In this section we discuss which of the many Bitcoin wallets are available, the differences between different types of wallet and how to decide which is the best wallet for you.
One of the benefits of the Bitcoin network is that it is open for anyone to create new applications and services that use it. This has a great benefit of encourging innovation and allowing for Bitcoin to be used in a wide variety of ways, but it does have a downside, and that is the sheer number of new Bitcoin enabled applications and services available can be overwhelming and confusing to someone new to Bitcoin.
The first step in choosing a Bitcoin wallet, you should consider the following questions:
In everyday life, with our local currency, we typically don’t carry all of our money around with us in a single wallet, or store all of our money in a single place. As the saying goes: ‘dont keep all your eggs in one basket’. The same applies to where you keep your Bitcoins.
Just as with cash or credit cards, choosing where to keep your money and which method you use to spend it is a tradeoff between ease of use and security. For instance, most of us tend to carry only small amounts of cash on our person, but keep our savings in a savings account in a bank, or precious items in a secure vault.
It’s the same case with where and how you hold your Bitcoins. Below are some specific questions which will help guide your choice.
If you’re intending to make small purchases or send small amounts of Bitcoin then a simple web wallet would be a suitable choice.
If you’re planning to send large amounts of Bitcoin in a single transaction or you’re you’re looking to hold large amounts of Bitcoin, then its wise to choose a wallet which offers the best possible security features available. Hardware wallets are a good choice here as they keep your wallet’s keys away from your PC or smartphone and therefore reduce the risk of compromise should your PC or smartphone get hacked or infected with malware.
For the really security concious, a handful of companies offer ‘Bitcoin Vault’ services which use the most secure methods possible for protecting your wallet’s keys. Bitcoin vaults use a technique called “cold storage” to ensure that your wallet’s keys could never be stolen by a hacker. In addition to the extra security employed, some ‘Bitcoin Vault’ services also provide insurance against loss. The flip side to this is that accessing your funds is not as simple as opening an app on your smartphone, so these services really suit those who wish to store large sums of Bitcoin for long periods of time.
If you’re thinking of using Bitcoin for small purchases such as buying a coffee or exchanging face to face with someone, then its a good idea to choose one of the many wallets available for Smartphones. Web wallets can also be used in this case, but its worth making sure the wallet works well with your Smartphone’s screen size.
Many of the web wallet providers also have their own corresponding Smartphone app, which generally provide a better user experience tailored for you smartphone.
If you have no intention of using your wallet from your smartphone, you can of course use a desktop wallet application. There are many to choose from on all operating systems. Its worth noting that the first Bitcoin wallets were desktop applications which download the entire Bitcoin transaction history when the application is first run. While you’re entitled as anyone to do this, we recommend that this type of wallet (or Bitcoin client known as a full client) offers no more benefits to a normal Bitcoin user than a ‘thin client’ or SPV wallet.
For a more detailed discussion of desktop wallets check out the desktop wallets section.
An increasingly common use case for Bitcoin is sending money to friends or family in a different country. In this case you may want to combine security with being able to easily exchange your local currency to Bitcoins (or vice versa).
In this case some wallet (such as Coinbase) offer an integrated wallet and bitcoin exchange which make it very easy to purchase Bitcoins (using USD, Euro or GBP) and send them.
A Web Wallet is a Bitcoin wallet that you access using your web browser.
Some info about web wallets.
Some info about desktop wallets.
Some info about paper wallets.
Some info about hardware wallets.
Some info about Bitcoin vaults.