Bitcoin is not a thing of today, but the truth remains that not everyone knows about it or accepts it as a means of payment. Bitcoin wallet comparison is one thing every individual who is dealing with bitcoin should do, in order to pick the best bitcoin wallet. There are some individuals who have little knowledge about bitcoin digital currency or the various types of bitcoin wallets out there.
Some time ago, (somewhere around 2015) I brought a bitcoin investment opportunity to a friend of mine, and he was like bro, what is bitcoin? – and I was like dude are you for real? That is my friend, and I know there are several other people like this friend of mine cos have been asked by other people as well to explain the bitcoin digital currency to them and for that reason I wrote a guide about bitcoin in my previous post which you can find here.
So in this post I won’t be explaining what bitcoin is, but rather, I will be talking about the bitcoin wallet by doing some bitcoin wallet comparison. This bitcoin wallet comparison will help you know the types of bitcoin wallets out there and their features, the device they work on as well as assist you in making the best decision for your bitcoin storage. And this is very important in terms of security purposes.
Bitcoin wallet in terms of functions is similar to your bank account because it allows you to send, receive and store your bitcoins. There are several types of bitcoin wallets you can use but all bitcoin wallets can be classified into two categories, Hot Wallets and Cold Storage Wallets.
Hot Wallet: A hot wallet is a type of online storage wallet that can be accessed using any internet connected device such as a mobile phone, PC or tablet. This type of wallet is recommended for beginners who are just testing out bitcoin because it is easy to setup. But it is not recommended to those who are trading bitcoin in large quantities because it is prone to hacking (as you know anything online can be hacked).
Cold Storage Wallet: This is a type of wallet that stores your bitcoin offline. This type of wallet is considered the most secure wallet because it stores your bitcoin physically thereby eliminating any hacking threat.
Now that we are done with the classification of bitcoin wallets, it’s time to know what type of wallets falls into these classes.
1. Online wallets: In this bitcoin wallet comparison online wallets or web wallets as some would call it, is top on my list because it is the easiest and most commonly used type of wallet. You can access your wallet from any internet connected device such as a mobile phone, PC or tablet. You can easily get an online wallet by signing up on Blockchain. There are other providers of such wallet, some examples are Coinbase and Circle. As you must have guessed it is an example of hot wallet.
The negative side of using such wallets is that they are prone to hacking because your private keys are stored on somebody’s else’s server. Like we all know, anything online is hackable. You wouldn’t want your story to be like that of Mt. Gox, a popular bitcoin exchange site whereby they lost $460 million worth of bitcoin to hackers in 2014.
My advice is not to use online wallets if you intend to store large amount of bitcoins, but if you are just making small day to day transactions you can go ahead and use online wallet.
2. Software Wallets: Software Wallets is another example of hot wallet, but this particular type of wallet requires you to download software clients before you can create and use a wallet. Software wallets are available for both mobile and desktop platforms. Bitcoin core is an example of a software wallet, but before you can use bitcoin core you will have to download the entire Blockchain network, which is more than 100GB in size. Not everyone have the time, bandwidth or storage space to do this. It takes a lot of time for the blockchain files to finish downloading.
In order to avoid this long process of downloading the entire blockchain network, you can use other software clients like MultiBit, which allows you to create and use a wallet without the need to download the blockchain network. Amory is another great option due to its security features. You can also try mSIGNA which is also a good options.
Software wallets are not just made for desktop platforms only, many of us use smartphones these days and we would love to have something we can easily use conveniently without the need to always switch on our PC or desktop. Mycelium and Blockchain are very good alternatives and they are available on both Android and iOS devices. Copay is another great option which is available for both mobile and desktop platforms.
I will advice if you are using a software wallet, you should take the necessary steps to protect the desktop or mobile phone the software client was installed on.
3. Paper wallets: This type of wallets unlike the previous ones mentioned here in this post, is a cold storage wallet and as you must have guessed, it is more secure than the previous two because you have both your private and public keys printed on a piece of paper which is offline.
Paper wallets requires you to print your public and private keys on a piece of paper. Because it is a piece of paper you should consider storing it in a safety deposit box or somewhere safe where it can’t be torn or damaged by water or any form of liquid or get stolen. It is also advisable to make multiple physical copies just in case one copy gets damaged.
4. Hardware wallets: Hardware wallets are physical vault storage device use for storing bitcoins. This type of wallets are cold storage wallet which generate keys while making a transaction offline on the device itself. This type of wallets are the most secure not just because it generate private keys offline but you can also set a password on it to avoid theft and you do not need to be a tech-savvy person to be able to use it. They also provide you with a backup option to avoid you loosing access to your wallet. This type of wallets are very portable and easy to carry around, most are of the same size with your pen drive. To use these type of wallets is very simple, all you have to do is to slot it into your PC or desktop to configure the settings which is very straight forward. Investing in hardware wallets like Trezor or Ledger Wallet is a very good investment. If you are dealing in huge amount of bitcoins or dealing in bitcoins regularly. It will give you a great deal of peace of mind about been hacked.
My take in this bitcoin wallet comparison
If you are still a new bitcoin user or test running the idea of going into bitcoin big time or still dealing with small day to day transactions, online wallets will be the Ideal way to go. If you are looking for a little more security, then you should consider using software wallets, for either your phone or PC. But if you have problem trusting a third party with your private keys you should consider using the more secure paper wallets but always remember it’s your responsibility to keep the paper safe and dry. In all of this I will advice you should consider investing on a hardware wallet especially if you are dealing in huge amount of bitcoin because it is worth the investment.
And that’s it with my bitcoin wallet comparison. You can get a bitcoin hardware wallet to store your bitcoins and use online or software wallets in making your day to day transactions.
If you are already dealing in bitcoin, don’t forget to share with us what bitcoin wallet you are using and your experience in using it. And don’t forget to share this bitcoin wallet comparison with your friends so they can also benefit from it.