Since its introduction in 2008, Bitcoin (BTC) has become one of the first successful digital currencies in the world. Developed by the entity known only as Satoshi Nakamoto, BTC has grown in popularity as a way to make digital transactions without the involvement of a central bank or financial institution. However, this rise in popularity comes with the risk that your accounts could be compromised and your BTC stolen. To keep your Bitcoin assets safe and secure, holding BTC in a Bitcoin wallet is the best solution.
What is a Bitcoin wallet?
When you purchase BTC for the first time, you are issued with two keys: public and private. Your public key is used for transactions, while the private key helps authenticate the transactions while protecting your assets. A Bitcoin wallet is software or hardware designed to ensure that attacks from malicious entities do not compromise your private key. The wallet does not store any BTC but instead generates and stores private keys that allow you to access, store and manage your Bitcoin accounts without any security risk.
How does a Bitcoin wallet work?
As mentioned, every transaction from your Bitcoin account requires a public and private key. The public key can be shared with anyone to make a transaction, while the private key must remain safe and secure to ensure only you have control of your account. A Bitcoin wallet generates new public and private keys linked to multiple blockchain accounts across various networks. The Bitcoin wallet can generate as many keys as are needed to continue making easy and secure BTC transactions.
What are the different types of Bitcoin wallets?
When we talk about Bitcoin wallets, there are many different types of Bitcoin wallets to consider. While all are designed to manage and protect your Bitcoin accounts, how they do so differs for each type. In addition, some have downsides compared to others regarding how well they protect your Bitcoin accounts. Three main types of Bitcoin wallets are available: software, online, and physical. Let’s look at each Bitcoin wallet, how they work, and any drawbacks they might have.
Online Bitcoin Wallets
Online Bitcoin wallets, or hot wallets as they are more commonly known, are linked to third parties on the internet. They offer convenience when accessing your BTC but are often less secure than other types of Bitcoin wallets. This is because information on your private keys is entrusted to a third party, who may or may not choose to misuse the information you have entrusted them with. The most common form of online Bitcoin wallets available is known as Centralized Exchange Bitcoin Wallets.
Centralized Exchange Bitcoin Wallets
As the name suggests, these are Bitcoin wallets managed by a centralized Bitcoin exchange. They tend to be offered by specific exchanges when someone first purchases BTC from them. As such, they are often popular with people when they first enter the Bitcoin market. While this makes handling Bitcoin accounts simple and convenient, it also means that control and access to private keys belong to the exchange. If something happens, such as revoking access to your account, you could lose all your BTC assets. As such, this is seen as one of the least secure forms of Bitcoin wallets.
Software Bitcoin Wallets
Software Bitcoin wallets are another form of hot wallet. However, unlike online Bitcoin wallets, they are not managed by a third party but by the individual using specialized software such as computer programs and mobile apps. This is a much more secure way of protecting your Bitcoin accounts and allows you to potentially access your accounts from anywhere or on multiple devices. However, the downside is that software Bitcoin wallets are more at risk of being compromised by malware and other digital threats. The primary forms of software Bitcoin wallets include mobile wallets, desktop wallets, and Bitcoin wallet extensions.
Mobile Bitcoin Wallets
As the name implies, these are applications you download to your smartphone or mobile device that allow you to manage your Bitcoin accounts securely. These applications generate and store private keys in the device’s memory, which can be used to make secure transactions from the device at any time. The advantages of Mobile Bitcoin Wallets are that they can be accessed whenever you need them, and they often can scan QR codes for added convenience.
Desktop Bitcoin Wallets
This software Bitcoin wallet is a desktop program you download and install on your computer. The program is linked to your Bitcoin accounts and generates private keys that are stored in the computer’s memory. Although it does not allow you to access your accounts anywhere, it does allow you to access your accounts from multiple computers should you require it.
Bitcoin Wallet Extensions
Rather than downloading any apps or software, you can access your Bitcoin wallet through an extension on your Internet browser. Add the extension to your browser and link it to your Bitcoin accounts for easy and secure transactions. Much like Desktop Bitcoin Wallets, you can access your Bitcoin Wallet Extension from any browser with the extension installed..
Physical Bitcoin Wallets
Also known as cold wallets, Physical Bitcoin Wallets use offline methods to store and protect Bitcoin accounts. While this might seem counterintuitive in today’s digital world, it is perhaps the most secure way of managing and protecting your private keys. That said, special methods must be employed to generate, store, and secure these keys, which can differ between physical methods. The two common types of Physical Bitcoin Wallets are paper wallets and hardware wallets.
Bitcoin Paper Wallets
One of the simplest forms of Physical Bitcoin Wallet involves printing private keys onto paper for safekeeping. This is done using a secure key generator to avoid being compromised by online threats. Although this keeps your private keys safe from hackers, it is a more cumbersome and complicated way of managing your Bitcoin accounts. In addition, paper can become lost or damaged, so it is important to keep your wallet in a safe, dry, and secure place at all times.
Bitcoin Hardware Wallets
Perhaps the most secure form of cold wallet is the Bitcoin hardware wallet. This electronic device is specially designed to store private keys offline and allows you to make transactions anywhere without needing an internet connection. It can also come with secure element chip protection to prevent any form of hacking. It also has additional security methods, such as a Trusted display for confirming transactions as safe. As such, these are some of the safest and most convenient physical ways of protecting your Bitcoin accounts.
How to Choose a Bitcoin Wallet
Having learned about the different types of Bitcoin wallets available, you may wonder which is the best. Ultimately, it comes down to choosing the right Bitcoin wallet for your needs. To determine which Bitcoin wallet suits you best, consider some factors relating to your intended usage. Are you just getting into the Bitcoin scene, or do you have a high volume of BTC assets you wish to protect? Do you need a Bitcoin wallet that can access specific ordinals or networks or even work offline? Perhaps you need a wallet for multiple users, so you may wish to consider a multi-sig wallet. Regarding purchasing a Bitcoin wallet, you should examine the following important factors.
Custodial Vs Non-Custodial Wallets
The first thing you must consider when looking at Bitcoin wallets is who controls your private keys. Custodial Bitcoin wallets are an option through which a third-party service manages your private keys on your behalf. By contrast, a non-custodial Bitcoin wallet is one you control solely, giving you complete ownership and responsibility over your security and assets including Bitcoin. Online Bitcoin wallets fall into the custodial category, while many software and physical wallets are non-custodial.
As mentioned before, when discussing online Bitcoin wallets, the disadvantage of custodial Bitcoin wallets is that a third party manages your private keys, which can be risky if there is a data breach, or they act against you. On the other hand, non-custodial Bitcoin wallets give you full control over your private keys, you alone are responsible for maintaining it. Should you lose access to your private keys, you may find it more challenging to get them back than you would with a custodial wallet. Ultimately, it comes down to how much you use BTC for. A Bitcoin custodial wallet might be adequate for beginners or light users, but for heavy BTC users, a non-custodial Bitcoin wallet is highly recommended.
Security of Your Private Keys
As discussed in the different types of Bitcoin wallets available, each Bitcoin wallet type offers a method of protecting your private keys. Private keys are vital in authenticating any transaction made from your Bitcoin accounts, and should you lose access to your keys, you could lose access to all of your BTC assets. The best types of Bitcoin wallets allow you to fully control your accounts and security, such as software and physical wallets. However, software wallets can also fall victim to hackers and malware; plus, should you lose access to your phone or computer, you could also find it more difficult to access your accounts. For the best security of your private keys, it is recommended that you choose a physical Bitcoin wallet with chip protection and offline transaction capabilities.
Bitcoin Blockchains Supported
All BTC assets and transactions rely on a blockchain to function. Blockchains are decentralized online databases maintained on multiple networks across the globe. The data is arranged into chronological blocks that are secured using cryptographic technologies. Today, there are many blockchains out there, both public and private, and while they can be used for multiple purposes, BTC trading is perhaps the most popular use of these blockchains. If you have various BTC assets across any number of blockchains, it makes sense to have a Bitcoin wallet that can access as many blockchains as possible. Not only does this allow you to secure multiple accounts at once, but it can allow you to make transactions in one place without having to switch accounts constantly. Therefore, it is recommended that you look at what BTC blockchains are supported by a Bitcoin wallet before making your choice.
The Wallet’s Reputation
Once you have your eye on a Bitcoin wallet that meets your needs, it is important to research its reliability. Consider the company providing the service: do they have a reliable track record regarding security and support? Have they experienced security breaches, and if so, how did they handle them? Another thing to consider is how long the company has been around. It is better to go for a service provided by a well-established company in the industry. This will also allow you to research service reviews and see if the feedback is mostly or universally positive. Generally, if the service has a large user base, you can take it as a sign that it is trustworthy.
What is the Best Bitcoin Wallet?
Now that you’re familiar with the various types of Bitcoin wallets available and what to look for when choosing one, you may be wondering which one we recommend as the best. Based on all the factors we have discussed; we believe the best Bitcoin wallet available is the Bitcoin wallet from Ledger.
Choose the Ledger Bitcoin Wallet
Ledger has been developing secure technologies for Bitcoin wallets since 2015 and has amassed a customer base of over seven million individuals and enterprises. Ledger Bitcoin wallets come with a range of features that make them the perfect wallet for secure BTC transactions. Let’s look at some advantages of purchasing a Ledger Bitcoin wallet.
A Non-Custodial Bitcoin Wallet
You won’t have to worry about third-party services accessing your private keys when you purchase a Ledger Bitcoin wallet. Ledger Bitcoin wallets are designed to give you total control over the private keys of all your Bitcoin accounts. This will offer you peace of mind when making any future BTC transaction.
Highly Secure Bitcoin Wallet that Generates and Stores Your Private Keys Offline
Ledger Bitcoin wallets create and store your private keys separately from an online connection to keep your accounts as safe as possible. In addition, each wallet has Secure Element chip technology, so you won’t have to worry about hackers gaining access to your keys. As such, Ledger Bitcoin wallets are one of the most secure ways to handle BTC transactions.
Bitcoin Wallet Backup Options
Should you ever lose your Ledger Bitcoin wallet or wish to transfer your BTC accounts to a new wallet, it is important to have a backup in place. Fortunately, Ledger Bitcoin wallets make backing up your wallet information simple and hassle-free. This adds an additional security feature that ensures you won’t lose access to your BTC accounts.
A Bitcoin Wallet That Supports Bitcoin Blockchain and Much More
Today, there are many blockchains out there, many with their own unique cryptocurrencies to trade in. Ledger Bitcoin wallets not only support BTC transactions but also allow for trading in over 5,500 varieties of cryptocurrency on the market. With access to multiple blockchains and cryptocurrencies, you can conduct secure transactions easily from one place with this wallet.
Reputable Bitcoin Wallet With More Than 7 Million Devices Sold
Today, Ledger has a customer base of over 7 million users. Their products have earned a reputation for being highly secure, with no devices ever being hacked. As the world of BTC trading increases in popularity, it only makes sense to trust a company known for its reliability, security, and ease of use.
User-Friendly Bitcoin App to Pair With Your Physical Bitcoin Wallet
In addition to your Ledger Bitcoin wallet, the Ledger Live app allows you to manage your BTC accounts securely from any device. Ledger Live pairs easily with your Ledger Bitcoin wallet, offering you up-to-date information on your accounts, transaction history, and much more. The app is secure and easy to use, requiring no sign-in or password. All you need is your Ledger Bitcoin wallet for access.
How to Get a Bitcoin Wallet: A Step-by-Step Guide
So, now that you know all about Bitcoin wallets, what they do, the types available, and what features to look for, you’re probably wondering what the best way of purchasing one is. Here’s a step-by-step guide to help you buy and set up your first Ledger Bitcoin wallet.
1. Visit the official Ledger website and explore the range of available devices. If you are starting BTC trading, you may want to consider purchasing a Ledger Nano S Plus or Ledger Nano X for additional Bluetooth capabilities. For more experienced cryptocurrency traders, there’s the Ledger Flex and Ledger Stax, both with secure E Ink touchscreens. Compare each device and choose the one that best suits your needs.
2. Once you have your Ledger Bitcoin wallet, it is time to set it up to work with Ledger Live. Ledger Live is an app that works with your physical wallet and allows you to access your account securely from any device. Download the app to your desktop or smart device and install it to manage your accounts. The app works on all Android and iOS devices and Windows, macOS, and Linux systems.
3. If you already have a Bitcoin account set up, simply add it to your wallet to begin managing and trading BTC. With Ledger Live, you can quickly and easily add multiple cryptocurrencies to your wallet, allowing you to manage all your accounts from one location.