Cryptocurrencies have been thought and imagined so that their holders can do without trusted third parties like banks. However, this freedom has a counterpart: the responsibility of ensuring the security of their wallet. Do you own Bitcoins or do you plan to invest quickly in this cryptocurrency? Choose a Bitcoin Wallet (or Bitcoin wallet) which will guarantee their safe storage, without forgetting to study their practicality and their functionality!
What is a Bitcoin wallet?
The purpose of a Bitcoin wallet is to store your crypto assets outside of exchange platforms, which do not offer guarantees in terms of security against potential attacks.
Definition of a wallet
A wallet is a tangible or intangible medium that allows you to store your cryptocurrencies, manage them and carry out transactions. This wallet works thanks to two encryption keys:
- A private key, which acts as a signature to confirm the placing of a transaction order on the network. This is the most important security key, which you should never communicate;
- A public key, whose role is to precisely verify the quality of the signature. Shared when you buy your Bitcoins, it represents your address on the blockchain.
To go further: the concept of key results from the asymmetric key cryptography device based on the ECDSA algorithm (Elliptic Curve Digital Signature Algorithm).
The advantages of using a wallet
The main advantage of using a wallet lies above all in the security of your cryptocurrencies. The level of security is, moreover, the decisive element in selecting the best Bitcoin wallet. As a reminder, you should know that most hackers exploit malware (Malwares, Keyloggers) to achieve their ends.
How do these softwares work? Simply put, they directly attack your wallets or manage to save all of what you type on your computer keyboard. This is how hackers know in particular the passwords for accessing the private key of your wallet.
Warning: the degree of your protection device depends on what you do with your private key. If it is revealed, then people who have had access to the data will have the ability to move the funds kept in your wallet.
Using a private wallet to store your cryptocurrencies is above all essential so as not to leave them on exchange platforms. These are easy targets for computer attacks. This is the reason why it is recommended not to deposit them on an exchange, but to bring them warm in a wallet, for which you will be responsible.
The different types of wallet
Several families of wallets exist on the market, presenting quite different degrees of security. Here are the three commonly used categories, listed in descending order of safety.
The cold wallet
This cold storage has the particularity of storing the private key offline. Safe from malicious attack, it can take the form of a paper wallet or a hardware wallet such as an external hard drive or a USB wallet.
However, like any object, it can be stolen or damaged. In addition, the cold wallet is not always intuitive, especially for beginners, and impractical for insiders who manage trading operations on a daily basis.
The desktop wallet
This storage on a so-called “office” wallet allows the private key to be placed on a device belonging to the holder of the wallet. In terms of security, this option is quite safe, although this idea must be qualified, because the device remains vulnerable to computer attacks.
To reduce its exposure, the idea is to use this office wallet only to manage transactions of cryptocurrencies whose software interface makes operation very practical.
The hot wallet
This storage on a private key online is the solution most exposed to attacks. It is prudent that this web wallet is used to store a limited amount of cryptocurrencies, in order to avoid losing everything if a problem should arise.
The hot wallet is nevertheless very practical for temporary storage of its coins, in order to carry out daily trading operations on the exchange platforms.
What you must remember :
- Paper wallets correspond to a sheet of paper on which your public and private keys are printed. You can use a QR Code to avoid having to write the often long, error-prone keys.
- Assets: impossible to undergo a cyber attack;
- Disadvantages: risk of loss, theft or deterioration of the paper support;
- For who ? For those who store a lot of cryptocurrencies, provided they store the paper wallet in a safe.
- Hardware portfolios are usually encrypted USB sticks, easy to carry. They simply require a connection with a computer or tablet to access Bitcoins.
- Strengths: reliable and secure solution that resists malware and viruses, some systems even allow you to recover your digital currencies through a source code;
- Disadvantages: a high purchase price for a solution not always practical for daily trading;
- For who ? For those who want to have an impenetrable portable safe, without having to trade cryptocurrencies every day.
- Portfolios on computers or smartphones behave like electronic wallet software, encoding private keys.
- Strengths: easy to use to buy, sell or trade cryptocurrencies quickly;
- Disadvantages: solution which guarantees less security, hackable from a distance, which must not be lost or risk losing your electronic currency;
- For who ? For those who handle low volumes of cryptocurrencies during regular transactions.
- Online portfolios store data in the cloud, making it searchable from any connection device. However, this solution amounts to entrusting your cryptocurrencies to a third party.
- Strengths: easy to use and accessible everywhere;
- Disadvantages: insecure solution. The storage server that has control over your electronic currencies can be subject to computer crashes or attacks;
- For who ? For trading aficionados who use them as a fast transit wallet.
Tips: don’t leave all your cryptocurrencies on a single wallet, but rather diversify your wallets!
The 3 best wallets for Bitcoin
Faced with the multiple solutions that exist on the market and the numerous wallets for cryptocurrencies, here are three of the best wallets (each in a category) to help you make your decision.
Bitcoin Wallet: Armory
The Armory wallet is a recognized Bitcoin software portfolio, in other words a trusted one. It is an open source solution originally developed by Armory Technologies Incorporated (ATI) and now improved by the Bitcoin developer community. Pioneer of cold storage, this Bitcoin wallet has the advantage of offering many functions and above all a high degree of security..
It is, for example, quite possible to protect the sending function of your cryptocurrency by means of a password. This adds an extra layer of security. Above all, this Bitcoin wallet delivers multi-signature (multisig) support including decentralized safes (lockboxes). Result: the user has full control over the life of their private keys (creation and storage).
The desktop wallet is compatible with Apple Mac OSX, Microsoft Windows, Linux Ubuntu and Raspberry Pi. Free to install and very easy to use thanks to its ergonomic interface, it allows you to create multiple addresses, which is invaluable for easily separating your personal Bitcoins from those of a company (what is called a ” Hierarchical Deterministic wallet ”, or HD wallet).
What you must remember :
- Advantages: hyper-secure open source wallet which has a solid reputation in the Bitcoin community;
- Disadvantages: no mobile version or two-factor authentication;
- For who ? For insiders who already know how to manage their Bitcoins as well as for large carriers of cryptocurrencies.
Bitcoin Wallet: MyCelium
MyCelium is a digital Bitcoin mobile wallet aimed at both beginners and more experienced users. It combines both accessible operation for everyone and enriched and more complex functionalities. Users have also expressed a positive opinion for this Bitcoin wallet, the application of which can be downloaded from the Google Play Store.
In terms of security, MyCelium offers classic protection in the form of a personal PIN code, which authorizes the opening of the application, but also the transfer of funds or the export of private keys. It is also an HD wallet which allows you to make backups securely via a set of twelve random words. In the event of theft or breakage of the smartphone, rapid recovery of funds is possible using these keys.
The interface is perfect for smooth navigation between tabs. Transactions are carried out using simple buttons, with the current Bitcoin exchange rate watermarked. Regarding account management, the user can rely on an address book and the history of movements.
What you must remember :
- Advantages: easy to use thanks to its ergonomic interface, while offering advanced functionalities;
- Disadvantages: the risk of storing your private keys online like all permanently connected devices;
- For who ? For those familiar with cryptocurrency exchange platforms, but also beginners who want a more robust solution.
Bitcoin Wallet: Ledger Nano S
A benchmark portfolio for several years, the Ledger Nano S is a physical Bitcoin wallet. Composed of a screen, it has two physical buttons : on the right to increase a number or go down in the menus, on the left to decrease the numbers and go up in the menus. By pressing both simultaneously, the user validates his selection.
In terms of security, the Ledger Nano S offers the creation of a personalized PIN code and especially the storage of private keys offline. A security seal, in the form of a tamper-proof adhesive tape, prevents anyone from handling it, except to alert its owner.
The Ledger Live interface allows the installation of 18 different cryptocurrency applications, three of which are already accessible (including the Ledger Wallet Bitcoin). Its installation is very fast (3 minutes!) And its dimensions make it very practical to transport.
What you must remember :
- Advantages: cheap wallet, easy to install and use, for maximum security;
- Disadvantages: no integrated battery, hence the obligation to have the USV mini cable adapter, this physical object can be lost or broken;
- Why ? For everyone.
What should you remember about choosing a wallet for Bitcoin?
Choosing your Bitcoin wallet depends above all on the following:
- The level of security to protect your cryptocurrencies;
- Your trading activity;
- The convenience of being connected and transported;
- The associated functionalities;
- Ease of use.
For hardware Bitcoin wallets, we mentioned the Ledger Nano S but we could also have mentioned competing offers like the Trezor Wallet, CoolWalletS or Keepkey Wallet.
For Bitcoin desktop or mobile wallet wallets, we mentioned the Armory solution but we could have talked about the offers distributed by Electrum, Exodus, Bitcoin Core, Multibit, Ciphrex or Samurai.
For online wallets (hot wallet), we have developed MyCelium, but other options are possible: Bredwallet, GreenAdress, Coinbase Wallet, BTC.com or Blockchain.com. Choosing a Bitcoin wallet meets both your needs and your knowledge levels. And if you hesitate, know that you can perfectly combine multiple Bitcoin wallets by installing Electrum on your computer browser, Coinomi Wallet on your smartphone, a strategy completed by the purchase of a Ledger Wallet to keep your private keys offline! Become your own cryptocurrency bank, personalized and adapted to your activities.