The best way to keep your bitcoin safe is to keep them in cold storage. However, to be able to use your bitcoin for routine transactions, they should be easily accessible (to you).
A good wallet and healthy security practices helps you achieve both accessibility and safety.
Bitcoin wallets are special applications that connect to the bitcoin network and the distributed ledger. They present users’ ledger accounts in a less complicated way. A variety of bitcoin wallets exist; each one has different perks and demerits as well. Before getting a bitcoin wallet, consider certain factors that apply to you and decide which wallet serves you best and if you need a wallet at all. In some cases, you might need multiple variants of bitcoin wallets.
Here are the major wallet options available to store your bitcoin:
Hardware (cold) wallets
Hardware wallets are the safest devices to store your bitcoin.
They score high in terms of security because they are mostly offline and less prone to phishing and other risks due to frequent use. Hardware wallets share some resemblance with storage drives.
They usually have a small user interface to allow users to perform core activities like asset transfer and regular checks. Hardware wallets can also be connected to other devices like a personal computer if needed, but they are never directly connected to the internet.
Ledger and Trezor wallets are the two most popular hardware wallet producers.
The ledger nano series come with little variations in their specifications. The ledger Nano X allows you to hold over five thousand cryptocurrencies, including bitcoin, and it also has Bluetooth features that enhance connectivity;
in contrast, Nano S doesn’t have Bluetooth features and can only hold about 1000 cryptocurrencies.
Hot Wallets
These can be either exchange-based, or non-custodial software hot wallets.
Most come with mobile applications, enabling their users to perform transactions from the convenience of their mobile devices.
However, mobile wallets sacrifice security for accessibility, as their connection to the internet places them at greater risk of phishing and data sniffing.
Also, do note that if you opt for a non-custodial hot wallet, you will be responsible for your own private keys and the related seed phrase, which is a master key to let you recover access to your on-chain crypto assets.
Never store your seed phrase online, and use crypto steel to record your seed phrase with multiple copies for backup.
Paper wallets
Paper wallets are almost completely deprecated.They are basically papers with a barcode and your private keys. Paper wallets were more popular in bitcoin’s early days and are hardly used currently. Nevertheless, they are still a valid option to keep your bitcoin.
Choosing a wallet
Hardware wallets work best for investors who own big amounts of bitcoin and plan to leave them untouched for a long time.
If you are planning to hodl for the long run, moving your bitcoin to a hardware wallet and keeping the device and its details safe ensures optimal security of your bitcoin.
Hot wallets are best for routine transactions and they are as convenient as carrying your mobile devices.
If you are constantly transacting with your bitcoin in less comfortable locations like your workplace, classroom, in transit, and on the go; mobile devices are best for this.
Consider keeping a little fraction of your bitcoin in a hot wallet for easy access, while storing the bulk of your funds in a hardware wallet.
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