A Bitcoin wallet is not just a place where you store your coins. So, a Bitcoin wallet - what is it?
It is an app or a device you use to manage your cryptocurrency.
But why do you need a Bitcoin wallet?
The main functions of a crypto wallet are not only storing coins but also sending and receiving them, trading between different pairs, and in some cases, even interacting with smart contracts. Whatever you do with crypto is possible through a wallet. This is why selecting a reliable crypto wallet is a must if you don’t want to run into the risk of losing your money.
Types of Crypto Wallets
Cryptocurrency wallets fall into two main groups:
- software wallets
- hardware wallets.
Both have the same goal, but they work in very different ways. Because of this, people often call them hot wallets and cold wallets.
What Is a Hot Bitcoin Wallet?
A cryptocurrency wallet that connects to the Internet is a hot wallet. It is easy to use and accessible, but the Internet connection makes it more vulnerable to hacking. We distinguish the following types of hot wallets.
- Web wallets: A web wallet for cryptocurrency works through browser extensions and does not require downloading or installing on your device. They are simple, and flexible, and support integrations like Web3 and DeFi. They are a good choice for beginners but are less secure because third parties control the private keys.
- Desktop wallets: Desktop wallets are software and can be installed on a computer. They are less convenient than web wallets. But they offer better security because private keys are stored on the device and managed by the user.
- Mobile wallets: Mobile wallets are popular because they are easy to access. Some are mobile versions of desktop or web wallets, while others are designed only for smartphones. A mobile wallet for Bitcoin is convenient but not 100% secure.
Cold Crypto Wallets
A cold Bitcoin wallet does not require an Internet connection to create keys. It makes it much safer and highly resistant to cyber-attacks.
Hardware wallets are classified as follows.
Hardware Wallets for Bitcoin
A hardware wallet is a physical device that creates keys as a random number generation (RNG) and stores them offline.
These wallets may connect to an Internet-enabled device through a USB or use dApps to complete transactions. While they are less convenient to use, they offer a high level of security.
Hardware wallets come with different features and security levels, so it is important to choose one that fits your specific security needs.
Paper Crypto Wallets
A paper crypto wallet is a piece of paper on which you print your private and public keys. You create and print these keys to store your cryptocurrency offline.
Paper wallets offer a safe way to store crypto but are not very convenient for trading. They are less common now.
They are very secure but you need to handle them carefully. Otherwise, they can be damaged. Many people choose hardware wallets instead because they are more durable and reliable.
How to Choose a Bitcoin Wallet
Choosing a cryptocurrency wallet can be hard, but certain factors can make it easier. Each wallet has its pros and cons. Here are the most important things to think about when selecting a crypto wallet.
Ownership
Ownership refers to who controls the private keys used for cryptocurrency. Crypto wallets can be custodial and non-custodial.
Custodial Wallets
In custodial wallets, a user doesn’t have private keys. The provider gives access to your account but must approve every transaction, which makes the process slower. These wallets are very easy to use and are good for newbies. But they are not very secure. They are suitable for constant operations, but it is not recommended to use them for long-term holdings.
Non-Custodial Wallets
Non-custodial wallets let users fully control their private keys and crypto assets. You are the only one who has the private keys. This gives you complete control and boosts the Bitcoin wallet security level.
You are also entirely responsible for your funds. You must handle your private keys carefully to keep access to your assets.
Bitcoin Wallet Usability
A crypto wallet should be simple, convenient, and easy to understand. Look for wallets that focus on making things easy for users and have extensive Bitcoin wallet device support. Wallets that work well with many cryptocurrencies and financial platforms are a big advantage.
Supported Cryptocurrencies
No wallet supports every cryptocurrency. Some work only with specific tokens and apps, while others support many cryptos but may lack certain features which impacts the Bitcoin wallet functionality.
Before choosing a wallet, make sure it provides support for the crypto you’ll use. For hardware wallets, confirm compatibility before buying.
Backup Possibilities
A wallet with private key management, also known as backup features, makes it easier to manage your keys. Your private keys are saved in the cloud (Apple or Google), and any new wallet you create will have its keys automatically backed up.
The keys are encrypted, and you set a password to unlock them. If you lose access to your device, you can reinstall the app and sign in to the cloud. Then, you use your password to restore all the accesses to your wallets.
How to Evaluate the Security of a Bitcoin Wallet
Make sure the wallet offers the following security measures.
- Two-factor authentication (2FA): This is a unique code that is sent to your email or phone. It adds a security level and makes it harder for criminals to access your wallet.
- Backup and recovery: A good hot wallet should offer backup options to save your assets. This helps you recover your Bitcoin recovery phrase if something goes wrong.
- Multisignature: Some wallets require multiple signatures to approve a transaction. This adds extra security but makes transfers slower.
Best Bitcoin Wallets 2024-2025
The top cryptocurrency wallets can be chosen based on multiple parameters. We’ve determined these parameters as following:
- Safety
- Ease of use
- Number of supported crypto assets
- Cost
Trezor
The Trezor wallet is a top choice for a secure and easy-to-use crypto wallet. It supports over 9,000 cryptocurrencies and also has a version for Bitcoin only. It uses open-source software, which makes it more transparent.
Ledger
Ledger hardware wallets are highly rated for keeping crypto safe offline. They allow easy access to decentralized finance (DeFi) and make it simple to transfer crypto between hot and cold wallets. Ledger wallets support over 5,500 cryptocurrencies.
Coinbase Wallet
Coinbase Wallet is great for beginners. It is easy to use and runs on mobile devices and as a web browser. You can easily access cryptocurrency exchanges and decentralized apps (dApps).
Trust Wallet
Trust Wallet is the best mobile crypto wallet. It is easy to use. It supports over 10 million coins and tokens and has features to interact with decentralized apps (dApps) and NFTs.
MetaMask
MetaMask is the best Ethereum wallet for beginners. It is easy to use and available as a web browser extension or mobile app. It gives you easy access to thousands of Ethereum tokens and decentralized apps on the Ethereum network. It also connects to popular NFT marketplaces.
Which Wallet Is Best for You
Different wallets serve different purposes. For example, if you use a wallet for frequent transactions, you might like a software or web wallet that has an exchange built in. If you need to store your crypto for a long time you need a Bitcoin wallet for storage (a hardware wallet) because it offers better security.
A wallet with simpler functionality may be the best Bitcoin wallet for beginners, while an experienced trader may prefer a wallet with many integrations.
Mistakes When Choosing a Wallet
Choosing the wrong crypto wallet can put your digital money at risk. Bitcoin wallet security can be impacted negatively due to the following:
- Compatibility issues: If you choose a wallet that doesn’t support your cryptocurrencies, it may be unusable for storing cryptocurrency.
- Security problems: Wallets without strong security features can make your crypto vulnerable to hacking and unauthorized access. This is why paying attention to the security of the wallet is crucial to protecting your crypto wallet data.
- Loss of control: If you use a custodial wallet with weak security or poor management, you could lose access to your funds, especially if the company faces legal or financial issues.
These risks show why it's important to research and choose the right wallet carefully. Make sure the wallet fits your needs and helps protect your crypto.