CryptoMarketCap - Cryptocurrency Market Capitalizations logo CryptoMarketCap - Cryptocurrency Market Capitalizations logo
2020-04-17 16:18:00

How Should You Choose The Wallet For Bitcoin?

Bitcoin wallets are divided into “cold” (offline storage) and “hot” (permanently connected to the Internet). The former are considered the most reliable, because it makes it impossible for attackers to obtain remote access.

When using the "hot" there is always the possibility of losing assets due to hacking. The rest of the wallets differ in the ways they implement and interact with the user.

Desktop Bitcoin Wallets (Desktop)

These are applications that are installed on a computer. As a rule, they are free, but with a small transaction fee.

They are divided into the so-called "thick" and "thin". In the first case, the wallet needs to download the entire Bitcoin blockchain to the local PC storage, which can take several days, because at the moment it weighs about 275 GB. In the second - full synchronization is not required.

It can also be used to organize “cold” storage of bitcoin and the creation of offline transactions.

All other desktop wallets are classified as thin. They are installed in a few minutes maximum and take up much less space on the user's hard drive, since interaction with the blockchain is carried out through the developers' servers. This method of conducting transactions is considered less secure compared to working through a “thick” wallet for bitcoin, but is quite acceptable for storing small amounts and conducting regular transactions.

Almost all representatives of the category of “thin” desktop wallets are “hot” and universal (multicurrency). But under certain conditions, they can be used for “cold” storage of bitcoin - for this, after creating a BTC address, the computer with the application should always be disconnected from the network, and the corresponding private key should never be used to confirm online transactions. As soon as this condition is violated, the Bitcoin wallet in question will immediately become “hot” with all the ensuing consequences.

Bitcoin Online Wallets

Wallets are implemented as websites and are the easiest and fastest way to create an address and receive / send funds from anywhere in the world. All that is required is a computer, tablet or smartphone with Internet access and a few minutes of time to create an account.

At the same time, they are considered the least secure way to store bitcoin due to the fact that at different stages of interaction with the wallet, user data can theoretically be stolen. Therefore, it is recommended that you do not store a large number of coins in bitcoin online wallets and, if possible, use all available ways to increase the level of security (complex password, two-factor authentication, SMS confirmations, etc.).

To some extent, cryptocurrency exchanges can also be attributed to online wallets for bitcoin, since each of them has the ability to store crypto assets. However, there is an important nuance - user funds are actually voluntarily transferred to the ownership of the site and the possibility of their withdrawal depends solely on its approval of the requested transaction.

Given the increasing trend of hacking crypto exchanges, this way of storing bitcoin is one of the most unreliable. Therefore, at such sites it is undesirable to keep more funds than necessary for trading.

Read Also:

— How Bitcoin Halving Can Change Crypto Market

— Find Out About Demo Crypto Trading

— What You Should Know About 2FA

Bitcoin Mobile Wallets

This type of Bitcoin wallet is an application for mobile gadgets (smartphones, tablets) that allow you to quickly and conveniently access the balance of your Bitcoin addresses.

Bitcoin mobile wallets always belong to the “thin” and “hot” class, as they do not store the entire history of the blockchain and regularly send payments through the network.

Typically used for small daily transactions, mainly using QR codes and NFC technology. For example, to pay for goods, food or drinks from sellers that accept Bitcoin and other cryptocurrencies.

They are not intended for storing large amounts due to the operating features (they often have access to private keys) and vulnerabilities to remote attacks, as well as viruses that could infect a device.

Another important point is the risk of physical loss or theft of the device. As a rule, in this case, the user is given a seed phrase to restore access, which should be stored in a safe place.

Hardware Wallets

Bitcoin wallets in this category are considered the most secure, as they offer only “cold” storage of bitcoins with the ability to create offline transactions. As a rule, they are compact devices with an internal drive, a small screen and several buttons.

In fact, the hardware bitcoin wallets do not contain the coins themselves, and only private keys are stored for access to them.

Interaction with such devices most often occurs through specialized software installed on a PC or laptop, which is connected via cable or Bluetooth.

Because of this, and also because of being offline and having enhanced security measures, hardware wallets cannot provide fast transaction sending. Therefore, they are not suitable for regular payments and are mainly used for long-term storage of a large number of BTC.

Of the shortcomings of this type of wallets for bitcoin, we can only mention their relatively high cost ($ 80-200 and higher). However, the cost of purchasing hardware wallets is justified, given the level of security.

You can also mention the risk of physical loss of access to the device, but it is usually leveled using the backup function, which allows you to restore funds to another wallet of the same model.

Paper wallets

Based on the name of this type of bitcoin wallets, you can already guess what they are - a public and private key, written or printed on paper. This feature is the main advantage, since in fact it is the cheapest way of "cold" storage, which provides protection against remote hacking.

However, this condition is preserved only until the private key is used for at least one transaction on the network. After that, the paper bitcoin wallet ceases to be “cold” and it is better to replace it with a new one.

Thus, this type of wallets is perfect for long-term storage of assets outside the network, but not for frequent transactions.

You can generate random public and private key directly on the site, simply randomly moving the mouse cursor around the screen.

But it is preferable to download the program repository on a PC and then create a new wallet, after disconnecting from the network. The received data can only be printed out or written down manually on a sheet of paper. Ideally, it would be necessary to store the public and private keys separately.

The main drawback of paper wallets is poor physical security. It can be torn, burned, lost, etc. Therefore, it is advisable to store them in a safe place, for example, in a safe or a bank cell.

Bitcoin Core: official Bitcoin wallet

The wallet (or rather, the integrated software) Bitcoin Core was introduced in 2009, almost simultaneously with the Nakamoto manifest, so it became the first cryptocurrency wallet. Since the application includes not only a wallet, but also connects the owner’s PC as a Bitcoin network node, Bitcoin Core is often called the “Nakamoto client”. At the moment, software is considered the best and perhaps the safest "thick" wallet.

The main advantages of an official wallet include:

  • Reliability is the main trump card of Bitcoin Core. Since all user data is stored on the owner’s PC, it is not necessary to transfer it to remote servers, as provided for in "thin" applications;
  • Multifunctionality - Bitcoin Core is a comprehensive software that includes “cold” and “hot” wallets, as well as a full Bitcoin node;
  • Constant updates - the client is updated and finalized. The latest version is incomparably more convenient and easier to understand than the first Bitcoin Core, which appeared in 2009 and this trend will continue in the future.

Minuses:

  • Large volume - to work, you need a complete Bitcoin blockchain, and this is about 300 GB and all of them will be stored on your PC;
  • Relative complexity - the Bitcoin Core interface has evolved, but it is still more complicated than the “thin” analogues, so newcomers often have problems with the development of the client;
  • PC load - since the application works with a large amount of data, it actually needs a separate hard drive and from 2 to 4 GB of RAM. For the modern hardware, this is not a problem, but there will be lags and friezes on old computers.

Which Bitcoin wallet to choose

Each of the above types of wallets for bitcoin is not ideal, since they all have both advantages and disadvantages. But in order to choose the most worthy option, an assessment should be made according to a number of criteria.

So, so that a Bitcoin wallet can claim the title of ideal, the following statements must be true in its respect:

Does not require special technical skills for its use;

Reliably protects user assets and data from intruders using a multi-level security system;

Its creators do not have access to private keys of clients, since they are either stored on servers in encrypted form or are present only on local devices of users;

It offers a convenient function to restore access to funds in case of reinstalling the application, losing a password or gadget, etc .;

It has never been hacked.

Not every Bitcoin wallet meets these conditions, but such options are still available.

Best Bitcoin Wallet

Almost every category of bitcoin wallets has its own leaders, which can be used without fear.

Currently, there are a lot of offers on the Bitcoin wallet market, not all of which are safe.

Therefore, if you decide to turn your attention to a Bitcoin wallet that was not mentioned in this material, you should adhere to the recommendations from trusted experts.

 

 

 

Read the Disclaimer : All content provided herein our website, hyperlinked sites, associated applications, forums, blogs, social media accounts and other platforms (“Site”) is for your general information only, procured from third party sources. We make no warranties of any kind in relation to our content, including but not limited to accuracy and updatedness. No part of the content that we provide constitutes financial advice, legal advice or any other form of advice meant for your specific reliance for any purpose. Any use or reliance on our content is solely at your own risk and discretion. You should conduct your own research, review, analyse and verify our content before relying on them. Trading is a highly risky activity that can lead to major losses, please therefore consult your financial advisor before making any decision. No content on our Site is meant to be a solicitation or offer