Bitcoin (BTC) hardly needs an introduction these days — it’s the modern version of gold, the so-called One Currency to Rule Them All. Having absolutely blown up in price over the last few years, bitcoin continues its mostly upward trend and remains the most expensive cryptocurrency out there. Even though ethereum (ETH) is in hot pursuit, it’s still miles behind BTC.
Jumping on the cryptocurrency train can prove lucrative, but there are steps you need to take before you can get your hands on some bitcoin. Like all other cryptocurrencies, bitcoin requires that you have a special wallet in order to store it. A cryptocurrency wallet is a form of storage for all of your digital currencies; it holds proof of every transaction you make, public or private, as well as all the assets you choose to store in that particular wallet (via Investopedia).
It’s worth noting that a crypto wallet is not the same thing as a cryptocurrency exchange. Exchanges allow you to buy and sell cryptocurrency, but you still need a wallet that acts as your very own digital address and holds all the crypto you work with.
Keep in mind, however, that not all wallets are safe, and when you own currency as expensive as BTC, it’s important to keep it as secure as possible. In this guide, we’ll go over the different types of cryptocurrency wallets and leave you with trustworthy recommendations that will help you get into the world of crypto trading.
Types of cryptocurrency wallets
There are two types of cryptocurrency wallets: Hot storage and cold storage (via 101 Blockchains). They each come with their own set of pros and cons, although if you’re just starting out, you’re most likely going to use a hot storage bitcoin wallet. These types of wallets are typically easier to set up and usually free to use apart from any additional fees you may be charged for transactions.
The term “hot storage wallet” refers to wallets that require an internet connection in order to operate. This could be anything from a website, a mobile app, or even downloadable software that you install on your computer. These wallets are often easier to get started with, but like anything else with an internet connection, they are more susceptible to theft. Rest assured, however, that as long as you adhere to some basic internet safety rules, the various protective measures that the best bitcoin wallets have in place should be enough to keep your crypto safe and sound.
A “cold storage bitcoin wallet,” also known as a hardware wallet, is an encrypted physical device that stores the private keys that authorize moving your crypto. Unlike most digital wallets, these will cost you upwards of $50 to purchase. However, once you set one up, your assets are safely stored and are at no risk of digital theft. The only way to lose the currency stored on a cold storage device is to lose the device itself, although even then, you can restore it as long as you know the required recovery phrase.
Best Bitcoin wallet for online use
As mentioned above, if you’re just starting out, your first step will be to set up a digital hot storage cryptocurrency wallet. There are hundreds of options to choose from, but we narrowed it down to our #1 pick to save you time. However, if you want to explore getting a hardware wallet right away, scroll down to find our recommendations.
We recommend using Coinbase as your first bitcoin wallet, although it’s still good even for seasoned crypto veterans. Coinbase is a web and mobile-based crypto exchange that also lets its users set up a hot storage wallet. This wallet can later be used on Coinbase itself as well as other exchanges in order to buy, sell, and trade crypto.
Coinbase is one of the largest U.S.-based cryptocurrency exchanges. Being a multimillion-dollar company, Coinbase handles countless transactions on a daily basis. This kind of expertise adds value to the security provided by this wallet. Compared to smaller wallets that are just starting out, Coinbase tends to be secure, quick, and reliable.
This wallet is free to use, meaning your bitcoin is stored at no extra cost. The exchange itself takes a cut out of the transactions you make, but storing your crypto is free. Aside from bitcoin, Coinbase Wallet can also be used for a variety of other coins, including the ultra-volatile ETH.
Best hardware Bitcoin wallet
In the event that you want to buy yourself a hardware wallet to store your bitcoin in right away, there are several noteworthy devices for you to choose from. If you’re looking for the best mix of security and good value, we recommend using a cold storage wallet from Ledger. Ledger offers multiple cold storage devices that you can browse on their website, but for a quick pick, check out the Ledger Nano X.
The Nano X is a Bluetooth-enabled wallet that keeps all of your bitcoin (and other crypto) fully offline and protected. It can connect to a mobile device as well as to a computer. Although this is just a wallet, Ledger is supported by a variety of online cryptocurrency exchanges and other services, such as Changelly, Coinify, or DeversiFi.
Aside from Bitcoin, the Ledger Nano X can store different types of crypto, including Ethereum, Binance Coin, Litecoin, Dogecoin, and more. It’s a small, secure device that keeps your crypto protected. You can buy it for $119 on Amazon or directly from Ledger.