Are you intrigued by Bitcoin and cryptocurrencies? Wondering how it all works and what it might do for you if you invested in this new currency type?
One of the biggest questions I frequently hear from newbies is, “how do you keep bitcoins? If they’re virtual and not physical, do you have some sort of bank account, or what?”
As you consider investing in Bitcoin, you should know how to store it safely and conveniently. Just as a physical wallet holds your money, a Bitcoin wallet safely stores your bitcoins. Technically, a Bitcoin wallet is a software program with a private security key.
Bitcoin wallets come in two main types: hot wallets and cold wallets. A hot wallet allows the user to send and receive tokens. A cold wallet is offline and meant purely for storage.
Let’s get into the best crypto wallets, so you can know how to keep your bitcoins safe.
What’s Ahead:
Overview of the best Bitcoin wallets
Product name Best for Type
Exodus Beginners Hot Wallet
Mycelium Mobile users Hot Wallet
Electrum Bitcoin-only users Hot Wallet
Ledger Nano X Advanced cold storage Cold Wallet
Ledger Nano S Basic cold storage Cold Wallet
Trezor Model T Advanced storage with extra features Cold Wallet
Exodus
Wallet type – Hot wallet.- Cost – Free.
- Multiple cryptocurrencies – Yes.
Exodus is a beginner-friendly mobile and desktop wallet. It features a straightforward, intuitive interface and a built-in exchange option. Exodus started as a desktop-only software wallet, but now it is available for Android and iOS.
While Bitcoin is unquestionably the dominant cryptocurrency on the market, you can find a growing number of alternative cryptocurrencies such as Ethereum, Litecoin, and Cardano. With an Exodus wallet, you can easily swap between Bitcoin and over 100 other cryptocurrencies.
Exodus’s cross-platform app performs equally well on Windows, Linux, and macOS. There’s no need for registration: simply download and install the app to get started.
If you’re just getting into cryptocurrency, Exodus is a great option. It has excellent, responsive customer support, which is extremely helpful for anyone starting with Bitcoin wallets. It also updates every two weeks, working towards a constant optimization of security protocols and user experience. Since the company focuses specifically on beginner crypto investors, it prioritizes ease of use.
Exodus collects a fee on all cryptocurrency exchanges. Every time you send or receive crypto, the fee will appear at the bottom of the screen.
More advanced cryptocurrency investors may point out that Exodus does have its drawbacks. It is a closed source wallet: this means that the user must trust the Exodus team for security. Additionally, security relies on a password only and doesn’t include an option for two-factor authentication support or a multi-signature address.
Nevertheless, beginner Bitcoin users will love Exodus’s convenient, inviting interface.
Mycelium
Wallet type – Hot wallet.- Cost – Free.
- Multiple cryptocurrencies – Yes.
Mycelium is a mobile-only, open-source Bitcoin wallet. On the market since 2013, it started as an Android app and later became available for iOS.
Besides Bitcoin, Mycelium also supports ETH, FIO, and ERC-20 tokens. It has a convenient interface and allows the user to set custom transaction fees.
One of Mycelium’s significant advantages is its compatibility with hardware wallets such as Trezor and KeepKey. This means you can use an offline storage device to store your bitcoins and still view your holdings through Mycelium’s interface. The app can also import and sync keys from a cold storage wallet.
Mycelium has open-source software, which means that advanced users can check the code for errors, spyware, and other factors that may compromise security. The app uses the SPV (Simplified Payment Verification) technique to confirm transactions without downloading the entire blockchain.
Mycelium’s privacy features are relatively basic. The app can rotate addresses and securely communicate with servers through the Tor anonymizing network.
One disadvantage of Mycelium is its lack of a desktop computer view. It’s okay if you prefer to view your Bitcoin through a mobile app, but desktop users might want to look into other options.
Overall, this wallet is probably better for users with a bit of experience, especially those who are on the go and prefer a quick view of their crypto assets on a mobile device. Bitcoin wallet newbies will probably be more comfortable with a wallet that has a more streamlined interface.
Electrum
Wallet type – Hot wallet.- Cost – Free.
- Multiple cryptocurrencies – No.
One of the oldest open-source Bitcoin wallets, Electrum, started operating in 2011. The user interface hasn’t changed much since, which means that this is a very basic, Bitcoin-only wallet with a simple layout. However, it’s an excellent option for users who are only interested in Bitcoin and want essential features with a maximum level of security.
Electrum is compatible with all standard desktop operating systems, such as Windows, Linux, and macOS. It also works with Android but is currently unavailable for iOS.
Like Mycelium, Electrum uses the SPV mechanism for transaction verification. This allows the app to track and verify transactions quickly through server queries on the Bitcoin network rather than downloading the entire blockchain.
Advanced Bitcoin users can leverage Electrum’s more complex features, such as:
- Custom transaction fees.
- RBF (replace-by-fee) mechanism.
- An adjustable security level.
With Electrum, you can choose between two-factor or multi-signature authentication. Electrum also enables the user to make their seed phrase longer with custom words.
Apart from being limited to Bitcoin only, Electrum’s main disadvantage is its lack of customer support. This can inconvenience new Bitcoin users who are figuring out how to use their wallets. Once you have your initial setup complete, Electrum’s fund transfer and management functions are relatively easy to use, though.
Ledger Nano X
Wallet type – Cold wallet.- Cost – $119.
- Multiple cryptocurrencies – Yes.
The Ledger Nano X hardware Bitcoin wallet is the latest cold wallet by Ledger. Long-time Bitcoin users may remember the launch of its predecessor, the Ledger Nano S, a 2014 product of the same French company. Back in the early days of Bitcoin, the Ledger Nano S was one of the dominant cold wallets on the market. This wallet supports virtually every existing cryptocurrency.
The Nano X Bitcoin wallet is similar to a USB drive. It can connect to your device – desktop, iOS, or Android – either via USB or through Bluetooth, which allows the user to manage their portfolio through a handy smartphone app.
Ledger’s hardware wallet is highly resilient, with a custom-built OS and a SE (Secure Element) chip. The device has a security approval seal from ANSSI, the national French cybersecurity agency. It also features a substantial 100mAh battery, making it possible to use this cold storage wallet for hours before you need to recharge it.
Although the Nano X is a cold storage device, its users can enjoy the convenient Ledger Live software, which stores up to 100 apps and provides a handy interface for viewing all your cryptocurrency holdings. The user can manage their portfolio and separate wallets for various cryptocurrencies. The convenience of Ledger hardware Bitcoin wallets joined with comprehensive customer support, has made the company an industry leader.
Violent hacks into Ledger’s system in July 2020 have created significant concerns among the company’s customers, though. The hacks exposed private customer information, such as names, email addresses, and phone numbers.
Although the hackers gained no access to private cryptocurrency keys, the event caused many people to doubt the efficacy of Ledger’s security procedures. In particular, they fear that the wallet’s Bluetooth integration could become a vector of a cyber-attack. People who are concerned about this possibility can opt to use USB exclusively.
Bottom line: the Ledger Nano X is an easy-to-use, secure, multifunctional cold storage wallet.
Learn more about Ledger Nano X.
Ledger Nano S
Wallet type – Cold wallet.- Cost – $59.
- Multiple cryptocurrencies – Yes.
The Ledger Nano S, among the oldest of the first-generation open-source Bitcoin wallets, is the forerunner of the Nano X. This wallet includes most of the essential features present in the Nano X but at a much lower price. Like the Nano X, the Ledger Nano S works for virtually every existing cryptocurrency.
Nano S users enjoy unlimited access to Ledger Live, excellent customer service, community support, and secure storage for a highly affordable price.
For extra security, the Ledger Nano S features two physical buttons, both of which the user needs to press when confirming payment.
The user must also create a four-digit PIN code during setup, which helps avoid losing Bitcoin if the device gets misplaced, physically destroyed, or stolen. Suppose a thief attempts to guess the PIN code and enters an incorrect number combination three times, the device self-deletes.
So what is the difference between the Ledger Nano S and Nano X? Unlike its newer successor, the Ledger Nano S doesn’t come with a USB Type-C cable for connecting to smartphones. It has no Bluetooth option, and its storage limit is 18 wallets, compared to the 100 wallets Nano X can hold.
Why does it matter? If you work with multiple cryptocurrencies, you might not store them all in the Nano S wallet. Once you reach your limit, you’ll need to delete a wallet to make room for another. The cryptocurrency would still be present on the blockchain, and you would still be able to see it in Ledger Live, but not in the Nano S.
Despite these limitations, the Ledger Nano S ticks off all the basic requirements for cold-storage Bitcoin wallets: security, a fair price, and an easy interface, all of which make it an excellent choice for beginners.
Find out more about Ledger Nano S.
Trezor Model T
Wallet Type – Cold Wallet.- Cost – $193.
- Multiple cryptocurrencies – Yes.
Like Ledger, Trezor is one of the first names in cold crypto storage. Model T, its second-generation hardware wallet, comes with convenient features like:
- A touch screen (unlike the first-generation model’s buttons) that enables the user to enter the PIN code and passphrase directly on the device.
- A MicroSD card slot.
- A USB Type-C cable is compatible with both desktop and smartphone devices.
- Third-party exchange access directly in the website interface.
Like other Trezor devices, Model T works with all major desktop operating systems, including Windows (versions 10 and up), Linux, and macOS (10.11 and higher). It is also compatible with Android but not with iOS or Windows Phone.
Trezor Model T users can utilize MicroSD cards for PIN encryption to increase their device’s security. It also features the Shamir Backup, a backup method that involves splitting the seed into multiple shares that the Bitcoin owner can use to recover funds in case of device damage or loss.
The model supports over 1,600 cryptocurrencies, but you can switch to a Bitcoin-exclusive mode if you are interested in Bitcoin only.
Like the Ledger Nano X, this is an open-source software wallet with customer and community support. However, Trezor Model T offers unlimited storage, which gives it an edge over the Nano X.
Of course, all of these advanced features come with a hefty price tag of $193, almost four times higher than the basic Ledger Nano S.
Do the advantages of the Trezor Model T justify the price? Some user reviews respond with a resolute yes. Others complain of the touchscreen’s small size and the relatively complicated interface, which can be counter-intuitive for beginners. Overall, the Trezor Model T is an attractive option for advanced crypto users who are willing to pay extra.
Learn more about Trezor Model T.
How we came up with our list of best Bitcoin wallets
After reviewing the most popular Bitcoin wallets, we compared hot and cold cryptocurrency wallets by various features such as:
- User convenience.
- Security.
- Price.
- Compatibility with different cryptocurrencies.
We narrowed our choice down to a list of vetted hot and cold Bitcoin wallets. All the models featured in this review offer reliable security protocols, work smoothly with leading exchanges for convenience of open-market transactions, and are relatively straightforward to use. Some are very basic and great for beginners, while some would be a better option for more experienced users.
What is a Bitcoin wallet?
A Bitcoin wallet is a location or device that can store your bitcoins and other cryptocurrencies and validate your crypto transactions. The wallet keeps and protects your secret “seed,” or private Bitcoin key, which you can use for purchases or Bitcoin exchange through the blockchain. The Bitcoin wallet also safeguards your Bitcoin transactions and prevents malicious hacks into your crypto storage.
Bitcoin wallets are available in hot and cold storage options for mobile, web, desktop, and hardware. All wallets contain a private security key corresponding to the wallet’s address.
Why use a Bitcoin wallet?
When you sign up for a crypto exchange account, you automatically receive access to an exchange-hosted wallet. Technically, you could keep your bitcoins there. It would be easy and free. So why shouldn’t you do it?
An exchange-hosted wallet doesn’t give you control of your public and private keys. Control of the keys remains in the hands of the exchange, which functions as a bank: it holds your bitcoins, and you trust it to keep your crypto assets safe.
This setup misses the two main ideas behind cryptocurrency: total independence and complete control for the user. An exchange could shut down or experience a cyber-attack, and users could lose their bitcoins as a result. Regulations for crypto exchanges are minimal, so you should always keep your Bitcoin safe in a location you fully control. Security is the purpose of your Bitcoin wallet.
You have probably heard horror stories of cryptocurrency theft or people locked out of their Bitcoin fortunes because of a lost password. According to The Wall Street Journal, about 20% of all bitcoin in circulation is missing or inaccessible.
A secure Bitcoin wallet will help you preserve your peace of mind as it protects your investment.
Additionally, suppose you would like to participate in ICOs (initial coin offerings during a new cryptocurrency launch). In that case, you’ll need to have your private wallet, not just an exchange account.
Therefore, while many users keep a small amount of cryptocurrency in an exchange account, it’s not recommended for large amounts of Bitcoin.
Most important features of a Bitcoin wallet
When choosing a Bitcoin wallet, you should examine your goals: are you interested primarily in a long-term secure cold storage option or a hot wallet that will facilitate quick transactions with maximum convenience?
Here are some specific features you’ll want to look for in your Bitcoin wallet.
Security
Tight security is a top consideration in digital wallets. Always check whether the wallet includes secure login and two-factor authentication options. A multi-signature option is a preferred security measure for protection against cyberattacks. For complete control and independence, the Bitcoin owner is the only one who should have access to the Bitcoin wallet’s private keys.
In web wallets, keep in mind that HTTPS sites have a more secure protocol than HTTP. Also, check that the wallet’s source code is up to date.
Privacy
How well does your wallet of choice protect user privacy? Check whether the wallet asks for sensitive information, apart from your email, during the verification process.
Transparency
A reliable Bitcoin wallet will be transparent regarding its services, functions, and security measures. Open-source wallets have an extra security level that comes from peer reviews.
Ease of use
You will want a wallet with an easy, streamlined interface, especially if you are a beginner. Top Bitcoin wallets emphasize convenience and always strive to improve the user experience. Web wallets should have seamless compatibility with Windows and Mac, while mobile wallets must be easily compatible with Android and iOS.
Reputability
It is always better to choose a Bitcoin wallet from a reputable company with experience in the digital assets market. It’s also helpful to check out customer reviews and view genuine feedback regarding the wallet’s performance.
Summary
Whether you are just taking your first steps in the world of Bitcoin or are a savvy user with many crypto transactions under your belt, you need a secure, convenient, and affordable way to store your cryptocurrency.
Today, the Bitcoin wallet market offers multiple hot and cold storage options. Each of the models included in this article can be a sensible choice depending on your preferences, experience, and budget.
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