Guide to how cryptocurrency wallets work & recommendations
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After buying or mining some Bitcoin or other cryptocurrencies you have to make sure that your coins are kept in a safe place. And with cryptocurrency, it’s up to you to manage your own private cryptocurrency wallets.
Bitcoin and other coins and tokens (Ether, Litecoin, ADA, etc) are stored on the blockchains. But you use a wallet to interact with your coins and tokens. I.e. sending them to others. Or request a new transaction from someone else.
In this guide you will learn about:
- What is a cryptocurrency wallet
- Different types of Bitcoin and cryptocurrency wallets
- Hot vs Cold wallets
- Private vs public keys
- The best hardware wallets for Bitcoin and crypto
- Important wallet tips to remember
What is a cryptocurrency wallet
A crypto wallet is where you store your cryptocurrencies. Whether that is Bitcoin, Ethereum or some other cryptocurrency.
At your cryptocurrency wallet, you can keep track of all your holdings. Some crypto wallets give you an overview of the Fiat (USD, EUR, etc) value of your holdings.
It is from your crypto wallet that you can send and receive your cryptos. So if you are planning to buy some cryptocurrencies, you need a wallet.
In this guide you’ll find out about the different types of crypto wallets, such as hardware wallets, web wallets, mobile wallets. And the separate advantages and disadvantages.
Different types of Bitcoin and cryptocurrency wallets
There are different types of wallet where you can store your Bitcoins at. You might have heard them been mentioned already. Otherwise, it’s a good idea to read through our guide and get comfortable with the difference between them.
We will talk you through the difference, the benefits of each type and guide you through our favourite types of cryptocurrency wallets.
All so that you can decide on which type suits you the best. So at the end of this guide you know which one you need to get to hold and protect your cryptocurrencies.
A look into the different types
- Hardware wallets
- Paper wallets
- Web wallets
- Mobile wallets (and App wallets)
- Desktop wallets
Hardware wallets for Bitcoin and cryptocurrencies
Hardware wallets are physical devices where you ‘store’ your Bitcoin or other cryptocurrencies. And according to us, they are the best Bitcoin and crypto wallets.
Your Bitcoin or cryptocurrencies are still stored on the blockchain but the hardware device act like gateways to interact with your cryptos.
The private and public keys to your wallets are also stored safely on the hardware wallet. And in order to move your funds from the blockchain, you need to use that specific hardware wallet. Which makes them the safest wallet types to store your Bitcoin or cryptocurrencies at.
The benefits of hardware wallets
- A hardware device is easily the most secure. As they are not connected to the Internet and usually need another security feature to enable transactions.
- User-friendly. We’ve seen with all brands an increase in attention to details that makes the UX (User Experience) much better. With connected apps and intuitive UI (User Interface).
- Mobile, they’re small and easy to take with you. But question is do you want to bring them with you anywhere?
The disadvantages of hardware wallets
- Not as user-friendly as the web, desktop, and mobile wallets
- A downside is that you don’t want to bring them with you, so they’re kinda stuck where ever you store them.
- Bit more expensive (usually the other types can be found for free)
Paper wallets for Bitcoin and cryptocurrencies
A paper wallet is basically a piece of paper containing (printed or written) your private and public keys used to access your cryptocurrencies on the blockchain. Make sure you are keeping your paper wallet somewhere safe and keep copies if possible.
The benefits of paper wallets
- Super simple to use
- Secure as they are not connected to the Internet, other devices or applications.
The disadvantages of paper wallets
- Not digital at all
- Could be easy to lose, or get damaged
- Not particularly user-friendly
Web wallets for Bitcoin and cryptocurrencies
As the name suggests a web wallet lets you interact with your cryptos on the blockchain via a web browser or extension.
There are two types of web or online wallets. Hosted vs non-hosted wallets.
Hosted keep your private and public keys stored on their servers (with some exceptions). Examples of hosted wallets are exchange wallets (Binance, Coinbase, OKEx, etc) or dedicated Bitcoin and cryptocurrency wallets (Blockchain, Freewallet).
They offer different protection in the case of lost keys, email, etc. Non-hosted is where your private keys are not stored on their servers. And instead, you are responsible for storing your private keys.
The benefits of web wallets
- Easy accessible. From any computer, mobile or device connected to the Internet. Meaning you can reach it from anywhere in the world.
- Great variety of support of different cryptocurrencies. If there are a cryptocurrency then there will be a web wallet where you can store it.
- Simple to use. As web wallet isn’t always packed with extensive features.
The disadvantages of web wallets
- Runs higher risks of online breaches or hacks
- Could be exposed to viruses and keyword loggers, etc
Mobile wallets for Bitcoin and cryptocurrencies
Mobile wallets are when you have an application on your phone or tablet where your cryptocurrencies are stored.
They all provide different security features, like 2-FA, fingerprint protection, etc. It’s common for cryptocurrency companies to produce their own mobile crypto wallets supporting their own cryptocurrencies.
A popular new mobile (app) multi-currency wallet is the Lumi wallet. It actually also is a web wallet and mobile wallet. But we have included it in this section because it fits well in with both an iOS and Android wallet.
It supports the most popular cryptos like BTC, BCH, EOS, ETH and all the Ethereum and EOS tokens.
Another popular Bitcoin and crypto wallet is the wallet application called Freewallet. This is a multi-currency wallet (30+ coins, 100+ tokens) that is available for iOS, Android and as a desktop app.
The benefits of mobile wallets
- Mobile. Yeah, there’s a reason why mobile applications and websites have become so popular. Because they are always with us, as our phones most of the time being.
- Slick UI and ease of use. With mobile applications, the design has to fit into a smaller screen. Usually, that makes the UX and UI far more simple and easy to use.
The disadvantages of mobile wallets
- Higher risks of getting exposed to hacks and other breaches
- If not properly secured with for example backups you might risk your entire wallet if you lose your phone, or if it’s damaged
Desktop wallets for Bitcoin and cryptocurrencies
A desktop wallet is a software cryptocurrency wallet downloaded onto your laptop or PC. There are many different examples of desktop wallets. Supporting Windows, Mac, Linux, etc. Examples of desktop wallets are Exodus, Jaxx, Electrum and Bitcoin Core.
The benefits of desktop wallets
- Slick UI. Overall the UX and look and feel of a desktop wallet or mobile can’t be topped.
- More features. You can see features like price tracking, alerts, price conversions and many more with these types
- Great control of your cryptocurrencies. It is connected to the Internet, but it is stored on your device. So easy available when you need it. But not as accessible as a mobile wallet.
The disadvantages of desktop wallets
- Higher risks of viruses and malware and other infections on your computer
- Your computer gets stolen, damaged or breaks down
- Risks of hacks and scams while connected to the Internet
Hot vs Cold cryptocurrency wallet
You might hear the terms ‘hot and cold‘ when it comes to Bitcoin and cryptocurrency wallets. The difference between the two is that a hot wallet is connected to the Internet and ‘online‘.
And you can view your own storage of your Bitcoins the same. Some can be stored on an exchange or other cryptocurrency wallets like a web or desktop one.
Where it’s easily accessible and you can more quickly send it to others. And a majority should be kept at a more secure wallet.
Cold wallets are more secure
A cold cryptocurrency wallet is not connected to the Internet, thus making it less exposed to hacks and thieves and thus more secure than a hot alternative.
A hot wallet can be breached, via a hack or other malicious attempts. You can run into some very advanced and clever hacks and scams these days.
When you store your Bitcoins or cryptocurrencies using a cold wallet you can be much calmer knowing your coins are exposed to far fewer risks.
Private vs public keys
A set of private and public key pairs are two unique cryptographic keys (long random numbers and characters) used to encrypt and decrypt a wallet.
Where the public keys can be shared with others and are used to create unique addresses.
And the private keys which should not be shared with anyone can be used to decrypt and access your cryptocurrencies.
So it’s extremely important to remember that you should never, ever share your private keys to anyone. For more security tips read our guide on protecting your cryptos.
The best hardware wallets for Bitcoin and cryptocurrencies
1. Ledger Nano S
The Ledger Nano S is one of the more if not most popular hardware wallets for your average Bitcoin holder. I mean the average holder that values the security of their Bitcoins.
We all know or we should know about the hazards of keeping your Bitcoins at an exchange. So for peace of mind getting a secure cryptocurrency wallet is a must.
The Ledger Nano S costs about €69, and it can be one of your smartest decisions you can make to make sure your funds don’t get stolen or lost. It’s easy to operate with two buttons and one screen.
It’s also password protected and it comes with an interesting feature where it allows you to log in to a ‘dummy’ account using a separate password. For the money, it costs it might be one of your best investments. And keeping your cryptos safe should always be your top priority.
The Ledger is definitely one of the best Bitcoin wallets to pick from.
Buy a Ledger Nano S here
2. Ledger Nano X
Here it is, the new Ledger Nano X. The latest cryptocurrency wallet from the Ledger team, now Bluetooth-enabled. With Bluetooth, the Nano X can be used with mobile devices, which makes sense in today’s mobile world. Storing your Bitcoins on a Ledger Nano X is easy, and foremost secure.
It’s built on the backbone of one of the most popular hardware wallets for cryptocurrencies. We loved the ease of use of the Ledger Nano S.
And with added memory and new features we are super eager to soon try the Ledger Nano X.
Ledger has recently added their “all in one companion” application for the Ledger Nano X hardware wallet called Ledger Live find out more about how it works here
Buy a Ledger Nano X here
Another hardware option for storing your Bitcoins is Keepkey. It positions itself as the simple cryptocurrency wallet option on the market. KeepKey supports 54 coins and tokens through one native Chrome app.
Buy a Keepkey here
4. Trezor T
The Trezor is also one of the most popular choices for hardware wallets. Trezor Model T supports more than 500 coins, it’s easy to use and of course, it does the job to keep your coins safe. Storing your Bitcoin on a hardware wallet is a must to be, and feel safe!
The Trezor Model T is definitely a keen favourite amongst the community as one of the best crypto wallets.
What’s the difference between Model T and One?
While Trezor One has two physical buttons and smaller screen, Trezor Model T features a touchscreen, faster processor, advanced coin support, as well as all the features of the Trezor One. In addition, Trezor Model T has a magnetic dock with a double-sided tape that can be attached to any firm surface.
Buy a Trezor T here
5. Trezor One
The Trezor is also one of the most popular choices for hardware wallets, with the Ledger Nano S.
The Trezor One is cheaper than model T but it still very much does the job to keep your Bitcoin and cryptocurrencies safe, but with less features and without the colour touchscreen.
A difference between the two models is that Trezor One does not have a touch screen, and it’s made of plastic so it has a lighter (cheaper?) feel to it.
And the lack of a touchscreen means that the PIN code has to be entered using a computer. Other than that it’s super easy to use, and supports pretty much all the coins you could own. So for a cheaper price than the Model T, it’s still a good buy.
Buy a Trezor One here
Make sure you are keeping your Bitcoins and cryptocurrencies safe
You might ask yourself is it worth the hassle, and the investment? When you can easily keep your Bitcoins and cryptocurrencies on an exchange? Then yes is the quick and simple response to those questions.
Well, there are currently risks involved in keeping your Bitcoin and crypto on exchanges. There have been several hacks involved exchanges since the birth of Bitcoin.
The most famous of the hacks throughout the years was the Mt Gox hack back in 2014. The exchange handled about 70% of all Bitcoin traffic and in the end, more than 850,000 Bitcoins were stolen. Valued at $450 million at the time (today worth $3.4 billion dollars). This is one of many hacks involved in cryptocurrencies.
Go Cryptowise could report that North Korea has reportedly launched a hacking group. That’s been involved in cryptocurrency hacks to the value of $571 million (read more here).
Another recent but well-known crypto scandal was the QuadrigaCX affair (read more about it here). Where the late Gerald Cotten who while abroad in India had sole access to cryptocurrency funds totaling $190 million USD.
The affair has not yet reached any positive outcome with questions remains unanswered, and unfortunately, users remains without their cryptocurrencies. So please make sure you avoid these common risks with crypto. Keeping your Bitcoins and cryptocurrencies somewhere safe.
Important tips to remember
- Don’t forget that you should never share your private keys with anyone. And keep them somewhere safe.
- Don’t store your cryptocurrencies on an exchange for too long. Or store that many cryptocurrencies at one point on an exchange. A recommendation would be to keep a smaller amount that you use for trading for example.
- Do your research before trying out a new exchange. Read up on it on Reddit and other social forums. And try and do a smaller test amount before sending all of your coins there.
- If you own Bitcoin or cryptocurrencies more than 3x the value of let’s say a Ledger Nano S then you should definitely buy a hardware option to keep your cryptocurrencies safe.
- Make sure that the website address you’re accessing is the correct one, there’s been several phishing hacks with crypto throughout the years. Where fake website addresses have been created to fool you to login using your credentials. So make to check twice before accessing any website. And check that they are using HTTPS the added security protocol to websites.
So when you are doing your research it is worth checking what the rest of the crypto and Bitcoin community are using? Check out on social media, for the best Bitcoin wallet Reddit can be a good place to go to!
We hope you liked this article on the best Bitcoin wallets and best crypto wallets. If you have any questions or suggestions please leave a comment below. Otherwise please share the article if you enjoyed it.
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Hello and welcome to Go Cryptowise.
My name is Per Englund and I’m a long-term fan and investor of Bitcoin and other cryptocurrencies. I’ve been around the space for a good few years, learning how it all works and to be a part of this engaging community.
Now it’s time for me to share my experience with others. I am also a business and product developer so I know first-hand what it takes to create a successful product, brand and customer experience.
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