Where Should You Store Your Bitcoin?: It’s now safe to say that Bitcoin (BTC) is more accessible than ever. At this point, everyone has heard of it and many people have already started trading it—especially now that a lot of them can easily buy Bitcoin with debit cards.
However, as many of us know, the well of information only gets deeper as soon as you dive in. Yes, you probably have your Bitcoin, but are you storing it properly? There are so many Bitcoin wallets to choose from; how do you know that you’re using the right one?
Well, we can help with that.
The different types of Bitcoin wallets
Bitcoin wallets can be tricky—the market is full of different options to choose from, but if you understand what’s out there and know what you’re looking for, it doesn’t have to be difficult to choose which one is right for you.
Mainly, Bitcoin wallets can be categorized into hot wallets and cold wallets. Hot wallets are storage solutions that are always connected to the Internet, while cold wallets—although some have the option to connect to the web—remain mostly offline.
As we mentioned earlier, the well only gets deeper from here since these two categories can be split up even further into different types of wallets. Here are some of the most popular options for each type:
Hot wallets
Web wallets are some of the most popular storage options on the market. These are the wallets that you usually get free from exchanges. They’re one of the most secure Bitcoin wallets right now, especially if you’re just starting out. Additionally, they’re also easily the most accessible—allowing you to trade and manage your funds in real-time.
Mobile wallets are installable applications that you can use on your smartphone. Since you can use your phone to manage your funds, these wallets are extremely convenient, allowing you to use your Bitcoin while you’re out in the real world, whether for peer-to-peer payments or in-store purchases.
The best thing about hot wallets is that they won’t cost you much, if they aren’t completely free, which most are. However, it’s worth noting that if you plan to use a hot wallet, make sure that the company providing it is reputable and secure. If not, your funds could be at risk. Do a little background research on the wallet providers before you park your funds in there.
Cold wallets
Desktop wallets, like mobile wallets, are installable applications that you can use on your personal computer or laptop. More often than not, it’ll provide you with full control and access to your Bitcoin—including full possession of your own private keys.
Hardware wallets are physical devices that look like USB flash drives—but with a small LED screen and buttons to navigate through the user interface. Although these devices can be a little pricey for newer traders, it provides top-tier security for your Bitcoin, making it ideal for people who are holding a lot of it.
The biggest downside to using a cold wallet is that rarely any of them are free to use. Additionally, having your funds offline generally means less accessibility. This is what makes cold wallets more ideal for traders who like to hold their Bitcoin for long periods of time.
Which one should you use?
We’ve just given you the four most popular types of Bitcoin wallets you can use, each tailoring to a specific trading style. For example, if you’re constantly trading on your computer, web wallets might be good since they’re the most accessible and they’re already connected to the Internet.
However, if you’re always on the move, mobile wallets might be the best option for you. It might even give you the chance to use it in the real world. However, if you’re holding a significant amount of Bitcoin and don’t plan on selling them any time soon, hardware wallets might be the way to go—even if you have to pay a little bit extra for more security.
With all that said, it doesn’t mean you have to stick to just one. Aside from having a web wallet, you could purchase a hardware wallet so that you can leave the BTC you want to hold in there while you keep a smaller amount in the web wallet for trading.
The great thing about all these options is that there’s really no wrong option for you. Each type will serve you well, but choosing the one that tailors most to your trading style could maximize your earnings and optimize your Bitcoin storage.