A crypto or Bitcoin wallet is simply an app, website, or device that manages private keys for you.
This guide will show you how to create a wallet and pick the best one.
Types of Bitcoin & Crypto Wallets
Let’s discuss the types of wallets and why you might want to use one kind over another.
The Ledger Nano S is one example of a hardware wallet.
A hardware wallet is a physical electronic device, built for the sole purpose of securing crypto coins.
The core innovation is that the hardware wallet must be connected to your computer, phone, or tablet before coins may be spent.
The two most popular and best Bitcoin and cryptocurrency hardware wallets are:
- Ledger Nano X
- TREZOR T
Hardware wallets are a good choice if you’re serious about security and convenient, reliable Bitcoin & crypto storage.
Hardware wallets keep private keys separate from vulnerable, internet-connected devices.
Your all-important private keys are maintained in a secure offline environment on the hardware wallet, fully protected even should the device be plugged into a malware-infected computer.
As bitcoins and cryptocurrencies are digital, cyber-criminals could, potentially, target your computer’s “software wallet” and steal them by accessing your private key.
Generating and storing private keys offline using a hardware wallet ensures that hackers have no way to reach your coins.
Hackers would have to steal the hardware wallet itself, but even then, it can be protected with a PIN code.
Don’t worry about your hardware wallet getting stolen, lost or damaged either; so long as you create a secret backup code, you can always retrieve your coins.
Think of a hardware wallet like your own underground steel vault. If you own a significant amount of bitcoin or crypto, you should strongly consider getting one!
Why are hardware wallets good?
- Easiest way to securely store bitcoins and other coins
- Easy to backup and secure
- Less margin for error; setup is easy even for less technical users
- Multiple hardware wallets can be used together for extra security
Why are hardware wallets bad?
- They’re not free!
- They can be challenging for new users to understand
Hot wallets are wallets that run on internet connected devices like a computer, mobile phone, or tablet.
Private keys are secret codes. Because hot wallets generate your private keys on an internet connected device, these private keys can’t be considered 100% secure.
Think of a hot wallet like your wallet today: you use it to store some cash, but not your life savings. Hot wallets are great if you make frequent payments, but not a good choice for the secure storage of bitcoins.
Why are hot wallets good?
- Easiest way to store small amounts of bitcoin and crypto
- Convenient; spending and receiving payments is easy and fast
- Some hot wallets allow access to funds across multiple devices
Why are hot wallets bad?
- Not safe for the secure storage of large amounts of bitcoins and crypto
- You might forget about the application being installed on your phone
Which Wallet is Best for You?
Investing or saving? Then a hardware wallet will keep your coins safe.
Otherwise, a software wallet will send and receive bitcoins & crypto just fine. Best of all, software wallets are free.
Each wallet has pros and cons, and different wallets are built to solve different problems.
Some wallets may be geared towards security, while some wallets may be more focused on privacy.
Your specific needs should determine the wallet you use, as there is no “best bitcoin wallet”.