Like a regular wallet, you might need a cryptocurrency wallet to hold your Bitcoin and other cryptocurrency and protect it. While a crypto exchange can offer you a primary wallet, specialized bitcoin wallets provide you with additional security and reduce the chances of stolen.
Top 6 Best Bitcoin wallets
- Exodus Bitcoin & Crypto Wallet
- Trezor T
- Mycelium Bitcoin Wallet
- Ledger Nano X
- Wasabi Wallet
What are crypto or Bitcoin Wallets?
Like a physical wallet, in this case, cryptocurrency, the digital wallets can hold your money. And as your digital currency does not exist, except in the decentralized electronic network that manages and tracks it, your electronic wallet must be able to interact with the network.
While professionals use the term “wallet” to describe what secures your crypto assets, it may be more accurate to consider it as a (highly strengthened) address to which your money is accounted. So in the distributed leader of crypto – like a long receipt of all the transactions in the currency – a wallet says that “any asset that is directed to belongs to the owner of the wallet.”
In a general sense, without a wallet, you couldn’t have crypto coins. There’s just no place to put your money. Even exchanges like Coinbase and payment applications like CashApp and PayPal offer a primary wallet for transactions, even if this does not meet the needs of heavy users.
And between investing in the crypt and holding the asset, there are differences between actually transacting in a cryptocurrency where a wallet is needed to send and receive money. The first task is to preserve the investment while a specialized wallet provides the end-user with the ability – and responsibility – to protect the asset.
Advantages of Bitcoin wallets
A digital wallet allows you to collect payments and store your payment keys so you can send crypto coins to others. It’s similar in this first respect to other digital wallets, such as CashApp, PayPal, or Venmo, which can be used for ordinary currencies.
A specialized wallet enables users themselves to take possession of coins. In that sense, it might be like holding a wallet on an exchange so that your money is kept at a bank while having your specialized wallet is like locking your currency.
What separates the aforementioned specialized payment bags from more basic ones is a higher level of security and other features that attract more fantastic users (or fear). These crypto wallets are not controlled by any third party and are therefore not subject to significant threats such as mass hacking and fraudulent custodians who absorb customers’ property.
This configuration means you – and you alone – can maintain your holdings. Many see this as a beneficial feature because you don’t have to rely on custody from a third party.
But a third party’s lack is a knife that cuts both directions, at least in terms of accessibility.
Again, at least partially, the wallet metaphor is helpful: If you drop your actual wallet, the money might go missing, maybe because of a thief. In the case of a crypto wallet, you can lose the wallet yourself, which is perhaps a physical object, or you can lose the password of your wallet, which makes your own currency moot. You may ultimately lose your crypto anyway.
If you use a hardware wallet, it could be physically problematic, for example, by degradation or destruction or potentially by some other means.
Depending on what type, a crypto wallet may create additional friction problems by actually using your cryptocurrency. Some wallets may not trade with certain coins, while others may be offline – making wallets that are almost unavoidable for electronic theft and useless for exchange, although later they will be transferred to a wallet for use.
Some wallets, like mobile wallets, are much better for accurate on-the-job payments, while others, like desktop wallets, are much less suitable to pay for goods while you are away.
And there’s finally the question of comfort when it comes to payments. Everything that prevents an amount beyond a credit card swipe or tap may render a wallet less valid.
Types of Bitcoin Wallets
Crypto wallets are generally available in two broad categories: hardware or cold wallets and software or hot wallets.
Wallets for hardware
A hardware wallet has a physical device to secure your cryptocurrency. It is closer to a genuine wallet in the physical sense and looks like a USB thumb drive. It contains your cryptocurrency keys, which enable you to manage the currency effectively.
The main advantage of this wallet is that it is not linked to the Internet or can instead be disconnected from it. Thus, your coins are not readily subject to electronic theft without connection. But they are still vulnerable – to wallet loss, physical robbery, and password loss. You can plug the wallet into your computer and transact if you have to move money.
Therefore, a hardware wallet is actually designed for safekeeping and transactions and is therefore called a cold wallet. Trezor T and Ledger Nano X are famous makers of hardware wallets.
On the other hand, wallet software uses software to secure your cryptocurrency. Software carriers are generally less secure than hardware carriers since they are connected to the Internet. But they are also meant to be used, so they’re called hot wallets as you pay for things. Like a physical wallet, maybe you only want to carry what you want to spend.
Hot wallets come in several different varieties depending on the way you interface:
- Wallets for desktop. You download software with a desktop wallet that manages your crypto holdings from your computer. It is an adequate balance between security and convenience, as you can spend money on your wallet and take it offline when not in use so that your wallet will remain inaccessible to desirable thefts.
- Web carriers. A web wallet is a browser plugin that connects to the blockchain to complete a transaction. You can start and finish a trade quickly, but the Internet makes it less safe than a cold wallet.
- Wallets for mobile phones. If you use your mobile device, usually Android or iOS, to pay someone, a mobile wallet is a good payment solution.
In some cases, software suppliers produce multiple types of hot wallets to provide various devices with one solution. Top hot wallets also integrate with important hardware wallets such as Trezor and Ledger, so consider using wallets that work together for convenience.
Popular hot wallets include Exodus Bitcoin & Crypto wallet, mycelium bitcoin wallet, mobile wallet, and edge wallet (desktop).
Other things to take into account
You will want to consider other factors and the type of wallet and the particular wallet you choose.
- Your requirements: What is wallet do you need? Will you regularly transact or keep your cryptocurrency? Regular transactions are better for hot wallets, while a cold wallet may be much more helpful for long-term buyer-investors. Or you might prefer to save most of your stash in a cold wallet while spending a bit with a hot wallet.
- Cost: Hardware wallets usually cost you between $60 and $120 in advance. Software wallets can be downloaded free of charge but cost a variable transaction fee.
- Support for specific currencies: you want to make sure that the particular cryptocurrency you deal with supports your wallet. Sure, Bitcoin is a standard, but perhaps the 500th most popular digital currency you want isn’t supported. Please be sure to check.
- Convenience: If you regularly use a wallet – heat or not – make sure that you can use it quickly and for the purpose, it is intended. There’s the minor point otherwise.
Function set: Check a prospective wallet double to ensure that it has other characteristics, even beyond certain currencies. For instance, does your software wallet fit well with a hardware wallet to use?
Like any product, you’re going to want to ensure it meets your needs. It may be the best wallet globally, but it isn’t the best one if it doesn’t have the features you need.
The world of Bitcoin and cryptocurrency is new and wild. Make sure you are clear about what you want as you look for a digital wallet. With much money at stake, you want to trust whatever solution you choose, and most importantly, it must meet your needs.
Check out: What You Must Know About the Bitcoin Wallet: Eric Dalius