Which Bitcoin wallet should I choose?
There are a number of wallet apps on the market from a variety of vendors and with different features to choose from. We welcome you to try the Bitcoin.com Wallet, the fully non-custodial crypto wallet trusted by millions.
The Bitcoin.com Wallet is what’s known as a ‘software wallet’. Quality software wallets provide an excellent combination of security and ease-of-use. Depending on how you’re using your bitcoin though, you may want to consider another wallet type. Here’s a rundown on the different types of Bitcoin wallets and their respective pros & cons:
Software wallets: convenient buying, selling, storing, trading, and using
- Software wallets take the form of an app which is downloaded for free to your phone or desktop. You simply open up the app and can start making Bitcoin transactions almost immediately.
- Since software wallets connect to the Internet, there’s a small risk of hacking. Therefore, it is generally recommended to not store large amounts of bitcoin in your software wallet. That being said, if you follow password management best practices, it’s safe to store bitcoin in a software wallet.
- While there have been a few isolated cases of software wallets being hacked, by far the greater risk is that you lose your ‘private key,’ which is like the password to your wallet. Therefore, it’s critical to backup your wallet and store the password somewhere safe.
Tip: Make sure the software wallet you’re using is fully non-custodial like the Bitcoin.com Wallet, meaning only you can access your cryptoassets — not the wallet provider. This protects you from the risk of fraud or bankruptcy by the wallet provider.
Read more: What features to look for in a Bitcoin software wallet.
Hardware wallets: long-term storage for larger amounts of bitcoin
- Hardware wallets, also known as cold wallets, are physical devices created specifically for the purpose of storing cryptocurrencies. They offer the best security for your digital assets because they insulate you from the Internet, making it effectively impossible for hackers to infiltrate your wallet.
- Since they take more time to access, hardware wallets aren’t ideal for making frequent Bitcoin transactions. Use them for long-term storage instead.
- As with software wallets, you need to back up your private key and adhere to password management best practices.
Tip: Hardware wallets are well worth the initial cost — especially if you own a lot of bitcoin. To make sure the device isn’t compromised, only buy one from a company you can trust.
Centralized exchange wallets: convenient buying, selling, and trading
- Centralized exchanges (CEXs) have traditionally been a popular place for many newcomers to buy their first bitcoin because they make the buying process very simple. It’s like opening a trading account.
- However, the CEX itself retains control over the funds in your account. Not only does this expose you to the risk of the exchange getting hacked or going bankrupt, it also means you have to ask for permission to withdraw your bitcoin, wait longer to withdraw, and usually pay higher transaction fees for withdrawals.
- We recommend using centralized exchanges only for trading (not for storing your bitcoin).
Tip: CEXs are not a secure place to store digital assets. Once you’ve bought your bitcoin, you’re advised to move it to your software or hardware wallet if you don’t plan on trading it immediately.
Paper wallets: alternative to hardware wallets, unique method for gifting bitcoin
Paper wallets are created by downloading a software package, then running the software (for security, preferably in an offline environment) to generate a public/private key pair which you print out on a piece of paper. Having created a paper wallet, you can send any amount of bitcoin to the wallet address. To spend it, you use the private key written on the paper to sign the spend transaction.
Like hardware wallets, paper wallets allow you to store bitcoin completely offline. This makes them a lower-cost alternative to hardware wallets.
Since the public/private key pair is written on the paper, handing over the paper to another person is similar to handing over a cash note. This makes paper wallets a novel way to exchange bitcoin face-to-face.
You can create your own Bitcoin Cash paper wallets at Bitcoin.com Paper Wallet.
You can learn how to create a Bitcoin paper wallet here.