One of the most important aspects of using Bitcoin is learning how to properly manage a crypto wallet. Also known as a digital wallet, this is a program that serves the same purpose as your leather wallet to your paper money — protection, organization and easy access.
Of course, there are some differences between handling a leather strap and a wallet app. Let’s take a look at how to store bitcoin so that you can have the same peace of mind using digital currency that your traditional currency gives you.
Desktop Wallet
A desktop wallet is a program that sits on your desktop just like Microsoft Word or Excel. The program is there to generate an address where you can send and receive your crypto. Desktop wallets also allow you to store a private key. The private key is a long number that links you to the wallet address.
If you have a desktop wallet, it is important to note that your crypto is not stored on your desktop. The keys that you have are giving you ownership of a crypto balance. Opening the wallet just allows you to access and manage that balance, moving it as you please and eventually recording that movement on the blockchain. If someone else takes these keys, they have possession of the balance.
If you have a program like this on a smartphone, it may also be known as a mobile wallet. The function of the wallet is the same, though. One major difference is that many mobile wallets use near field communication quick response (QR) codes — the square barcodes you can scan on your smartphone — to access wallets. Mobile wallets are more easily impersonated, so make sure you are not downloading malware on your phone that you think is a wallet.
Hardware Wallet
One of the most secure types of digital wallet you can keep is the hardware wallet. The hardware wallet keeps your security information on a physical device that you can access through a USB port. These wallets are made to be highly resistant to virus attacks. Because they are physical, they are the only type of crypto wallet that is not free.
Because hardware wallets are kept separate from the desktop, laptop or smartphone, users do run the risk of losing it unexpectedly.
Buy Bitcoin Worldwide – The Trezor Model T hardware wallet
Paper Wallet
If you write down your private keys and crypto addresses on a piece of paper, you are said to have created a paper wallet. The major advantage is there is no way to digitally hack a piece of paper. The disadvantage is that paper wallets are more easily lost. It is also possible that the writing on the paper may fade over time, taking access to the crypto stash it represents with it.
To access your crypto from this type of wallet, you will use your private keys in a wallet generator program. The program will be on a website and will generate QR codes and keys. In order to keep these keys safe, we recommend you generate keys while offline and wipe online history after creation. Online wallets, also known as live or hot wallets, can sweep information from the paper wallet so that the money it represents can be used.
Pros and Cons of Storing Bitcoin in Wallets
Having a good Bitcoin wallet to store your keys is very important to the safety of your digital value store. The other alternative is allowing a professional exchange to hold your private keys. Many exchanges require transmitting funds into their system to trade on the system, but you always have a choice to move your crypto back into a private space once you are done transacting.
Many exchanges have been famously hacked and the crypto value on them wiped out. Users that did not move their crypto into a private space found their money stolen — with no recourse.
Pros of Wallet Storage
- Full control over your crypto
- Higher level of security and anonymity
- Safety from exchange hacks
Cons of Wallet Storage
- Risk of storage loss
- Funds sometimes not immediately useable
- Potentially difficult setup and maintenance
Can you Store Bitcoin on a USB?
Yes. A normal USB flash drive is a type of hardware wallet. It has the ability to store your keys and credentials, and you can access your security information through a USB drive hooked up to a laptop.
Best Bitcoin Wallets
There is a huge difference between a Wal-Mart wallet and a Montblanc. In the same way, not all digital wallets are created equal. Make sure that you understand the type of wallet you are using and whether it matches your idea of safe storage.
Here we will go through some of the most popular and reputable bitcoin wallet “brands.”
- Active Crypto Traders
Coinbase
Not to be confused with the huge brokerage under the same corporate umbrella, the coinbase wallet is a highly versatile and secure program. Coinbase is known for ease of use. You will trade all of your anonymity for this convenience, but if you are okay with that, you should have no problems. You can store all major cryptocurrencies in this wallet, but it has limited support for smaller coins.
Mycelium
Mycelium is a top-ranked mobile wallet with an intuitive, straightforward interface. New users will find it easy to use, but it has advanced accessibility and security features that integrate right into your iOS or Android phone.
Trezor Model-T
This Trezor is a popular hardware wallet with a color touchscreen and cutting-edge security. It is said to be so safe that you can use it on computers that have been infected with malware, although you should not try this. Currently, the Trezor Model-T costs around $170.
Not Your Keys, Not Your Crypto
“Not your keys, not your crypto” is a warning that all crypto oldheads give to newbies. When taken literally, it means that you must have your digital private key to truly own your crypto. If you keep your bitcoin in an exchange or other service that keeps your private keys from you, that bitcoin really is not yours. It can be taken from you at any moment, and there really is not anything you can do about it.
Interpreted more loosely, this phrase speaks to the fact that you are ultimately responsible for your crypto. Bitcoin, ethereum and the like have no physical presence. You can keep your crypto in any wallet form above — what is most important is that you keep your private keys. Your money is on the blockchain. The wallet you choose is only a branch to the chain.
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