Since the advent of money, its owner had to have a way to store it somehow. Chests, pouches, wallets, and banks were the norm and Bitcoin is no different. While it’s not a physical, tangible item storable, it's still stored in a wallet. A wallet can be physical or digital, software or hardware.
Unquestionably, your first foray into the cryptocurrency world must start with choosing a wallet appropriate for your needs. There's so many variations and we'd like to clarify why each type has their positives and negatives.
BITCOIN WALLET OVERVIEW
As I mentioned, there are many different kinds of wallets. First, let’s cover the digital ones. Most wallets are digital, as even hardware products have some kind of software running inside. A basic digital wallet would be a software wallet. There are two kinds of these: one is a web-based application, where you log in onto a website to manage your coins, second is an app that you download onto your computer or mobile phone.
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Among the browser based ones is blockchain.info. It’s perfect for beginners and great for advanced users as well. One key feature is being able to use the .onion hidden Tor network service to anonymously conduct transactions. By purchasing cryptocurrency in person or by using another crypto to purchase Bitcoin, this makes its use nearly untraceable. Granted, only if you login exclusively using the hidden service. Other common features such as two-factor authentication are present. Secure, simple, convenient. You can log in from anywhere with an Internet connection. It’s also more difficult to lose the wallet – like most accounts in various web services, you’re only locked out if you forget all of your credentials. Unlike software, paper or hardware wallets, where all can be lost when the storage media is destroyed.
Exchanges also offer web-based wallets. Personally, I wouldn’t recommend them. Every now and then we can hear about an exchange being hacked with all funds of the clients lost. They’re more prone to attacks than any other wallet. Only use for such wallets is when you’re purchasing or selling cryptocurrency on an exchange; short term storage.
Other than blockchain.info, I can recommend strongcoin.com. Private keys are encrypted by the browser before they reach the server, thus, the owners of the service do not have access to them, and neither does anyone who illegitimately gains control of the systems. Only the user is the owner. In addition, Strongcoin is a hybrid wallet. You can download a PDF file with your entire account on it. It can be printed, creating a physical paper wallet. Quite useful!
Speaking of physical wallets, Trezor is a great choice for Bitcoin. It's a hardware wallet, a small computer which runs the software storing your money. Although, if you wish to use other cryptocurrencies, you might want to look into the Ledger Nano S, which supports a wider range of crypto.
Trezor though, is an amazing, exceptionally crafted device, durable, and built to last, which provides its user utmost security of their coins. It’s supported by many different services and software, bringing advanced cryptography to you on about every platform. Featuring SSH/GPG agents and U2F key support, Trezor is more than just a place to store your Bitcoins. It can be used for two-factor authentication in a variety of other services as well, providing you with a safer user experience everywhere you go.
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LEDGER NANO S OVERVIEW
The Ledger Nano S is a second favourite of ours. If you intend or already own alt-coins, then I'd highly recommend checking out this wallet. In comparison with the Trezor, the Nano is a bit smaller and compact. Overall the design of the Nano is more attractive and the fact that it can hold a wider (and growing) selection of alternative cryptocurrencies - it's a long term investment.
The Nano S also allows for a 24 word backup system, in case you happen to misplace your keys. This way you have one final access point that only you know. Overall, we found the Ledger Nano S to be incredibly intuitive and although the process for storing crypto's isn't easy to the common person - this piece of hot storage made it a lot less frustrating.
On the app side, we have mobile and desktop wallets. Mycelium is an award winning, Android and iOS mobile wallet. It supports the aforementioned Trezor hardware wallet and offers several account types. A well-reputed, open source project, Mycelium is a great piece of software to store your coins with for quick, mobile payments on the go.
Sign up, set up a PIN code, write down the 12 word security phrase, and you’re ready to go! Fully free, available from Google Play and iTunes, backed by enterprise level security solutions like HD (hierarchical deterministic) security, this is surely the best option for mobile. Granted, the way it is – a mobile wallet, it is not a good choice for storing long term. Best use of Mycelium would be for casual shopping, transferring a small amount of coins beforehand from a more secure wallet, like a hardware wallet.
For desktop, in my opinion, the best choice would be Armory. It is perhaps the most secure software wallet you can have on your desktop. That is due to offering the feature of cold storage – management of your coins without the need for an Internet connection. Armory implements the feature using Glacier Protocol, a popular, high security system for Bitcoin.
Various platforms are supported, including Windows, Mac OS, GNU/Linux and Raspberry Pi. You could also purchase a cheap Pi model and use it as your travel friendly wallet! Just like Mycelium, it’s open source, with features like HD security and multi-signature transactions included, developed by experts in cryptography and private key ceremonies. Of course, all of this for free. It doesn’t yet have support for cryptocurrencies other than Bitcoin, but the team is constantly working on adding new features to Armory.
The last option for cryptocurrency storage is a paper wallet. To put it simply, it’s an image printed on a piece of paper or stored on a computer, or about in any way, shape or form where you can store the image. For this purpose, you can use a hybrid wallet, like strongcoin, or a plain paper wallet, like bitaddress.org. Bitadress will ask you to generate some “randomness” by moving your mouse or typing in characters in the box. After the process is complete, you receive a pair of QR codes to check your wallet and spend the money inside.
Options to print a neat ticket or cheque style wallet are available, with other useful choices in stock. A detailed step-by-step list on how to use these codes can be found on the website. While quite secure by itself, paper wallets are prone to being lost or destroyed, although you could theoretically etch the QR codes in a material more durable than paper. The project itself is open source, as many solutions in the cryptocurrency world, and enjoys high trust in the Bitcoin community.
BEST RATED BITCOIN WALLET
WINNER: LEDGER NANO S
Although the Ledger Nano S isn't as easy to use as a mobile wallet and the price is fairly expensive compared to the other choices. It's by far the best option for a hardware wallet where you can store your coins offline. (See our complete review here)
It holds almost double the amount of supported coins (at the time of writing this) than the Trezor wallet and we've found the usability to be much better. All-in-all, if we are going to recommend a wallet - you can rest assured it's going to be one with cold storage capabilities and the best one we've used is the Nano S.