Best Bitcoin Wallets

Bitcoin wallets enable the sending and receiving of the bitcoin by adhering to the Bitcoin protocol. Wallets are essentially software programs that enable individuals with little to no technical knowledge to interact with the Bitcoin blockchain to transact value globally, without limitations and without intermediaries.

Bitcoin is not stored in a wallet in the same sense that cash is held in your physical wallet. All bitcoins stored on the blockchain, a distributed ledger that tracks the ownership of each bitcoin on the network. Each bitcoin on the network is associated with a specific wallet or private key to be more precise. Only the person that controls the private key can provide a valid signature to move these bitcoin around. In a nutshell, it is the combination of the private key(s) and public key that create the concept of a Bitcoin wallet.

Both the public and private keys are to be kept private. If you reveal your private key to someone, that person could steal your funds without anyone being able to prevent it. Revealing your public key is less sensitive but results in a loss of privacy. This is because your public key is responsible for generating bitcoin addresses. Whenever you want to receive funds your wallet generates a new address for you by using your public key to derive it. This bitcoin address can be given to anyone - like a bank account number - only that it changes frequently. If you reveal your public key all your bitcoin addresses can be tied together by inspecting the Blockchain.

There are different types of bitcoin wallets to choose from when it comes to securing your private keys. Hardware, software, metal, paper, each with their own trade-offs. Remember: if you aren't holding your own private keys, you don't actually own bitcoin - you just own a claim to bitcoin held by an exchange. Similar to how you hold a claim to the dollars or euros in your bank account.

Bitcoin Web wallets

Web wallets let you interact with your bitcoin holdings in a web application. They were the first type of wallets that were widely used. Perhaps the most famous of this type is BitGo and Blockchain.com.

Bitcoin Mobile Wallets

Mobile Bitcoin Wallets have become popular in recent years. Mobile Bitcoin wallets run as mobile iOS/Android apps. Famous examples of mobile bitcoin wallets are Casa, Blockstream Green or BlueWallet.

The advantage with a mobile bitcoin wallet is that you can manage your funds on the go. Some also argue that phones are more secure as the wallets, holding users’ keys can be protected with phone security features such as Face or TouchID.

Bitcoin Desktop Wallets

Bitcoin Desktop Wallets are software programs that you can download and run on your Windows or Mac computer to store, send and receive your bitcoins. The private key is stored locally on your computer and often additionally encrypted by a password.

You can either download a desktop wallet as a “full node” or a “light client”. The vast majority of desktop wallets come in the form of “light clients” - Simplified Payment Verification (SPV) wallets. Instead of downloading the whole Bitcoin blockchain, they simply synchronise themselves to it.

Bitcoin Hardware wallets

Hardware wallets are small physical devices that are optimized to store your seed phrase offline - where it is close to impossible to be hacked. To use a hardware wallet you have to connect it to your computer or phone. You can then initiate transactions in the wallet app and sign them with the hardware wallet. This process ensures that your private key never leaves the device.

These additional security guarantees make hardware wallets the best option if you want to keep funds over a long time horizon without ever moving them. However, if you plan to use your bitcoins on a regular basis to put them to productive use, it is better to go with a bitcoin mobile wallet or desktop wallet.

Hardware wallet support

Hardware wallet support means that you can use a desktop or mobile wallet without exposing your private key online. You’re essentially just using the interface of the wallet application while keeping your private keys offline.

Offer easy private key export or seed backup

There is a widely adopted standard in the bitcoin wallet space to generate seed phrases called BIP39. You can import your seed phrase into any other wallet app to recover your coins as long as it adheres to this standard.

Support SegWit

SegWit is a process by which the block size limit on a blockchain is increased by removing signature data from Bitcoin transactions. When certain parts of a transaction are removed, this frees up space or capacity to add more transactions to the chain. Wallets that implement SegWit save users fees and help the bitcoin blockchain process more transactions.

Lightning

An increasing number of bitcoin wallets support Lightning. The Lightning network is a Layer-2 network that allows users to execute fast and cheap bitcoin transactions. The Lightning network is still at an experimental stage but it is nice when wallets support it anyway.

Fiat On- and Off-ramps

Some bitcoin wallets offer the ability to users to buy bitcoin using their debit card or bank transfer. This makes the life of new users much easier as they don’t have to worry about additionally signing-up to an exchange, acquiring these tokens first and then sending them to their bitcoin wallet.