Synopsis: There isn’t a single best Bitcoin wallet that does everything perfectly. Some specialize in convenience & user-friendliness, while others prioritize security above all else. This article gives readers the best Bitcoin wallets for several different uses, and provides direct download / purchase links so that readers can form their own optimal wallet setup.
First Of All – There’s No Single Best Bitcoin Wallet
If you want to buy Bitcoin, you’re going to need a place to put it. “Wallets” are where Bitcoin is stored.
The thing is, there isn’t a single Bitcoin wallet that is best for every need. Different types of Bitcoin wallets are like tools in a toolbox. While you probably could use a spanner to get a nail into a wall, what you really need is a hammer. The same is true of all the best Bitcoin wallet varieties – each of them specialize in doing different things well.
The most important distinction between different Bitcoin wallets is the degree to which they are wired into the Internet. Or, in crypto vernacular, whether a wallet is “hot” or “cold”.
- Hot wallets have greater Internet connectivity. They are therefore able to offer far better convenience, but the downside is that they are less secure.
- Cold wallets are separated from the Internet. This makes them more immune against the risk of hacking, but their lack of connectivity reduces their accessibility to the rightful owner as well.
When deciding on which Bitcoin wallets will be best for different purposes, think about questions like:
- How much crypto do you need to be able to access at a moment’s notice? (This is like the cash you carry in your pocket, stored in a hot wallets)
- How much do I have at stake? (If it’s a large amount, you had better store some of it in a cold wallet, which is a lot safer.)
There are 5 varieties of Bitcoin wallets. The rest of this article will go through them, and make a recommendation on which one is my pick for the best Bitcoin wallet in each category.
1. Online Crypto Exchange Wallet – Coinbase (Red Hot)
An online cryptocurrency exchange is essential for changing fiat currency into Bitcoin. There are many options, but for beginners, Coinbase is a great place to start (assuming that you are in one of their supported countries).
Coinbase is one of the largest and most highly-respected crypto exchanges. They are based in the United States and are backed by significant Silicon Valley venture capital funding. Further, they are intent on doing everything “by the book”, meaning they are following all of the financial regulations. Make of that what you will: some people consider that following the directives of government is a great reason to support Coinbase, while certain crypto purists decry Coinbase’s fraternizing with ‘the enemy’.
One thing that everyone can agree on is that Coinbase’s security policies are impressive: they store over 98% of user holdings in cold offline storage, and are covered by insurance which protects users against any possible losses resulting from a breach of Coinbase’s security – whether that be physical security, cyber security, or employee theft. All of Coinbase’s user holdings (both crypto and fiat currency) are also held in custodial bank accounts, which means that even if Coinbase were to fail as a business, user funds could not be claimed by Coinbase or its creditors.
Besides security, the best part about Coinbase is its user-friendliness. You can use their online platform to change fiat currency for Bitcoin. As of the time of writing, they only support 4 different crypto varieties, and their interface looks more like an online bank – it isn’t confusing, like some crypto exchange dashboards can be.
Coinbase also has a related mobile app for both Android and iOS which makes sending and receiving payments a breeze with a simple QR code. This means you can get two types of Bitcoin wallets for the price of one!
2. Mobile Wallet – Bitcoin Wallet (Hot)
A mobile Bitcoin wallet is exactly what it sounds like – a wallet which you can be accessed with a mobile phone. A word of warning: you have to be very careful with which mobile Bitcoin wallet you choose, because some of the developers of these apps build in sneaky back-door access to user’s Bitcoin holdings!
Unless you are technically competent enough to do your own analysis, you should restrict your choices to the ones endorsed by the Bitcoin development team: the list of which is here, on the official Bitcoin website.
Bitcoin Wallet is one of the officially-endorsed mobile wallets, and in my view, the best. The way it self-describes itself says it all:
“Bitcoin Wallet is easy to use and reliable, while also being secure and fast. Its vision is de-centralization and zero trust… The app is a good choice for non-technical people.”
3. Desktop Wallet – Electrum (Warm)
Desktop wallets are software running on personal computers connected to the Internet. You can view your portfolio, without relying on the external servers of an online crypto exchange or a mobile wallet. The fact that it’s a standalone application on a computer also gives users more control over their transactions.
Still, the fact that the computers hosting a desktop wallet has Internet connectivity can make them a potential target for hackers, especially if that computer happens to be infected with any sort of malware. This is why it pays to be very careful with which desktop wallet you choose.
And as was the case with mobile wallets, it is going to be helpful to choose your best Bitcoin wallet by relying on the recommended wallet list of the official Bitcoin website. Their technical team have independently verified the wallets listed there.
Electrum is the pick of the desktop wallets. They offer 2-factor authentication (meaning access to multiple devices would be required if anyone wanted to steal your Bitcoin), integration with hardware wallets, and full backup – if your computer crashes, your Bitcoin can be recovered using a secret passphrase. It also doesn’t absorb a lot of memory to download and run.
There is a caveat to the recommendation of Electrum. If you plan to do cryptocurrency mining, you will need a different desktop wallet: Bitcoin Core, which is the desktop wallet designed by the internal Bitcoin developer team. Bitcoin Core is however very resource intensive – running it as a full client requires downloading the entire blockchain history, stretching all the way back to the genesis block in 2009.
4. Hardware Wallet – Trezor (Cold)
Hardware wallets are special physical devices which attach to a computer, usually through a USB port. They separate themselves from Internet connectivity, and are specially designed for the purpose of securely storing crypto offline.
Trezor was the world’s first Bitcoin hardware wallet and is based out of the Czech Republic. It is a highly-regarded company and the device works on Windows, Linux, Apple and Android. The device itself is small, water-proof, tamper-proof, and uses the most advanced standards in cryptographic security. It’s the best Bitcoin wallet in its category.
Additionally, if you ever lose the Trezor device, you can recover your Bitcoin holdings – so long as you have your recovery seed.
Trezor offers among the most comprehensive range of supported coins. So you can use it to store Bitcoin, as well as:
5. Paper Wallet – BitcoinPaperWallet (Ice Cold)
Paper wallets are as “cold” as it’s possible for a wallet to get. While hardware wallets offer extra security due to the fact they separate themselves from access to the Internet, paper wallets are, well, paper. This means they are not only removed from online connectivity, but are not connected to a computer at all. There is simply no way that any online hacker could breach into a piece of paper. It makes it the best Bitcoin wallet for security – bar none.
You still have different concern with paper wallets: being that you must protect the piece of paper from physical theft or destruction. Remember, if you lose all copies of your paper wallet, your Bitcoin is irrecoverable.
BitcoinPaperWallet is my pick. It was created by a man named Canton Becker. If you visit BitcoinPaperWallet.com, you can see his photograph prominently displayed, along with his email address, phone number and a public endorsement from trusted Bitcoin expert Andreas Antonopoulos.
The BitcoinPaperWallet website is very user-friendly, featuring some handy videos and extra security advice (example: make sure to print your paper wallet in a private place, to ensure that no-one peers over your shoulder at your private key while it is being generated). There is even the option to purchase tamper-proof seals for a nominal fee, which can be paid either with Bitcoin or PayPal. All-in all, BitcoinPaperWallet is the best Bitcoin wallet in the paper format.
Summary: Which Wallets Do You Really Need?
Truthfully, very few people will have need for all five of these wallets. If you are just getting started with trying to learn cryptocurrency, you might as well just stick with Coinbase as your one and only wallet. Yes, it is true that storing crypto on an exchange isn’t ideal (because the exchange holds the all-important private key rather than you). But if you don’t have very much value invested yet, you needn’t complicate your life with lots of different wallets.
- An online crypto exchange wallet, to trade in and out of your Bitcoin holdings. (Both exchanging fiat money for Bitcoin, Bitcoin for fiat, and Bitcoin for other crypto assets.)
- A mobile wallet, to make day-to-day payments anytime you want to pay a merchant or service provider who accepts Bitcoin. Remember that Coinbase also offers this sort of mobile wallet functionality, so if your online crypto exchange wallet is Coinbase, you can simply get the Coinbase app on your smartphone instead of needing a separate mobile wallet.
- EITHER a hardware wallet OR a paper wallet to securely store the bulk of your holdings – think of this as the “vault” where you lock away the majority of your net worth, safe from any possibility of being pick-pocketed. Both of these qualify as cold wallets, so it comes down to personal preference which you choose to go with. Hardware wallets are a bit more convenient, but cost around $100. Paper wallets remove all shadow of doubt that they could ever be hacked, but are a bit less user-friendly.
You will notice that there is no space on this “essentials” list for the desktop wallet. This is because desktop wallets occupy the dreaded “middle ground” between truly hot and truly cold wallets. Therefore, it is possible to do without a desktop wallet, unless you are undertaking crypto mining. So long as you have a best Bitcoin wallet in the other categories, a desktop wallet isn’t strictly necessary.