How Do I Store My Bitcoin?
Bitcoins are stored in digital accounts and accessed through a client, together known as a wallet
Storing bitcoins is a little different than storing your fiat money in a traditional banking system. With banks, your money is stored in a central location where it’s handled by a third party – the banks.
While you still have access to your money and can do with it as you please, your stored money is always in someone else’s possession.
With Bitcoin, on the other hand, your money is stored locally in a wallet that’s always in your possession. And since Bitcoin wallets are decentralized, no person or institution is able to access or seize your money as long as you keep your private wallet key a secret.
There are a number of different types of bitcoin wallets available, and depending on how you plan on using your bitcoins, some wallets might be better suited to you than others.
Generally speaking, the bitcoins you keep in your wallets are safe, provided you take the necessary steps to secure your wallet and keep it safeguarded against hackers. Every bitcoin wallet comes with an address, which is a string of letters and numbers ranging from 26 to 35 characters.
This address is how you get bitcoins sent to your wallet, which is why it’s absolutely important to ensure that you correctly enter the address every time you make a bitcoin transaction.
Example of a bitcoin wallet address in alphanumeric (below) and QR Code format (above)
Sometimes you’ll notice that bitcoin addresses also come with a QR Code for mobile users to conveniently send and receive bitcoins.
Also, you can look up information about your wallet and other bitcoin wallets by visiting sites like Blockchain.info and pasting the address into the search bar.
Now that we’ve covered the basics, let’s look at the different types of wallets that you can use to store your bitcoins.
Just as the name suggests, desktop wallets store your bitcoins on your desktop computer. If you’re running the original bitcoin software from Bitcoin Core, you already have a wallet integrated into the client.
But if you don’t feel like downloading more than 145GB worth of blockchain information just to have a desktop wallet, or you don’t have any reason to run a bitcoin node, try one of these smaller wallets instead:
One of the more popular desktop bitcoin wallets thanks its easy-to-use interface and extra features, like cold storage and multisig technology. Available for Windows, OS X, and Linux.
Bitcoin Armory is another popular desktop wallet for Windows, Linux, and OSX that’s safe and reliable. Like Electrum, Armory can also be set up for cold storage for when you want to keep your bitcoins offline.
Another interesting features included with Armor is having the ability to manage multiple wallets from one convenient location.
DarkWallet functions like the other desktop wallets, but with one distinction – it’s private. DarkWallet’s uses a Chrome and Firefox browser plug-in mix your bitcoin exchanges so that they’re unable to be tracked by outside parties.
Hardware wallets are physical wallets used to store bitcoins. More often than not, these types of bitcoin wallets connect to computers via USB and are a safe way to store large numbers of bitcoins and keep them protected from hackers.
One of the most common questions people ask about hardware wallets is what happens when the wallet is lost, damaged, or stolen.
Like other types of wallets, hardware wallets can be recovered as long as the owner has access to the private keys associated with the wallet. For this reason, it’s always important to keep these keys in a safe and accessible location.
The two most common hardware wallets are Trezor and Ledger. Both are incredibly popular cryptocurrency wallets that store bitcoins, as well as support for a number of altcoins, including Dash, Ethereum, Litecoin, and Zcash. Both Trezor and Ledger are incredibly durable and compact, making them easy to carry around with you anywhere you go.
Mobile Phone Wallets
Mobile wallets run on your Android or iOS device and allow you to carry your coins with you everywhere you go, which is great for when you want to purchase something with bitcoin.
These wallets are designed specifically to store, send, and receive bitcoins safely and securely. This means that you don’t have to worry about downloading and keeping all of the blockchain information up-to-date like you do with the Bitcoin Core client.
Having a mobile phone wallet can be especially advantageous if you’re someone who sends and receives bitcoins frequently. Some of the more popular mobile wallets include:
While there are talks of an iOS app in the works, Electrum is currently only supported by Android. It comes with many of the same features that make the desktop wallet great, like cold storage and multisig.
Mycelium is a popular bitcoin wallet for iOS and Android devices that make it storing and using bitcoins on your phone safe and easy. It also comes with a number of cool extra features that can integrate into the wallet and make it easier to handle your coins.
Blockchain is an Android app that’s secure and easy to use. It has support in 25 languages and a number of fiat currencies, comes with client-side encryption, and automatically backs up your data to its servers in case you ever need to recover your information.
And if you’re looking for something quirky and different, there’s the Aegis Bitcoin Wallet. Not only does this device support your Android phones, it also works on any Android-based smartwatch.
Online wallets store your bitcoins in the cloud. As you can imagine, you need internet access in order to send bitcoins stored on an online wallet.
The advantage of having an online wallet is that you always have access to your bitcoins, regardless of the computer or mobile device you’re using.
The downside, however, is that your private keys are usually stored on the internet, and that isn’t quite as secure as hardware wallets and cold storage.
For this reason, it’s important to only use reputable online wallets that are known for their security. That way, nobody but you will have access to your private keys and the contents of your wallet.
Still, online wallets are convenient to have for making payments and sending people money. For this reason, some people like to keep a small portion of their coins in an online wallet for shopping and sending money.
Some popular and trusted online bitcoin wallets include:
Jaxx is an online wallet that’s fully compatible with your PC, Mac, iOS, and Android devices. With Jaxx, you not only have a place to store your bitcoins, you can also hold other altcoins like Ethereum, Dash, Litecoin, and many more.
Blockchain also hosts a popular online wallet that you can use for Bitcoin, Ethereum, and Bitcoin Cash. Like Coinbase, Blockchain’s wallet is straightforward, making it perfect for beginners.
One cool feature that sets it apart from Coinbase is that you’re able to manually set the transfer fee when you send bitcoins.
GreenAddress is now becoming one of the most favored online bitcoin wallets thanks to its security and added convenience.
Quick and easy to set up, GreenAddress allows users to quickly check their balance without from any online portal without disclosing sensitive information that could compromise their wallet security. And for those who’re looking for a little extra security, multisig and two-factor authentication are both supported by this wallet.
Making a paper wallet may seem complicated at first, but it’s a relatively easy process that can be done by visiting BitAddress.org. For step-by-step instructions on how to create a paper wallet, check out this tutorial.
Paper wallets are one of the most secure ways to keep your bitcoins protected. These type of wallets are known as cold storage, which means that all of your bitcoins are stored offline and inaccessible to would-be hackers.
Also, may other wallets also offer a cold storage option, so make sure to check your desktop or web-based wallet to see if you’re able to create a paper wallet through them.
The advantage of using a paper wallet is that you’re able to physically keep track of your bitcoins by using your wallet to send and receive bitcoins.
The good thing about this type of storage is that you don’t have to ever worry about a computer crashing or losing your phone. You can access your bitcoins from any computer or mobile device, provided you have your paper handy.
With that said, it’s important that you make several copies of your paper wallet and keep them in safe locations. If you’re using them to store a large number of bitcoins, you might want to even consider investing in a fire and waterproof safe.
And whatever you do, never lose track of your private keys. Without them, you won’t be able to recover your bitcoins if you lose your wallet.
Along with all of the wallets mentioned, there are a few others popular Bitcoin wallets that stand out for having features that set them apart from the rest.
Formally known as Breadwallet, Bread is a mobile wallet available on iOS and Android devices. It’s a reliable way to store, send, and receive bitcoins, and is known for its next-level security that connects you directly to the bitcoin network rather than going through a third-party.
Abra is available for iOS and Android devices. With Abra, you don’t just store bitcoins, you can also use fiat to buy them with your AmEx card or bank account if you’re in a supporting country. And unlike exchanges like Coinbase, you get a private key with your Abra wallet.
If you’ve heard of Airbitz then you’re already familiar with Edge, which is simply Airbitz rebranded and upgraded. Edge supports Bitcoin, in addition to other popular coins like Ethereum and Litecoin.
It also supports secure private keys so that only you have access to your bitcoins – even if the company goes out of business, as well as increased privacy that keeps your information protected from everyone, even Edge staff.
Edge is also working on fiat to bitcoin support in the US and Europe that allows users to use their money to buy and sell bitcoins.
If you’re planning to trade bitcoin and other altcoins, it’s not a good idea to use exchanges as your sole wallet.
While they’re great for buying and selling cryptocurrencies, exchanges experience outages from maintenance and high volumes of traffic.
During these times, it’s much harder to access your money stored on their web-based wallets. And while it’s rare, some exchanges have even fallen victim to hackers.
For this reason, most people only store the amount of money they want to trade on exchanges and leave everything else in a private wallet.
Now that you know more about how to store bitcoins and other cryptocurrencies, you’re ready to start sending and receiving bitcoins of your own. Whether you’re using bitcoin for investing, sending money across borders, or for buying and selling things, you’re going to need a good wallet.