Best Bitcoin Wallets – How To Use, Spend, Send/Receive & Trade?

Picking a Bitcoin wallet is way harder than picking a conventional wallet. Want to choose the best Bitcoin wallet? We want to help. Here’s everything you need to know about picking a Bitcoin wallet.

What Is A Bitcoin Wallet?

A Bitcoin wallet is a device or platform that lets you store, transfer, and spend Bitcoins. Many Bitcoin wallets are designed to hold Bitcoin along with other cryptocurrencies – also known as altcoins. A Bitcoin wallet can be an app, a website, an online account, or a physical device.

There are two broad types of Bitcoin wallets:

Physical Wallets:

Also known as a cold storage wallet, a physical Bitcoin wallet is a device you can hold in your hands. It looks like a USB drive or external hard drive. When you need to spend or transfer Bitcoins, you connect this wallet to your computer or mobile device. Typically, these wallets use USB cables. Some wallets also use Bluetooth.

Digital Wallets:

These Bitcoin wallets can be found in the form of an app, a website, or online account. If you have ever purchased Bitcoins through an exchange, then your Bitcoins are stored in that exchange’s wallet. Some people also call digital wallets “hot wallets”.

Whatever type of wallet you have, it has one simple goal: to store your private Bitcoin keys for you. These wallets store lines of code. Each line of code refers to your Bitcoin. To protect your Bitcoins, the wallets typically encrypt your code and lock it behind multiple security checks.

Hardware Wallets Versus Digital Wallets

Which wallet is the right choice for you? Here are some of the pros and cons of hardware wallets and digital wallets for storing your Bitcoins.

Hardware Wallets

Hardware wallets come from popular brands like Ledger, Trezor, and KeepKey (these are the three most popular hardware wallet brands available today). These are physical electronic devices that connect to your computer for the sole purpose of securing your Bitcoins.

Typically, hardware wallets are the best choice for those who have a decent number of Bitcoins, and don’t want to rely on a digital wallet. As long as you retain access to the physical hardware wallet, you retain access to your Bitcoins.

Most hardware wallets also have a backup security mechanism – like a PIN or recovery sentence – you can use to regain access to your Bitcoins if your device is stolen or lost.

Pros

• Easy way to store, spend, and protect your Bitcoins
• Bank-grade security
• Peace of mind
• Easy to backup and secure your Bitcoins

Cons

• They’re not free (they range in price from $30 to $250)

Digital Wallets

Digital wallets or hot wallets are wallets found on websites, online accounts, apps, offline software, and other digital platforms. These wallets generate private keys on an internet-connected device. Any time you’re connected to the internet, you’re introducing a security risk.

Many Bitcoin users view digital wallets like traditional wallets: you use it to store a small amount of cash, but you keep your life savings somewhere else (like a bank).

Pros

• Easily store small amounts of Bitcoin
• Free and easy to setup
• No need to attach a physical device to your computer
• Spend funds across multiple devices and websites

Cons

• Not ideal (in terms of safety and security) for storing large amounts of Bitcoins
• Exchanges, websites, and online accounts can be hacked or shut down at any moment

How To Pick The Right Bitcoin Wallet For You

Bitcoin is used by a wide range of people for different purposes. If you want to pick the perfect wallet, you need to decide how you’re going to use your Bitcoin – and why you’re using Bitcoin.

Are you investing in Bitcoin? If you plan to keep your Bitcoins for a long-time, then a hardware wallet is a no-brainer. You can buy Bitcoin today, transfer your Bitcoins to your wallet, then keep it in a secure storage location for a long period of time until you need it.

Are you using Bitcoin for a small online purchase? Some purchases require Bitcoins. Sometimes, you just want to try Bitcoin out. If that’s the case, then a hot wallet is perfectly fine.

Are you the type of person who worries about security? Ultimately, the price of Bitcoin today means that a hardware wallet is a very low-risk purchase. You’re spending $50 to $150 today to protect what could be a much larger investment. For many people, that’s a no-brainer.

The Best Hardware Wallets Available Today

The world of Bitcoin hardware wallets isn’t huge. There are three main brands dominating the space, including Ledger, KeepKey, and Trezor. Here’s a brief overview of the four most popular products from each company:

Ledger Nano S ($65 USD)

Priced at around $60 USD, the Ledger Nano S is the cheapest Bitcoin wallet with a display. Many Bitcoin users recommend getting a display for extra security.

It gives you an extra layer of protection that lets you see what you’re spending, and what’s going on inside your wallet. The Nano S is Ledger’s mid-range device. The company released this wallet in August 2016.

Trezor ($100)

Trezor was one of the first established Bitcoin hardware wallets. Released in August 2014, Trezor’s wallet continues to offer rock-solid security and ease-of-use today. It’s basically the convenience of a hot wallet combined with the security of a hardware wallet.

If you want to keep your Bitcoins secure and spend/transfer them frequently, then Trezor is a great option. It’s all packaged inside a sleek, thumb-sized device with a display.

KeepKey ($100)

KeepKey competes with Trezor for the most popular Bitcoin hardware wallet available today. Priced at about the same rate, KeepKey was released in September 2015. Like Trezor, it offers a screen – although the screen on KeepKey is slightly larger. Some people prefer KeepKey for added security, while others just like the larger screen.

Ledger HW1 ($20 to $30)

This is the cheapest Bitcoin hardware wallet. If you want slightly more security than a hot wallet, but don’t feel justified in spending over $60, then the HW1 is your best option. The HW1 is the lower-end product in Ledger’s lineup.

The wallet is made by a reputable company, so security is still very good. However, there’s no display – which can slightly weaken security on the HW1.

Digital Wallets

Digital wallets, or hot wallets, can be found on Bitcoin exchanges, cryptocurrency exchanges, apps, websites, and more. They’re designed to be easily accessible through an internet-connected device – like your computer, phone or tablet.

These wallets generate keys over the internet-connected device, which naturally makes them less secure than a hardware wallet (which you disconnect from the internet when not in use).

You’ll notice that there are lots of wallets designed specifically for Android. There’s a good reason for that: Apple banned Bitcoin wallets for years, which means most developers focused on Android. Today, Bitcoin wallets can be found on the iTunes App Store and Google Play Store.

Here are some of the popular hot wallets available today:

GreenAddress (Web, Desktop, Android, iOS)

GreenAddress is a popular hot wallet available across multiple platforms, including your web browser, desktop, or mobile device. GreenAddress also gets along well with Trezor and Ledger’s wallets.

As a multi-signature wallet, GreenAddress requires manual confirmation for all coin movements, which gives you an extra layer of security. If you’re using GreenAddress on Android, you’ll need to download the GreenBits app.

Mycelium (Android)

Mycelium may be the most popular Bitcoin wallet for Android. It’s an easy way to send and receive payments, and its extensive backup options make it ideal for those who care about security. Mycelium is also surprisingly user-friendly – so if you’re not very techy, you should be able to use Mycelium without issue.

Breadwallet (Android and iPhone)

Breadwallet was known as an iPhone exclusive Bitcoin wallet for years. However, the company recently released an Android wallet as well. On either mobile OS, Breadwallet lets users control private keys through an easy-to-use interface with passcode support.

Copay (Android)

Copay is a popular, straightforward wallet that uses an open source, multi-signature platform to protect your Bitcoins. The wallet is made by the team from BitPay. You can choose to secure your account with multiple signatures/security checks, or just one.

One of the unique advantages with Copay is that you can have multiple users – similar to a joint checking account at a traditional bank.

Airbitz (Android and iPhone)

Airbitz is a Bitcoin wallet available for iOS and Android. The wallet comes with a cool feature that distinguishes it from competitors: it’s a zero-knowledge single sign-on solution called “Edge Login”.

Essentially, you use the Airbitz wallet to login to decentralized blockchain apps by scanning a barcode. The app instantly creates, encrypts, and backs up your keys with no need to write anything down, save any files, or decrypt any data.

Bitcoin Wallet (Android)

Bitcoin Wallet was the first mobile Bitcoin wallet. Also known as Schildbach Wallet, Bitcoin Wallet is directly tied to the Bitcoin blockchain, which purportedly makes it more secure than others. The app is also known for its straightforward interface. It doesn’t overwhelm you with features, but provides enough functionality for average Bitcoin users.

Electrum (Windows, Mac, and Linux)

If you’re looking for a software-based wallet for your desktop computer, then Electrum is a popular option. Desktop wallets like Electrum are stored on your computer. Many prefer these desktop clients because they don’t rely on third parties for data.

Electrum was launched all the way back in November 2011. Today, it works on Windows, Mac, and Linux and supports popular hardware wallets like Trezor, KeepKey, and Ledger.

How To Keep Your Bitcoins Safe From Hackers

One of the biggest concerns among Bitcoin users is the theft, loss, or hacking of Bitcoins. Before hardware wallets became popular, there were several major instances were Bitcoin users lost considerable funds due to hacks.

Many will tell you about the Mt. Gox failure, for example, where users lost $450 million in Bitcoin. On a smaller scale – but still devastating – was the Bitfinex hack, where users lost $70 million in value.

As Bitcoin has become larger, more valuable, and better known, security concerns have continued to grow. Today, many users prefer to keep their Bitcoins away from exchanges and other online platforms.

In any case, here are three core rules you should follow to keep your Bitcoins safe from hackers:

1) Create Backups Of Your Private Keys:

Some wallets do this automatically. In other cases, you’ll want to do it manually. Whatever the case, this protects against the loss of your Bitcoins due to hard drive failure or other unexpected catastrophes.

Keep a duplicate set up backups off-site (i.e. in a safety deposit box at a bank) to protect against physical problems – like theft, fire, robberies, etc. If disaster occurs, you have a (literal) backup plan.

2) Generate Private Keys Offline:

Any time you’re generating private keys over the internet, there’s the chance for a security problem. Generate private keys in a secure, offline environment – especially if you’re using large amounts of Bitcoin.

3) Encrypt Your Wallet:

Encryption is a no-brainer. When you encrypt your wallet, you prevent someone from accessing it even if they steal the physical device. In the unfortunate event that your hardware wallet is lost or stolen, encryption prevents someone from stealing all the funds from your wallets.

Ultimately, Bitcoin users have a responsibility to safeguard their funds. Bitcoin users who are lazy about security can quickly find themselves missing access to thousands of dollars’ worth of funds.

Frequently Asked Questions About Bitcoin Wallets

What Is A Private Key?

A private key is a key part of the Bitcoin platform. It was created as a way to communicate securely through insecure communication channels – like the internet. Think of the key like a special password. That password lets you accept a message through a communication channel. Without that password, the message is gibberish.

In the Bitcoin wallet, private keys come in pairs – including a public and private key. It’s one of the key security innovations created by Bitcoin. The public key is used to encrypt the message, while the private key decrypts the message.

Only one person (you) has the private key. The public key is free for everyone. That means everyone can send encrypted messages without having to agree on an encryption method. They use the public key, and you use the private key to decode the message.

Why Are Private Keys Important?

Private keys are crucial for secure online communications beyond the world of Bitcoin. Wikileaks, for example, and media organizations rely on private keys to keep sources anonymous. We’re not going to dive too deep into the technology behind private keys here, or how they were created, as it’s far beyond the scope of our Bitcoin wallets guide.

What Is A Bitcoin Address?

In order to use, transfer, and spend Bitcoin, you’ll need a Bitcoin address. A Bitcoin address is kind of like a bank account number combined with an email address. The address explains which wallet the coins should be sent to.

Essentially, it’s a series of numbers and letters that lead to a specific destination on the Bitcoin blockchain. There are several advantages of a Bitcoin address, however. You can customize the amount requested, for example, and include an expiration date.

What Else Do I Need To Know About Bitcoin Addresses?

One of the most important things to know about Bitcoin wallets is that they’re case sensitive. Typically, an address consists of 34 characters, including numbers and lowercase letters. A Bitcoin address starts with either a 1 or 3. You’ll notice that Bitcoin addresses never use an O or 0.

How Do I Get A Bitcoin Address?

Most Bitcoin wallets manage your Bitcoin address for you. Others, however, give you full control of your Bitcoin address, or let you add an existing address. Typically, generating a new Bitcoin address is as easy as pressing a button on the app or wallet.

Some Bitcoin wallets – including Electrum – give you an additional level of control. You can choose how many blocks your transaction should be confirmed, for example. The faster you want your payment to go through, the more you’ll have to pay miners for confirming your activity (i.e. the transaction fees).

If you don’t mind slower transaction times, then you can have lower transaction fees.

How Do I Put Bitcoins In My Bitcoin Wallet?

You can buy Bitcoins through online exchanges. Exchanges vary worldwide. Some exchanges are built for certain countries, while others work worldwide. After you purchase Bitcoins, you can send them to your wallet simply by entering your Bitcoin address.

Sometimes, transferring Bitcoins into your wallet is as easy as tapping a button in a Chrome extension or mobile app.

If you created a wallet using one of the services listed above, you’ll find that they make it easy to buy Bitcoins through their service. In fact, some of the apps above were created by Bitcoin exchanges. As long as the price is fair, there’s nothing wrong with using these platforms to buy and sell Bitcoins.

Where Are My Bitcoins Stored?

One of the unique things about Bitcoin is that it isn’t a physical product: it’s just a string of data. You could get that string of data tattooed on your arm, if you wanted to (don’t do that). Essentially, the wallets mentioned above are just secure places to store that code.

Can I Buy Physical Bitcoins?

Yes, you can buy physical Bitcoins. However, they’re a bit gimmicky. A physical Bitcoin is just a piece of metal with a Bitcoin code printed on the front. It’s not a very secure or practical way to secure your Bitcoins – but it does look kind of cool. Ultimately, unless you’re a coin collector, physical Bitcoins aren’t a great idea.

Can I Use My Wallet To Store More Than Just Bitcoin?

Most of the wallets mentioned above – including hot wallets and cold storage wallets – can accept Bitcoins and other cryptocurrencies. Bitcoin is the largest and best-known cryptocurrency, but alternatives like Ethereum, Litecoin, and Dogecoin can all be purchased from major exchanges, then stored in your wallet.

Typically, you start using altcoins just like you start using Bitcoins – you press a button to create your altcoin address, then send altcoins to your address after buying them from major exchanges.

Do I Need To Open A Bitcoin Account?

There’s no such thing as a “Bitcoin account”. If you have a Bitcoin address and/or a wallet, then you already have a “Bitcoin account”. Unlike traditional banking systems, you don’t need to apply to open a Bitcoin account, or fill out a bunch of paperwork.

Which Wallet Is Right For You?

For many people, free digital wallets are the best option. These wallets can be found in the form of offline desktop software, mobile apps, web extensions, or online accounts. If you’re dealing with a large value of Bitcoins, however, and you plan on keeping those Bitcoins secure, then a $60 to $100 hardware wallet is absolutely worth a purchase.

It’s a cheap price to pay to secure thousands of dollars’ worth of Bitcoins.

Remember: Bitcoin is an easy target for hackers. Major Bitcoin exchanges are under constant attack from some of the world’s best hackers. There’s a lot of value in Bitcoin, and one small flaw can cause half a billion dollars’ worth of Bitcoins to disappear. For peace of mind, hardware Bitcoin wallets are almost always your best option.