Types of Crypto Wallets Explained
When you first get started with Bitcoin or other Cryptocurrencies the most important decision you will have to make is which wallet to use. Your wallet is where you will store your coins, and it is also what you will use to send, spend and receive coins.
There are various different types and brands of wallet software available, and your choice of wallet will determine how securely your Bitcoin is stored – and therefore whether, or to what extent, you risk having your digital money stolen by hackers, as well as how easily you will be able to use Bitcoin for shopping or sending money to friends and family, as well as what other additional features you will be able to take advantage of.
It is therefore very important that you take the time to choose the best Bitcoin wallet for you. This article will look at some of the best Crypto Wallets for beginners, providing a brief review and link for each one. When choosing which products to include on this page I’ve placed the greatest emphasis on security and ease of use. Each of these Bitcoin wallets should be quick and easy for beginners to learn how to use, and should provide you with a good level of security.
Before I get on to recommending specific products, I think that it is well worth while taking a moment to review the various different types of wallet that are available. Each of these different types of wallet has its own advantages and disadvantages, so you choice will depend on what your own personal priorities are.
The first distinction which you should make is between wallets which give you control over your ‘secret key’ and those which don’t. The secret key is like an internal password which is used to authenticate any transactions made by your wallet. You can also use it to recover your account if you lose your regular password. Generally it is seen as preferable to use a wallet which gives you control of your secret key. There are several reasons for this. Firstly it means that nobody else can spend or lose your coins. A wallet provider which doesn’t give you this option may not actually keep your coins in your specific wallet – they may act like a bank by lending out or investing your coins for profit; if this provider is dishonest or just incompetent they may therefore steal or lose your coins. If you retain control of your secret key you know that nobody else can take your coins away from you, but on the other hand some services may provide fancy advanced features which require them to control the key themselves. In short – if you don’t control your key yourself then that may be ok, but you should make damn sure that you trust your wallet provider as much as you would a traditional bank.
In addition to this I have identified 8 different types of wallets. The distinction between these may not be exclusive – meaning that some services or software products may fall under more than one of these headings:
Web Wallets
Web wallets are probably the most popular choice for beginners. You access them like you would any other website, meaning that you can use them from any device, anywhere in the world. Blockchain, Coinbase, CoinJar, Coinkite.
Desktop Wallets
A desktop wallet is stored locally on your own device. This gives you full control over your coins, but also means that you have full responsibility for securing them against hackers. Armory, Bitcoin Core, Electrum.
Wallet Apps
An app, generally designed for use on a mobile device such as a phone or a tablet computer, may actually be a form of web wallet which stores your information on a server and connects via the internet, or a kind of desktop wallet which stores your information locally on your own device – or even a combination of the two! Many web wallet providers also have their own app. Blockchain Android based and IOS, Coinbase android based, Bitcoin Wallet and Mycelium Wallet
Cold Storage Wallets
Cold storage wallets are designed for long term storage and may require extra time or jumping through a few hoops to actually spend your coins. People with a large number of coins may have a cold wallet – something like a savings account or safety deposit box – as well as a ‘hot wallet’ for everyday use.
Paper Wallets
A paper wallet is just a print out of all the information you need to recieve and spend Bitcoin. It will include your secret key, and a QR code which can be scanned to send you payments. Because it is not stored on a computer, a paper wallet cannot be stolen by hackers, but you still retain full control over your money as you would with a desktop wallet.
Brain Wallets
For the truly paranoid, a brain wallet is simply a nemonic – a memory device for remembering your secret key. Not only does this secure your coins against hackers, but also against anyone who may discover your paper wallet and attempt to use it.
Multi-Currency Wallets
Bitcoin is no longer the only digital currency out there. There are hundreds of different cons, many with unique and interesting features which set them apart from the rest. If you are interested in exploring some of these ‘alt coins’ as well as Bitcoin itself, a multi-currency wallet makes it easy by allowing you hold a range of different coins in the same place, rather than needing a separate piece of software for each one.
Multi-Signature Wallets
A multi-signature wallet needs more than one person to sign off on a transaction before it is allowed to be completed. There are two main uses for these. The first is a business use, in which one person may enter all the details for transactions, but another person, such as a supervisor or the business owner, may need to check them over and give them the ok before the money is sent out. The second use is for extra security, as a multi-signature wallet means that multiple account would need to be hacked before someone could spend your coins.
