With Cash in the bank earning a negative rate of return it does make sense to store some of your wealth in BTC – even if it is very volatile. When you first get into bitcoin there are a whole host of products out there and it can be pretty overwhelming with terminology such as hierarchical deterministic or multi signature technology being bandied about.
So how do you pick the best bitcoin wallet for your needs – well that depends on what you want to do with it, how simple you want it to be and how security conscious you are. Generally the more security you want – the more difficult it is to use and the more anonymous.
Mobile Wallets, Web Wallets or Desktop Wallets
This is how you want to access your wallet – and there are loads of different ways to do this. Most people want simplicity, to pull out their phone, swipe a QR code and check their balance – and this is where the most popular wallets are heading. They try to make the user experience as seamless as possible – one click good two clicks bad.
Some wallets try to give you a spread of accessibility options – the ability to use it on your phone as an App and also to access it on your browser. Although generally this means handing over trust of your bitcoins to a third party.
The first Bitcoin wallet was the Bitcoin core client which is essentially running a full node of your computer. This involves downloading the entire blockchain which can take a long time and take up a lot of space on your computer – and is now really only for the tech aficionados.
Security in a Wallet
The main thing to do with security is where the private keys are kept. For ease of use some web wallets and mobile wallets keep your keys stored on their servers. The problem is that you have to trust this third party to firstly not run of with your funds and secondly to have high enough security so no hacker can break in and steal your Bitcoins.
Hardware wallets are one form of very secure device as they keep your private key on a separate piece of hardware. The problem is that they are time consuming to set up and are not fully future proof. But generally these are for the more security conscious – if you like your own private high security bitcoin vault. Just whatever you do – don’t lose them.
One thing you shouldn’t do is use a brain wallet! Brain wallets are really easy hack as they use your password to create a private key which can then be guessed by trial and error (a brute force attack).
Bitcoin Wallet Features
There are a variety of extra features that wallets tack on to their offerings. For example Airbitz plugs 20% off starbucks vouchers. All you need to do is go into your wallet click buy voucher and then get the Barista to scan it – 5 seconds and its 20% off your morning coffee.
Another feature that is very useful is the ability to buy and sell bitcoins. These come with exchange linked wallets, for example Coinbase where you can buy bitcoin on your debit card and then pay with it by using you Iphone or Android Phone. If you are a trader this feature is a must have to get in and out of your positions at an instant.
A further feature that is becoming a bonus to have attached to your wallet is a bitcoin debit card – or to be more accurate a prepaid currency card. The wallet provider will exchange your bitcoin for you and convert it to USD, EUR, or GBP – depending on their offerings and obviously for a fee. These cards have varying fees for differing uses – for example if you want to use them at a shop till you might have to pay each time you use it and the same principle when you take money out of an ATM. They can also have very high currency conversion costs if you want to use the card to buy something abroad.
The good news is you can compare all the bitcoin debit cards at CryptoCompare where we have added special metrics to each card to work out how much you would lose by spending $1000 dollars or £1000 on the card and using it at ATM’s or in shops.
You can also Compare all the wallets too and rank them by security level, extra features and where you can use the wallet.
Data Courtesy of CryptoCompare