Types of Bitcoin wallets
There are a ton of ways to store your Bitcoin, and it can be pretty overwhelming trying to decide which is best for you. In this guide we will break down your options and explain the pro's and con's of the different wallet services. Keep in mind, for most people it is best to use a couple different types of wallets depending on your specific use.
When you are storing Bitcoin, it is all about securing and controlling your private key. The private key is a string of random letters and numbers, and it is the passcode to your funds. If someone gets access to your private key, they can steal your coins. If you lose the private key then you lose all access to your money. It will be lost forever.
When it comes to safeguarding your coins it is all about protecting your private key. It just matters how much money you are storing and how safe you want to be.
For simplicity, we have categorized all available wallets into three categories:
Day to Day Spending Wallets:
The wallets in this category are designed for your phone. They should be used when you are trying to buy something online or in person with Bitcoin and speed/convenience is more important than security. You should never keep more money than you are willing to lose in this type of wallet. Think of it like the wallet you carry around on a daily basis, you wouldn't carry your life savings around with you, same thing should apply here. You control your own private keys for all wallets in this category.
Medium to Long Term Storage Wallets:
These wallets offer more security than the "Day to Day Spending Wallets, " but sacrifice speed and convenience. You give up some control of your funds in these type of wallets because they help you protect your private keys. These wallets reduce the chances that your funds will be stolen and in some cases eliminate the danger of you losing your private keys. However, they expose you to the risk of having a government seize your funds, the company going bankrupt, or the company getting hacked and losing your funds. Essentially, you are trusting a company and the country it is located in, with safeguarding your private key because you don't trust yourself to do it properly.
Long Term Savings Wallet:
Using a properly generated password protected BIP38 encrypted paper wallet is the most secure method of storing your coins. Since you are the only one who controls your private key, and since that private key has never touched the internet, your coins are secure from hackers and viruses and cannot be seized or frozen by governments. It is simpler than you'd expect, yet extremely secure.
Disclaimer: This guide is intended solely to provide information. As I have no knowledge of individual circumstances and technical level, readers are expected to complete their own due diligence before proceeding with anything mentioned in this article. The topics discussed in this post are advanced and readers proceed at their own risk. Readers are expected to complete their own due diligence before purchasing or selling anything mentioned or recommended.