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The Down and Dirty Guide to Cryptocurrency Wallets

Bitcoin wallet

When choosing a coin wallet, one can’t just ask what is the best crypto wallet; rather, it must first be discerned what the user is looking for. The choice of wallet is dictated by many factors including amount invested, budget, investor type, and functionality and design among them.

Analysis research is so varied that analysts don’t always even agree on how many types of wallets there are. This article focuses on four types of crypto wallets:

  1. Smartphone wallets run on smartphone apps and are believed to be less secure than other types of wallets.
  2. Desktop wallets are accessed on computers through websites. Being on the Internet, even those that are least vulnerable to hacking can still be hacked. Greater security lies in hardware wallets and paper wallets.
  3. Hardware wallets are also known as cold storage wallets. These are self-contained devices that plug into a computer to make transactions. Greater security is achieved because the coin holder’s private keys and passwords and phrases don’t have to go onto the computer during transactions.
  4. Paper wallets are just that, wallets that are printed onto paper and stored in a secure location. Paper wallets are believed to offer the greatest security, but they require greater maturity and diligence as well.

The goal here is to give coin holders of all levels insight into what wallet might be best suited to their needs. Still, just as when asking which cryptocurrencies or ICOs to invest in, analysis only goes so far; it doesn’t negate the need for consumer research. Nor is it prudent to say that the products listed are the top or best available for that type. The research suggests that these are worth looking at, and for each one mentioned there are dozens more available.

Smartphone Wallets

Smartphone wallets are a good place to start, as many of the people with need of the information are new to the crypto world and not heavily invested enough to forego the ease of a smartphone application for the security of a more secure wallet.

Coinbase

More people begin with Coinbase because Coinbase is easy to begin with. With proof of identity and the syncing of a bank account, new users can buy one of the four coins available (Bitcoin, Ethereum, Bitcoin Cash, and Litecoin) in under five minutes. Available in more than 30 countries, Coinbase is the most widely used wallet in the world, having helped some 10 million people transact more than $20 billion in cryptocurrency exchanges. The Coinbase app is free to download, but a $1.00 fee is charged for each transaction. It is compatible with Android and iOS devices.

Mycelium

Founded in 2008, Mycelium is one of the oldest companies and most respected in the crypto space. Named the “Best Mobile App” by Blockchain.info in 2014, Mycelium offers five different types of accounts for users at various stages of cryptocurrency investment:

  1. HD (Hierarchical Deterministic)
  2. Bit ID (open protocol)
  3. Single Address Accounts
  4. Watch Only Accounts
  5. Hardware

Not perfect for long-term storage of large sums of currency wealth, Mycelium, a Bitcoin-only protocol, is designed for short-time movement of Bitcoin, commercial transactions, and sending and receiving funds. The app is free, with a small charge for transactions, and is compatible with Android and iOS devices and can also be downloaded on Google Play and iTunes.

Arbitz, Bitcoin Wallet, Btc.com, and Xapo are among the other smartphone wallets worth looking at.

Desktop Wallets

Desktop wallets are not always confined to the desktop. Some desktop wallets can be accessed on smartphones, and some can even be converted into hardware wallets for cold storage of cryptocurrency. Still, ones considered desktop wallets should be the first considered when choosing a wallet for a Mac or PC.

Armory Wallet

A Bitcoin-only wallet, Armory might be the ideal desktop wallet for the coin holder that is big on security and has been in the crypto game for a while. The security is provided by multi-signature support and decentralized lockboxes, and cold storage is even available for users who want added protection. The wallet allows coin holders to buy and sell Bitcoin and to send and receive funds as well, even from its offline wallet feature. Still, the Armory Wallet might be on the sophisticated side for some users, as it lacks the ease of use of other wallets. The Wallet is compatible with Windows, Mac, Linux, and Raspberry Pi.

Electrum

Said to be a good choice for users who might be using older or less powerful computers, Electrum connects to external servers to query blockchain data. This speeds up the syncing process, but doesn’t provide the same privacy that full wallet clients like Armory or Bitcoin Core offer. Dating back to 2011, Electrum was one of the earliest established coin wallets. A Bitcoin-only wallet, which also can be accessed on an Android phone, Electrum offers users the greater level of security by allowing them to maintain control of their private keys; the company doesn’t even have access to those.

Exodus, Copay, Jaxx, Bitcoin Core, Green Address, Mist, and mSigna are also worth researching.

Cold Storage Wallets

Trezor

More secure storage comes with a price tag, and Amazon’s price for the Trezor wallet is slightly less than $60. The Trezor unit is essentially a fob that can be carried on a key-ring and then connected to the Internet when the user wants to purchase something or send and receive coins. The device is secure even on an infected computer. Trezor is compatible with Mycelium’s Android wallet if a PC is not available. Trezor’s passphrase feature ensures the account remains secure even if the device is lost. Trezor supports Bitcoin and Ethereum, as well as various altcoins. If the device is lost, the account can be accessed using Electrum, Copay, or ArcBit (iOS only). All the research and reviews suggest that Trezor is a more than efficient and secure way to store coins for long-term holding, and worth the $60 price tag.

Ledger Nano S

The Nano S gets marks over Trezor because it’s quicker to adopt newer cryptocurrencies, which of course is a selling point for investors who like to spread their money around and speculate on new coin offerings. With an Amazon price of $96, the Nano S supports Bitcoin, Ethereum, and some two dozen more cryptocurrencies. The device is also compatible with MyEtherWallet, which gives the user access to any Ethereum-based cryptocurrency without having to access the website. The device receives high marks across the board in terms of UI and layout. Newer to the space than some of its competitors, the Nano S is being well-received and seen as a viable option. It is the lowest priced hardware wallet with a screen. The newness might also be evident in the fact that its Ethereum app isn’t functioning properly yet, but the company acknowledges that and remedies it with MyEtherWallet support.

KeepKey, OpenDime, and BitBox are others worth exploring.

Paper Wallets

Bitaddress

Paper wallets are said to be the pinnacle of security for Bitcoin storage, and they can be if the user gets the most of the security provided. Bitaddress solves the problem of Internet security by allowing the user to store the web page offline, by just turning off the WiFi once the website has been accessed. Going even further, the user can save the page to a USB stick and plug it into a computer that is permanently offline. Paper wallets might not be the perfect fit for users who are less technologically savvy, but the feedback from users who have adroitly managed the process is more than good. For long term storage of larger amounts of Bitcoin, the offline application of Bitaddress seems to offer about as much security as possible.

MyEtherWallet

While most paper wallet services focus on Bitcoin, MyEtherWallet has made it easy to create a paper wallet for Ethereum-based currencies. For even more advanced security, users can access the MyEtherWallet code at GitHub. Paper wallets offer the utmost in security when it comes to interfacing with the Internet, but the user has to be certain that he or she is responsible enough to store coins in such manner. The user is in charge of storing the paper securely in a place where it won’t be damaged or stolen (a simple smartphone picture is enough to do this). Paper wallets are not ideal for coin holders who do a lot of transactions; still, for hodlers, they should be a good fit, and MyEtherWallet is the way to go for Ethereum-based currencies.

Conclusion

When choosing a manner in which to store coins, just like the rest of the world of cryptocurrencies, there are no easy answers. The perfect wallet might not exist, but with thoughtful due diligence investors should be able to find a way to secure their coins in a manner that offers the needed accessibility.

Authors:

Written by Paul Keenan.

About the author

Allen Taylor

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