Bitcoin is a digital currency, and that is to say, the methods of acquiring and storing bitcoin is totally different from that of traditional currencies. Since bitcoin don’t physically exist in any form or shape, it cannot technically be stored anywhere. This is why you need Bitcoin Wallets to store it digitally/virtually using private keys to access your bitcoin wallet public address and to sign for transactions that need to be securely stored.
I know you’ll be asking, do i need a wallet for buying or transferring bitcoin? Yes of course, you seriously need a good wallet for that matter!
Firstly, it’s the combination of your private key and public key that makes bitcoin transactions possible anytime you may want to transfer the digital currency from one place to another blockchain wallet.
Types of the best Bitcoin/Blockchain wallet
There are several types of bitcoin wallets for storing bitcoin in terms of accessibility, safety, convenience, security etc.
#1. Paper Wallet
This is a kind of document that contains a public address and a private key that can be used to receive bitcoins. It also allows you to transfer or spend the bitcoins stored at that particular address. It is often printed in form of QR-based codes, so that you can quickly scan them and add the keys to a designated software wallet to make a transaction.
Services like BitAddress and BitcoinPaperWallet can be used to completely create a random bitcoin addresses and private keys for storing or transferring the cryptocurrency. This generated document can be printed, while some services also offer a tamper-resistant design or a kind of holographic labels which is good for protecting lose of keys due to damages inflicted on the document.
The major advantage of this kind of wallet is that, the keys are digitally stored anywhere, which makes it very hard for hackers attacks, malware and basically, any other form of cryptocurrency theft. However, a precaution indicated that before you create a paper wallets address, you should be very sure that no one is watching you. It is advisable that you make use of brand new operating system and also make sure that a networked camera is not enabled at the location where you’re creating the paper address, while using none networked printers as well.
It is also important to let you know that printing important information on a piece of paper, means that you have to securely guard that piece of paper from water, damping or generally wear or tear. I will always advise you to always laminate your paper wallet if you choose this kind of method to store your bitcoin investment.
#2. Physical Bitcoin
This is achieved through implementation of tamper-evident seal. Physical bitcoin is a physically designed coin that is pre-loaded with a fixed amount of bitcoin with the intention of not sending or transferring it as long as the private key remains hidden.
Bitbill is one of the physical bitcoin that is shaped like a credit card, but most alternatives were shaped as a round metal. Mike Cadwell, a cryptocurrency enthusiast popularly nicknamed, ‘Casascius‘ created the first of the popular Casascius physical bitcoins in 2011. The private keys were hidden under a peel-able hologram. The physical bitcoin looses its worth once it’s redeemed.
Thus, this is the type of bitcoin physical asset that can be stored in a bank for security for long-term HODLing. It can be very useful when trading offline in a large quantity. The major disadvantage is this form of bitcoin, is that armed robbers may figure out that you have it and try to snatch it away from you at a gun point.
#3. Mobile Wallets
If you are into cryptocurrency trading and mostly make use of your bitcoin investment on daily basis, this is the type of bitcoin wallets that is mostly convenient for you. It can be used to pay for goods in shops (both online and offline) or engaging in face-to-face transactions. It is ran as an app on your smartphones to store your private keys, which allows you to pay for transfer directly from your mobile phones.
Moreover, some phones comes with NFC (Near Field Communication) feature which enables some bitcoin holders to transact or transfer their asset from their gadgets to another bitcoin wallet by using tap-to-send, without having to provide any information during the process.
Despite the fact that your mobile phones can be private to yourself alone, it is still prone to hackers who use phishing attack to steal and make you loose control of your bitcoin wallets as soon as they gain access to your private keys.
#4. Web (or Online) Bitcoin Wallet
Online web bitcoin wallets stores your private keys on a server of a company providing such services. The server is constantly online and controlled somewhere by someone else. This means that, you don’t really have total control of your bitcoins since the private key is been stored on the server itself or by the person in-charge of the server.
Most cryptocurrency exchanges make use of this kind of storage to secure and store bitcoins. Though, majority of them also make use of cold offline storage devices. Some of the best crypto exchanges that one can use for temporally storing your bitcoin investment online are: LocalBitcoin and Luno.
#5. Desktop Wallet
Desktop bitcoin wallets are designated software that can be downloaded and installed on your personal computers to store your private keys making use of your hard disk drives. According to my research, it’s mostly secured than online or mobile wallets. However, they are all offline wallets and one of the great solution for those in cryptocurrency trading of small amount of bitcoins from their computers.
Best bitcoins wallets recommended for storing bitcoins on your computer are: Jaxx and CoPay. They have both mobile and desktop softwares that are secured due to the fact that they’re offline wallets. Thus, storing bitcoin on a personal computer can also be risky especially when you’re always online with with the same computer, which can be attack by hackers to steal your bitcoins, but antivirus software like Avast and Kaspersky are strictly recommended to avoid such event from happening.
#6. Bitcoin Hardware Wallets
Note: This is the most secure form of wallet to securely store any cryptocurrency, while avoiding any form of theft and hackers attacks.
A hardware wallet is a unique form of bitcoin wallet that stores user’s private keys in a hardware device. Unlike bitcoin paper wallets, which must be imported to a software before usage, hardware wallets can simply be used securely and interactively without the ling process of having to import or transfer your crypto assets before making use of them for transactions. Moreover, they are immune to virus.
The stored bitcoins cannot be transferred in plaintext, and mostly, their apps are open sourced softwares. Thus, some hardware wallets have keys which makes them convenient to transact without the need of third-party softwares to check the balance of funds remaining. This screen can also be used to generate a recovery phrase, to confirm payments and generate temporal addresses for receiving bitcoins.
There are manufacturers of hardware wallets that has good reputation over the years for producing such devices for storing cryptocurrency assets. The most secured and trusted hardware wallets on the market as at currently are:
The thing to keep in mind when using bitcoin hardware wallets, is that you have to be very careful with the way you handle the storage device to avoid severe damage which may lead to lose of cryptocurrencies if the private keys was not generated and securely saved somewhere before the damage.
Final thoughts on Bitcoin Wallets and Security
It’s important to store your bitcoin investment outside an exchange, or you risk the chance of loosing all your bitcoin assets instantly. A virtual exchange can run away with your bitcoin investments. Luckily, there are many options to choose from when making decisions to type of wallet to use in securing your bitcoins.
If you’re currently using a software wallet to store your bitcoin on any device, either desktop or mobile phone, try to always have a good antivirus installed alongside. Avoid making use of wallets that rely on internet connections. Instead, try and get Ledger Nano S hardware wallet, because it’s one of the best cold storage hardware wallet devices that doesn’t need internet connection to keep your bitcoin values, and also, save your bitcoins from lose, due to hack or thefts.
It will be a good deed if you bookmark this page so you can always review it whenever you’re about or ready to start looking for ways to securely store your bitcoin assets while doing cryptocurrency trading.