Cryptocurrency is undoubtedly coming into the mainstream. With Bitcoin’s market cap alone being over $175,000,000 USD at the time of writing, it’s hard to deny the digital currency is a legitimate asset.
But blockchain technology facilitates so much more than just an asset or a store of value. The creator of bitcoin, Satoshi Nakamoto, envisioned a peer-to-peer payment system where transactions of value could be made without trust or physical assets.
That being said, whether you are buying bitcoin as a way to store value, as an investment, or a way to make anonymous payments, you will need a bitcoin wallet. With more and more entering the market every day, Bitcoin Australia decided to take a look at the best bitcoin wallets.
What is a Bitcoin Wallet?
Wallets are an essential part of a functioning cryptocurrency. They are a way for users to access and interface with the blockchain. Wallets allow users to view, buy, sell, send and receive the cryptocurrency they own. In many cases, a wallet is exclusive to a cryptocurrency. This often means you will need one for your bitcoin, a separate one for your Ethereum and so on. Of course, certain apps and hardware wallets allow you to view all your wallets at once.
Each wallet has its own private keys and public addresses. If you don’t have access to these, you don’t truly own your bitcoin. For example, Coinbase wallets might be easy to use, but wallets on exchanges that don’t give you full control of your digital assets. If you buy bitcoin on an exchange and keep it in the on-exchange wallet, and that exchange gets hacked or goes down, your bitcoin will disappear with it. It’s essential to have your keys or addresses as well as your mnemonic passphrase. With these things in your hands, you have full control of your cryptocurrency and can access it anywhere.
Your private key can be seen as a password, that only you should know. It gives you access to your assets on the blockchain. Your public bitcoin address is what you use to send and receive bitcoins. Originally, bitcoin users had to generate new addresses for each transaction however, today almost all wallets are an HD wallet or a Hierarchical Deterministic wallet. This is essentially a wallet that uses a hierarchical tree-like structure of private/public addresses (or keys). This addresses the issue of users having to generate new addresses each time they want to make a bitcoin transaction.
There’s a range of different wallet types that fall into different categories, some of which we will look at below. Each has their own pro’s and cons and the right one for you will depend on your circumstances, and what you intend to do with bitcoin. With that said, here are the best bitcoin wallets, depending on your needs.
Best Overall Wallet
Edge – Free
Edge is a free wallet that makes it incredibly simple to store and trade cryptocurrencies. Edge supports currently supports 31 cryptocurrencies and has Shapeshifter integration, which means you can easily convert between it’s supported coins and tokens.
With client-side encryption, all your data is encrypted on your device before being sent to the edge servers. Edge and other 3rd parties, don’t have access to any of your data making edge one of the most secure wallets on the market. The servers are also on a decentralised network, which means your wallets will always work. Available on both Android and iOS, it’s the perfect wallet for mobile users. This accessibility and the easy to use interface makes it a viable cryptocurrency wallet for any type of bitcoin user.
It has all the typical security features, such as 2-factor authentication, the ability to create a password or pin code to access the app and an auto-logout feature.
Best Wallet for Security
Ledger Nano S – $109
The best bitcoin wallet overall is the Ledger Nano S. This is a hardware wallet or a physical device, that can store bitcoins along with alternative coins such as Ethereum and Litecoin. The price means it’s probably only worthwhile for serious investors or users of bitcoin, but it’s hard to beat the security of the Ledger Nano S.
The device plugs into your computer, much like a USB and stores your crypto assets and private keys in a secure, offline environment which makes it hard, but not impossible to hack. There’s a bit of setting up to do, but it’s fairly straight forward and once it’s activated, it’s simple to send and receive cryptocurrencies. A nice feature of the Ledger Nano S is its ability to integrate with a number of software wallets and third-party apps, which means it’s easy to transition your digital assets between wallets.
Best Online Wallet
Online wallets, as the name suggests, are platforms for you to store your digital assets in a completely online environment. This is known as a hot wallet. These wallets are sometimes on an exchange, such as Coinbase, or have a function for you to buy, sell and trade cryptocurrencies right from the wallet. When it comes to online wallets, it’s important to consider their level of security. Some online wallets fail to give the user a private key, or a passphrase to use in the case that they lose access to their wallet. In this case, you don’t truly own the assets that are within such a wallet. In saying that, there are some online wallets that allow you to be in full control of your digital currencies.
Blockchain wallet – Free
Named after the technology behind cryptocurrency, Blockchain has one of the best online wallets out there. The company has a range of products including a hardware wallet and an exchange, but the ability of its online wallet to store, send, receive, buy and sell all from the wallet makes incredibly useful. What’s more, you’re the outright custodian of the wallet with full control of your assets, this isn’t always the case when it comes to web wallets.
Having full control of your wallet means you have the private keys and your encoded backup phrase, which is crucial for whatever wallet you choose. The Blockchain wallet even has two-factor authentication functionality to give you peace of mind.
Best Hardware Wallet
In general, bitcoin hardware wallets are the most secure forms of crypto storage. Known as cold storage, hardware wallets usually store your crypto in an offline reserve, making it hard for malware attacks to get through. Hardware wallets are physical devices with sophisticated security measures so they will have a price tag, but for those who are buying large amounts of bitcoin, the price is worth the added level of security. We have mentioned the Ledger Nano, but there are a few alternatives when it comes to hardware wallets such as the Trezor and KeepKey wallets. Typically, a hardware wallet supports a huge number of cryptocurrencies, for example, the Ledger Nano supports over 1000 coins including BTC, Bitcoin Cash, Dash, Ripple and Litecoin.
Trezor Model T Wallet – $268 – $538
The Trezor is the main alternative to a Ledger Nano, and was one of the first hardware wallets to hit the market. Its updated model, the Model T, is a relatively new wallet and the latest in crypto hardware storage. Trezor is a multi-purpose, multi-digital asset security device used to secure Bitcoin transactions along with a huge range of altcoins including Ripple (XRP) and Litecoin. It is also a powerful password manager and a two-factor authentication device. The Trezor should satisfy the most serious crypto investors.
Best Desktop Wallet
A desktop wallet is similar to an online wallet, however, you have the wallet’s software downloaded onto your computer as an application. Typically, these have good user interfaces and decent security. The best desktop wallets will allow you to export your private keys and encourage you to store your keys offline in “cold storage”.
Electrum – Free
Electrum wallet is one of the most popular open-source software wallets on the market. It has the ability to be compatible with some hardware wallets such as the Ledger Nano and is functional completely offline. Electrum’s servers are decentralised which means there’s no downtime. The wallet has a bunch of other technical features which make it fast and secure such as multi-signature functionality to split the permission to spend your coins between several wallets.
Best Mobile Wallet
A mobile wallet is similar to a desktop wallet, only it’s a mobile app on your mobile device, rather than your desktop. Like all wallets, mobile wallets allow users to interface with the bitcoin network and see the amount of bitcoin they own.
Mycelium – Free
Mycelium was awarded the “Best Mobile App” award by Blockchain.info in 2014. It has “Watch Only” accounts, which are wallets stored without their corresponding key, so there’s no chance of it being stolen. Mycelium makes it allows users to access and use bitcoin whether it’s on an iPhone or Android device. The Mycelium interface is known to be a little more complicated than other entry-level wallets but it has a range of features that experienced users of bitcoin will appreciate. With “bank-grade security” for its mobile app and integrations from third parties such as Trezor, Mycelium is a great mobile wallet, for bitcoin users on the go.
These bitcoin wallets are some of the best in their categories. Each has their own pros and cons and bitcoin users will choose a wallet on their individual needs. Regardless of choice, a bitcoin wallet is essential to buy bitcoin, store it securely and transfer it.
Andrew has been passionately building products and services for the cryptocurrency industry since 2013. Andrew co-founded Bitcoin.com.au in 2014 after finding the process of acquiring Bitcoin too complex, expensive and fraught with anxiety. Click here to view Andrew’s full bio.