In the ordinary world, we are used to keeping money in a wallet, and if we draw an analogy between paper money and cryptocurrencies, they will have a lot in common. It means that you must also store bitcoins in the wallet. However, if a regular wallet can have only a few parameters and is intended only for storing money, then in bitcoin wallets, everything is somewhat more complicated. There are several brands of hardware wallets on the market, and the list is constantly growing. You may ask why we consider the options above the best hardware wallets. First, these are some of the oldest hardware wallets on the market. They are also the most used wallets around the world. In short, these are brands and models that have proven themselves in the market. We analyzed certain aspects of these hardware wallets, including cost, user experience, supported cryptocurrencies, security, and others. According to the type of storage of bitcoins, they can be divided into hot and cold, by the kind of storage of private keys – custodial and non-custodial, and by the type of installation – into local, mobile, hardware, browser, and paper. In this writing, we will attempt to understand all aspects of bitcoin wallets so that you can create a secure place to store your digital assets.
What Is a Bitcoin Wallet?
In essence, a bitcoin wallet is an application with which you can store bitcoin. Although, to be honest and accurate, it is not physically held anywhere – users are given data that provides access to their account. Depending on the type of wallet, this data can be a standard email + password pair, a private key, or a seed phrase; we have already talked about it here. The primary purpose of a wallet is to store and be able to send and receive bitcoins from other people. In principle, everyone who is somehow connected with cryptocurrencies receives payment in bitcoins, trades on cryptocurrency exchanges, etc., must have such a wallet. Before creating a bitcoin wallet, let’s study each type of wallet in more detail.
Hot Wallet vs. Cold Wallet
The contrast between a hot wallet & a cold wallet is that a hot wallet works when linked to the Internet, while a cold wallet can work without it. Hot e-wallets are less secure, as there is a risk of your data being stolen over the Internet. However, they are more in demand among users. Cold e-wallets are used for cold storage of cryptocurrencies, so they are more secure. Which bitcoin wallet you use is up to you – if you often make small transactions, then a hot wallet is suitable for you, and if you need to store large amounts for an extended period, then it is better to use a cold wallet.
Custodial Wallet VS Non-Custodial Wallet
The essence of custodial wallets is that they do NOT give you access to their private key but store it on their centralized server. Often, such a solution is provided by cryptocurrency exchanges, but there are also several cryptocurrency wallets – Crypto Pay and Blockchain.info. This explanation benefits you can restore access to your account via mail if the password has been lost. Minus – your account may be frozen. In case of intervention to unfreeze, you may be asked to undergo KYC. Also, you can lose money during hacker attacks, which have been a very popular event lately.
Non-custodial e-wallets work the other way around – they give you complete control over your private keys without using a server. Of these wallets, the Trustee Wallet has gained popularity among users, but others are also. A huge plus of this explanation is that the funds belong only to you. No one else can get hold of them without your seed phrase. However, this is also a minus of such a wallet because if you lose your key, then you can no longer return access to it. For example, if you crashed your computer or lost your smartphone, you can only restore access using the seed phrase given to you when you open an account. Therefore, we recommend storing your seed phrase NOT on your mobile device but separately in a safe place.
Local Wallet
A local (desktop) wallet is an application installed on a desktop computer or laptop. This kind of wallet is one of the most difficult for users, but at the same time, it has the best indicators for security and anonymity. You should note that they are often used by actual crypts or companies that produce developments on the blockchain. Desktop e-wallets can be divided into thin and thick. The bitcoin hardware wallet is a separate device that looks like a flash drive. Such a blockchain wallet is used for “cold” storage of bitcoins and connects to the Internet only when a transaction requires to be made.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
