cost between $60 and $100, these devices allow bitcoins to be spent directly from where no hackers can get to them; a task that is too technical for most users to duplicate in non-hardware wallets.
The security features make hardware wallets ideal to receive bitcoin income in. Once in a hardware wallet, any amount of bitcoins can be transferred over to other types of wallets for extra functionalities while keeping the remaining offline by default.
Maximum-Security Wallets for Advanced Users
The first such wallet made, Armory, is no longer fully supported but still available. This flexible wallet offers several unique options but requires downloading the whole blockchain.
Using the privacy wallet Electrum on a Tails USB boot drive is one of the most popular ways to bypass malware and hackers. It’s so popular that the Tails build has even included the Electrum wallet as its default bitcoin wallet. For maximum security, follow all directions completely and then only use the Tails drive sparingly, using the whole operating system only for your wallet.
Long Term Storage With no Wallet at all
For long term storage, many have chosen to greatly reduce the access to their coins by keeping them on printed paper only, a form called ‘paper wallets’. Making one requires a small amount of trust in the website or code that randomly generates the wallet, although with technical proficiency, that trust can be reduced. Bitaddress was the first popular paper wallet generator, but there are several others, including Bitcoin.com’s.
For added randomness, technophiles can use physical dice can be used to generate perfectly-secure bitcoin address or seed using Diceware.
Keep in mind that bitcoins stored on paper will have to be swept into a different wallet where it can be spent from, making this option only suitable for long-term storage. In addition, the chance of fire over several years should not be overlooked, so paper wallets must be stored in a fireproof safe that you control. Never store them nor any wallet seed in a safety deposit box at a bank.
Which bitcoin wallets are right for you? Let us know in the comments section below.
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