Bitcoin has been an attractive investment over the years, and new investors run to it every year. At the moment, this is the trend because of the worsening inflation around the world, and many are looking for a hedge against such inflation.
If you’re reading this article, you’re probably one of the new investors interested in Bitcoin as an investment. If that’s the case, you’ll need a wallet to “store” the Bitcoin you wish to acquire to keep it safe from criminals looking to steal your funds.
But first, we need to discuss what a wallet is, and the different types so that you’ll know which one to use.
What is a Bitcoin Wallet?
A Bitcoin wallet is a software or hardware you use to store your private keys. Usually, wallets are considered to be a place where you store the bitcoin itself. This isn’t completely incorrect since you can see how much Bitcoin you own and its value right in the wallet.
Your private keys are what give you access to the Bitcoin, and it is necessary to keep them safe because anyone with access to them can access your Bitcoin.
Types of Bitcoin Wallets
There are two basic types of wallets, namely hot and cold wallets. Hot wallets are software wallets that are perpetually connected to the internet. Examples are those you have on your phone or computer, whether an app or web-based.
Cold wallets on the other hand are wallets that are offline and only connected to the internet for carrying out a transaction. These are typically hardware wallets, but a variation is called a paper wallet which has the private keys printed on a piece of paper.
Cold wallets are generally safer if you intend to hold the Bitcoin in the wallet for a long time since bad actors can find a hot wallet with a large amount of Bitcoin more easily.
The Best 3 Bitcoin Wallets
Having known what Bitcoin wallets are and the types, here are the best ones you can use as a beginner as you start investing in the asset.
- Electrum: Electrum is one of the first Bitcoin hot wallets ever created. It is also a Bitcoin-only wallet, meaning you can only use it for Bitcoin. Electrum is also a very simple wallet that a beginner can easily use. One of its main distinguishing features is the replace by fee (RBF) feature which allows you to increase your fees should your transaction delay due to low fees. It is supported as an app on both mobile and desktop devices.
- Exodus: Exodus is also a great hot wallet to use for safely securing your Bitcoin. It is a non-custodial wallet that has a simple user interface, and is protected with a recovery seed phrase. Exodus supports Bitcoin and almost every cryptocurrency in existence, as well as non-fungible tokens (NFTs). You can easily install it on your mobile device or computer and create a password to start using it.
- Ledger: Ledger is a general name for a series of hardware wallets. Varieties of the wallet include Ledger Nano X, and Nano S Plus. You can order it online and connect it to your laptop to set it up. Once connected, you can access it the same way you access the hot wallets and do what you wish to do before taking it offline again. After buying Bitcoin, you can easily send to the wallet and rest assured that it is safe.
Which Should You Use?
As a beginner, you can use any of the three wallets. However if you wish to buy a large amount of Bitcoin, it is advisable that you get a hardware wallet to reduce the chances of the wallet getting hacked.
The only exception is if you wish to trade the Bitcoin maybe on a peer-to-peer platform, in which case the Bitcoin has to be on the platform. If it is a long term investment, the Ledger is your best friend.