Today, around 5% of Americans own Bitcoin.
Are you one of them? Or are you planning to join the ranks very soon? Then you'll want to keep this cryptocurrency safe.
To keep your BTC safe, you'll need to get a wallet. But there are several Bitcoin wallets out there, so which one's right for you?
Read on to find out more about the types of Bitcoin wallets available so you can make a better-informed decision.
How Do Bitcoin Wallets Work?
First of all, what are Bitcoin wallets?
A wallet is a user interface which allows you to interact with your cryptocurrency on the blockchain.
The wallet doesn't actually hold your Bitcoin, as the BTC are technically just entries on a distributed ledger. But your wallet is your keys to accessing the ledger, and with it you can send, receive and track your balance.
Now that you know how a Bitcoin wallet works, we can now look at the different types available.
Web wallets offer you some of the best convenience possible, as your wallet is just located on the internet. You choose a provider who then hosts your keys.
This means that so long as you have an internet connection, you can get access to your web wallet through any device, such as a desktop computer, laptop, tablet, or even smartphone. All you have to do is log into your account on the particular website and you'll be able to access your funds.
If you're looking for the wallet with the most convenience, then a web wallet is probably the best choice for you.
However, you should make sure you do some thorough research, as it's possible for unscrupulous server providers to run off with your funds. In the past, exchanges have shut down and stolen their customer's funds, so make sure to choose a service with a good reputation.
- Easy to set up
- Dont need to back up seed
- User friendly and convenient to use
- Trusting a third party to hold your funds
- Less advanced features
- Can be subject to arbitrary payment conditions
A Desktop wallet is a program you download and install on a desktop computer providing the user the ability to send and receive Bitcoin.
With Desktop wallets the user has full control over the keys and assets.
They are considered safer and more secure than web wallets as there are no third parties which have access to your funds. This also means that you need to ensure you have backed up your wallet correctly or you could lose your funds if something goes wrong.
Desktop wallets are decent to have, as they have good levels of security compared to some of the other options on this list.
Desktop wallets are designed for small amounts of Bitcoin. For larger amounts you should always use Cold Storage.
- Control your own private keys
- More advanced features available
- Many free open source options
- Risk of complete loss of funds if used incorrectly
- Can be complicated to set up
- Sometimes less user friendly than other options
For those of you who live on your phones, then the mobile wallet might be a good choice for you. With this option, you download an app that goes on your smartphone. This means you can access your Bitcoin funds with a tap of your finger.
Mobile wallets are a popular choice to have in addition to other wallets types, as they allow you to pay for things in person at physical stores.
Buying something with Bitcoin is as easy as scanning a QR code with your phone and pressing send.
- Control your own private keys
- Very convenient for in-person payments
- Many safe options
- Can lose all funds if not backed up correctly
- Not ideal for storing large amounts
- Don't usually have advanced features
Hardware wallets are the most secure type of Bitcoin wallet as they store your private keys on a physical piece of equipment so the keys dont have direct access to the internet.
This type of Bitcoin wallet is much safer, as even if someone steals your wallet they won't necessarily be able to access your Bitcoin.
To access your funds, the Hardware wallet is usually plugged into a computer via a USB port and secured with a password.
- Very secure
- Safer for storing large amounts
- Almost zero risk of being hacked
- Inconvenient for making fast payments
- HW wallets can be expensive
- Need to protect physical device
Keep Your Cryptocurrency Safe in a Bitcoin Wallet
You should now hopefully have a much better idea of what types of Bitcoin wallets there are and what options are available for you. Of course, there's no single wallet that's the best for every single person as each type has its own pros and cons.
But with this newfound knowledge, you'll be able to pick one that works for your needs and preferences! So secure your crypto and get yourself a wallet ASAP!
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