Now that you’ve started mining, purchasing, or receiving Bitcoin, it’s time to start looking at some safe ways to store them. Since Bitcoin is the world’s most valuable cryptocurrency, users should take the crucial steps to make sure that their valuable coins are stored properly.
There are a variety of options out on the market for Bitcoin users to choose from, but not all possible options are equally as good. Keep reading and we’ll break down what some of the best possible picks are for holding those Bitcoins in 2018.
What is a Bitcoin Wallet?
If you already think of Bitcoin as being, as Nakamoto originally described it, a “digital cash system,” then it would only make sense that there needs to be someplace for the cash to be held when you’re not using it, right?
When you have regular cash in your hands, you typically store it in your physical wallet in your pocket or purse when not in use. Likewise, Bitcoin operates in just the same way. When you’re not using the Bitcoin to send, receive, etc. you’ll need a place to hold it.
However, since Bitcoin is a digital currency, like all cryptocurrencies, you’ll need a different kind of wallet to store all your coins. There are a few different types of wallets out there, but the two categories to split them into are hardware wallets and software wallets.
As the names imply, one is a physical wallet that keeps your Bitcoins off your computer and on a separate device that you can then hide, place in a safe, bury in your backyard, etc. (the choice is yours!), whereas a software wallet is a wallet that holds your Bitcoins on either your actual computer or an online wallet service accessible via web browser. We’ll cover both below.
Keeping Your Wallet Secure
The single most important aspect of storing Bitcoins is your ability to keep them secure. You need to remember that since Bitcoin and other cryptocurrencies are decentralized technologies, there are no centralized authorities to mediate all transactions and possible security breaches.
That means that if you were to accidentally give away sensitive personal information relevant to the method you use to store your Bitcoins and another party gains access to them, there isn’t much that can be done.
Say you happen to either let some sensitive information slip online or a hacker is able to gain access to your computer, online document storage, or any number of possible vulnerabilities and then uses that information to get into your wallet and send themselves all of your Bitcoins, you won’t be able to get them back.
Transactions are handled on the network and are irreversible after being confirmed. Being a decentralized network with no authority, there is no governing body that can go back and take a look at the transactions to see whether they were legitimate or not.
If your Bitcoins get stolen or you accidentally send them to the wrong address, there is no bank or government that can step in to make sure you get your coins back.
There are many ways to keep your Bitcoins safe, but the most important aspect of security is keeping your private information private. Don’t post sensitive information online; do not ever share your private key with any users or people claiming to be with “support” for any major exchanges; and always double or triple check the wallet address you’re sending Bitcoin to before sending large amounts.
In the case of a mix up, even if it was honest, there is no going back unless the other wallet sends the Bitcoins back to you. Bummer, man.
Besides honest mistakes happening from time to time, another big concern for those holding a lot Bitcoin is the possibility of hackers and other nefarious parties trying to get your coins. One of the ways to remedy this is with what’s called “cold storage.”
Cold storage is a system for storing Bitcoin and other cryptocurrencies on a wallet that is not connected to the internet. The idea is to keep things as separated as possible when dealing with security.
If you have your Bitcoins in cold storage, then even in the event of a security breach on your own computer or home network, your Bitcoins will still be privately and securely stashed away, out of touch of any sticky hands. Some common cold storage techniques include hardware wallets (which we’re about to take a look at), paper wallets, and running separate computers (often laptops) that have never been connected to the internet before with their Bitcoin wallet software installed.
On top of everything else, there is no one insuring your deposits either. For residents of the United States, account holders are protected under law by the Federal Deposit Insurance Corporation (FDIC) for individual accounts to be protected in the case of a major incident. No such thing in the Bitcoin world, so listen up, take a look at your options, and decide on the best wallet for you.
What is a Bitcoin Hardware Wallet?
Easily the most recommended method of storage for Bitcoin, hardware wallets have grown in popularity exponentially in recent time. Hardware wallets do the exact same things as traditional wallets. They can be used for sending Bitcoin, receiving Bitcoin, and storing Bitcoin, but do it on a much more secure platform.
The most important feature with hardware wallets is that they securely store the users’ private keys on the physical device and can never be exported off of the device in plaintext. Since Bitcoin isn’t actually a physical coin, but rather a publicly recorded history of transactions, there are no digital coins being transferred to your device, but the device is holding your required keys to send and use the coins “in” your wallet (i.e. publicly verifiable transaction history that says you have ___ number of Bitcoins).
This means that should something happen to one of your hardware wallets, users can still recover their old wallet on a new hardware wallet as long as they have safely kept up with their recovery key.
Let’s take a look at some of the best ones for 2018 below.
Bitcoin Hardware Wallets for 2018
Though small, still mighty. This tiny little device is a secure hardware wallet for those looking to keep things on a budget. Unlike some of the other options which can get incredibly expensive incredibly quickly, the Ledger HW.1 retails for just $25 on Amazon.
Being first on the list, this is certainly going to be one of the best possible options for new users. The Ledger HW.1 doesn’t have a long list of impressive programs and different currency integrated technology or any other superfluous tech in the wallet.
The Ledger HW.1, plain and simple, is a Bitcoin wallet, and a secure one at that. Nothing more, nothing less. This wallet is going to handle all of your needs for holding Bitcoin and it does it at an almost absurdly low price point as well.
One of the reasons for the lower price tag is that the Ledger HW.1 was discontinued and is no longer in production. But don’t worry, the reason for stopping production was not because of any security issues or problems with the technology, but rather a desire to create wallets which are capable of holding a variety of other cryptocurrencies as well like Ethereum (ETH) and a whole host of other altcoins.
It is important to note that for those interested in the Ledger HW.1, that it is specifically designed for use with Bitcoin (BTC), no other cryptocurrencies can be stored on this wallet. The wallet is still very secure and stores Bitcoins locked up by a microchip which requires a PIN to unlock and even offers multi signature (multisig) wallet support for communities or companies with needs for enterprise situations.
And lastly, this wallet can be restored from any other Ledger wallet at a future date (just remember to keep your key in a safe place!). What else is there to say? For the price, it’s hard (if not outright impossible) to find a more secure wallet.
The next up on the list here is another member of the Ledger family, but this one is very different from the Ledger HW.1. This hardware wallet is in an entirely separate price range, and for good reason.
The Ledger Blue is currently sold out on the Ledger website but is currently selling on Amazon by other sellers starting at around $410 plus shipping and handling. The biggest reason for the difference in price on this wallet is simply because of what it supports.
The Ledger HW.1 is a little older and only supports Bitcoins, but the Ledger Blue (made by the same company) supports storage for all kinds of different alternative coins like Ethereum, Litecoin, and a whole lot more.
Many users may already be familiar with the Ledger Nano S hardware wallet which, like many other hardware wallets in the market now, is still sold out on the website. This Ledger Blue can be thought of as basically the big brother to that Nano S.
The Blue provides a larger screen with an easy user interface and is accessed via Chrome like the rest of the Ledger family. However, this thing is a beast when it comes to holding alt coins along with your Bitcoin.
Obviously not everyone is going to store other coins along with their Bitcoin, but if you are considering expansion in the future, this is definitely a great option to consider.
The last one on the list here is from outside of the Ledger family tree of hardware wallets. The CoolWallet hardware wallet is the product of a 2014 IndieGoGo campaign for a much-needed product to fit the need for more secure wallets in the community.
Unlike the Ledger Blue, the CoolWallet is designed to be incredibly portable without the carrier even noticing they have any additional hardware on them. The CoolWallet basically looks like a credit card that can easily fit in your wallet.
However, unlike a credit card, the CoolWallet actually hold your private keys for your Bitcoins and can connect via NFC to your smartphone to monitor your wallet as well as any other USB-less devices that support NFC.
Like many hardware wallets at the moment, the CoolWallet is temporarily out of stock, but retails for around $120 for one CoolWallet and one charger.
What is a Bitcoin Software Wallet?
Another kind of wallet available for Bitcoin enthusiasts is one held not on separate hardware, but instead on your local device with special software.
Software wallets can come in all different shapes, sizes, and platforms for users, but the core principle remains the same. The wallets are designed to give users a combination of both security as well as ease of use.
While cold storage hardware wallets are typically considered to be the best in the business for long-term storage and holding large quantities of Bitcoin for investments, software wallets offer users the advantage of being much easier to use and can be used on the go very easily.
In fact, software wallets are not limited to just local devices at home like your computer. Software wallets often have corresponding clients to go on your cellphone as well.
For those using Bitcoin as a method of payment for vendors accepting Bitcoin, software wallets on your phone offer one of the best solutions for checking out with merchants and quickly sending Bitcoins to your friends and family.
If you’re not new to Bitcoin, then a software wallet was likely the first wallet you ever had. It’s the default wallet all new users get when installing the Bitcoin client and is the traditional method for storing Bitcoin. However, it’s not always the most secure.
Before getting into the different types of software wallets, we should briefly mention exchanges. If you’re the type of Bitcoin user who has gotten into exchanging and trading different cryptocurrencies, then you’re likely familiar with some of the recent security breaches on some major exchanges.
Dating back to Mt. Gox in the early days of Bitcoin, exchanges have always been crucial targets for hackers and scammers trying to gain access to Bitcoins belonging to others. Exchanges are the programs you use for exchanging Bitcoin for Ethereum, or Bitcoin for Litecoin, or Bitcoin for any number of other alternative coins.
While you’re trading, it makes sense to keep a certain amount of Bitcoin on the exchange, but no longer than you need to. Because of the nature of the business, exchanges are huge targets for big hacking groups.
If you take a look at the number of transactions on any given day, you’ll see just how much money passes through the hands of exchanges between all users on the platform.
When you have a centralized system like Binance, GDAX, Poloniex, or Bittrex, you have a major target since the platform is the bottleneck handling all the major traffic in the industry.
It is never recommended to store your Bitcoins and other cryptocurrencies on exchanges, especially in larger quantities. Use exchanges to transfer Bitcoin for other coins or for trading back into fiat currency like US dollars and euros, but never for long-term storage. “If you don’t own your private keys, you don’t own your Bitcoin.”
Another point that should be addressed before getting into your different software wallet options are online wallets. Yes, the idea may sound really handy; all you need to do is type in a username and password and bam, you’ve got access to your wallet!
No need to download anything, no need to wait for network syncs, no need to worry about whether you’re installing the right software and infect your computer. Sounds great, right?
This can be a tempting route that can trick many newcomers to the Bitcoin and cryptocurrency world, but “online wallets” are also never suggested for any serious storage of a cryptocurrency, especially a valuable one like Bitcoin.
As we already mentioned with exchanges, when it comes to keeping money on them, it’s never suggested to keep your cryptocurrencies on a site where you are not the only one with control over the wallet. What you may think you’ll save in convenience and time, you’ll likely regret when you one day find your wallet swiped clean with no more Bitcoin left inside.
Remember what is probably the most important phrase in the business: “If you don’t own your private keys, you don’t own your Bitcoin.”
Now say it after me one more time, just to make sure everyone knows it: “If you don’t own your private keys, you don’t own your Bitcoin.”
Bitcoin Software Wallets for 2018
Copay Software Wallet
First up on the list is maybe the most user friendly for Bitcoiners. Copay is a secure wallet created by BitPay, a well-known cryptocurrency payment system in the industry, and is perfect for people just getting introduced to Bitcoin.
The lightweight, easy-to-use wallet is designed specifically for helping to introduce new users to the Bitcoin world by providing an easy way for them to manage their Bitcoin without offering a ridiculous amount of unnecessary added “perks” that are likely to confuse users new to the space.
Offering both a desktop and mobile version of the wallet, Copay is a versatile Bitcoin wallet that also allows for multiple users to have access to a Bitcoin wallet too.
It should be noted for those interested, Copay specifically supports Bitcoin, but no other alternative coins on the market. If you’d like to download the software wallet, you can visit the official Copay site here.
Electrum Software Wallet
The next up on the list, Electrum, is an incredibly versatile software Bitcoin wallet. The Electrum wallet is something users may wish to use even if they already have a hardware wallet in use.
Like other software wallets, Electrum offers both a desktop and mobile version for users to take advantage of.
However, features start becoming different when looking at the way the software interacts with other wallet options. The Electrum wallet can be used with all kinds of hardware wallets including the Ledger HW.1 as mentioned earlier, the Ledger Nano S, and Trezor wallets.
Electrum is considered to be a “lightweight” wallet meaning that it requires less time to sync when initially setting up and installing but will ultimately be a little less private than wallets like the original Bitcoin Core wallet or Armory wallet.
Along with that, though, it should be mentioned that the Electrum software wallet does come with the ability to create secure offline cold storage, much like the Armory wallet.
Jaxx Software Wallet
Last on the list, but certainly not least, is one of the most recognized names in the software Bitcoin wallet industry: Jaxx. Marketed as the self-proclaimed “Best Bitcoin Wallet,” Jaxx has been a staple in the Bitcoin community for much of the very recent history of its existence.
The things that made Jaxx a huge success are still seen in the program to this day. The user interface is clean, simple, and easy to use for beginners.
Actually, the interface is so simple, it’s perfect for anyone looking to get into the Bitcoin, or alternative coin, business, regardless of experience level, period.
As a software wallet, Jaxx offers some of the major features you would expect from a stable wallet. Those features include things like building a wallet backup, switching between different exchange rates, and setting up a security PIN for you to access your wallet on your computer or phone.
One last thing that really makes Jaxx a solid choice is that it has Shapeshift built in and directly integrated with the wallet platform. If you’re not already familiar with the business, Shapeshift is an online service used to directly exchange cryptocurrencies for other cryptocurrencies by paying a small fee.
Shapeshift is a great way to exchange your current assets for new cryptocurrencies without having to go through the lengthy process of signing up for an exchange, verifying your identity, depositing funds, trading in the public exchanges, and then withdrawing your cryptocurrency to another wallet.
The process is long; you may need to create multiple exchange accounts for different coins since not all are available on one main exchange, and the entire path is not very easy for newcomers. Ultimately, Jaxx is probably the best software choice for those interested in Bitcoin software wallets in 2018, especially for those new to the Bitcoin community.
After we’ve taken a look at all of our options, the only thing left to do is decide on a wallet for yourself. Between software wallets, hardware wallets, and everything in between (paper wallet, online, etc.) investors have many different storage possibilities to choose from.
At the end of the day, the choice is going to come down to what you’re most likely to use the wallet for. If you’re looking for long-term storage, then something like a hardware wallet that will keep your coins in “cold storage” is going to be the best option without a doubt.
These are meant for long term investors who plan on accumulating more Bitcoins over time and holding, or HODLing, those coins for a very long time. After you’ve set up the wallet, the cold storage hardware wallet can then be physically moved to another more secure area as well.
After getting your investments to a hardware wallet for cold storage, users can then take the extra step for security and lock up the device in a safe, place it in a safety deposit box at their bank, or hide it for potential future use in an area unknown to any other untrusted parties.
However, say you’re the adopter. Maybe you’ve got a significant amount of Bitcoin from your early days as a miner and you’re focused not on making money, but on implementing Bitcoin and Bitcoin Cash as an everyday medium of exchange.
In this case, you’ll need something much easier to use on a daily basis. You’ll need easy access to your funds daily and both a secure, and convenient, way to transfer Bitcoins to another party, and receive them yourself.
If this is the case, then using a secure software wallet with a mobile client is going to be the best choice. This wallet will give the user everything they need while maximizing mobility and ease of use.
Take a look through the list and consider the reasons you’re getting a wallet for yourself. Depending on your background and needs, you’re likely not going to need the same type of wallet as everyone else holding on to their Bitcoin.
Weigh all of your different options, consider the purpose of each wallet, consider your budget and the pricing for each wallet, keep security in mind, and choose the wallet that works best for you and your needs.