When it comes to investing in cryptocurrency, choosing where to store it is nearly as important as buying it in the first place. So, what’s the best bitcoin wallet in 2020?
Just as you likely maintain a savings account for long-term money storage and a checking account for day-to-day debit card purchases, the top cryptocurrency wallet solution may actually involve at least two wallets.
The term “wallet” is a bit of a misnomer, as they don’t actually store funds. Instead, each wallet stores one or more private cryptographic keys, which are required to access cryptocurrency funds that live in many fragments on a decentralized online ledger known as the blockchain. It’s absolutely vital to keep your private keys safe.
To keep it simple, choosing the best bitcoin wallet for you basically boils down to a continuum with security on one end and ease of use on the other.
“One hundred percent security is not easy to use, and 100% easy-to-use is not necessarily secure,” says Caleb Chen, content marketing manager at Private Internet Access. “Depending on where you’re at, the solution might be multiple wallets.”
At the most secure end is what’s called cold storage. Physical wallets that store keys offline on a physical medium like paper are called “cold storage” wallets because they’re not linked to the “hot” internet – like a hot wallet – where cyber-criminals prowl. Cold storage can also refer to keeping a wallet on a dedicated computer that is not linked to the web.
However, these options aren’t the easiest to use if you need to access your cryptocurrency with relative haste. So if you’re considering multiple wallets, you’ll probably end up with a combination of a hardware wallet and a software wallet. Online wallets are also available, but they can come with a big caveat in terms of security.
So, if you’re interested in crypto wallets, here’s a breakdown of your options (outside of cold storage):
- Hardware wallets: Keys are stored in a small physical device that you connect to a computer or smartphone for transactions.
- Software wallets: Apps that you download to your mobile device or desktop.
- Online wallets: Browser-based wallets that allow you to interact with them like a website.
Hardware Wallets: Ledger, Trezor and Coinkite
For long-term storage, many people choose hardware wallets.
According to Nick Percoco, chief security officer with Kraken Digital Asset Exchange, hardware wallets are “a good balance between security and utility.”
Hardware wallets – of which Trezor and Ledger Nano S models are the most popular – are physical devices about the size of a keychain fob that store your private keys and can be kept separate from your desktop computer. Even when you do connect one to your computer to make a cryptocurrency transaction, any malware that might be on that desktop doesn’t have access to the wallet, Percoco says.
Ledger and Trezor wallets have become popular because of the user experience they offer, which includes support for many different cryptocurrencies and a solid physical look and feel that inspires confidence, Percoco says.
Eden Dhaliwal, global managing director at Conflux Network, likes the Bluetooth feature of the Ledger Nano X that lets you use it on desktop or mobile platforms without having to have it physically connected. “It’s the most simple to use for cross-chain support,” he says.
Dhaliwal also points to a hardware wallet from Coinkite. “It has a real crypto security chip where your private key is stored in a dedicated security chip, not the main micro’s flash,” he says. “It also has a micro SD card slot for backup and data storage which allows for truly offline signing.”
Software Wallets: Electrum and Jaxx
Here’s where security begins to give way to ease of use.
For instance, a bitcoin wallet on a computer that you use to browse the web is less secure than a hardware wallet because it’s susceptible to getting infected with malware that specializes in looking for cryptocurrency wallets, Percoco says.
Software wallets can be useful if you spend cryptocurrency often, he says. In that case, you may want to have a software wallet that you transfer cryptocurrency to once a month from a hardware wallet. That said, “your life savings shouldn’t be available on your computer,” he cautions.
The Electrum desktop wallet is relatively easy to use. And, partly because it has been around since 2011, Electrum is one of the most well-respected desktop wallets out there.
A downside to Electrum is that it can only be used for bitcoin transactions.
For a multicurrency wallet, Chen points to an offering from Jaxx. As ease of use goes, he likes that it allows users to regenerate private keys from a phrase of “seed” words.
Web-Based Wallet: Guarda
Once you give up your private key, you lose your ability to control your cryptocurrency to another party. This is why Chen recommends staying away from web-based wallets that don’t allow users to store their own private keys.
For a noncustodial wallet in which users control their own keys, Guarda offers a web-based multicurrency wallet.
Dhaliwal says Guarda is very secure and praises its simple user interface.
The wallet supports multiple popular coins and tokens. It also allows users to import and export private keys to and from other services, back up a wallet with a secure encryption algorithm and purchase cryptocurrencies with fiat currency.
According to Dhaliwal, Guarda “is the only noncustodial wallet with fiat on- and off-ramps for smooth entry into bitcoin purchases.”