After making up your mind to own Bitcoin, the next thing is to get a Bitcoin wallet. Just like fiat, Bitcoin can be “safely" stored in what is known as a Bitcoin wallet. For extra security reasons, some Bitcoin owners go the extra mile and store their coins in offline wallets such as paper wallets or hardware wallets. Here are the different types of wallets with their pros and cons;
These are the most common forms of wallets given their ease of accessibility, cheap cost and compatibility with personal computers and mobiles. They, however, require internet connectivity to access stored Bitcoins. Some Bitcoin wallets can also store several other coins. This, however, depends on the wallet provider. For such wallets, you need a login username and password, and some provide two-factor authentication to improve security. Two of such types of Bitcoin wallets are;
Mobile Wallet: Mobile wallets have the same physical attributes as a hardware wallet though such a Bitcoin wallet is at high risk of viruses and hack attacks due to their online accessibility. Notwithstanding, this form of wallets is gaining increasing popularity given their ease of use. They most often have QR scanning options which can be downloaded from Google play store or Apple store. Some popular options include Jaxx and coinbase mobile versions.
Desktop Wallet: This form of Bitcoin wallet has similar functionality as the mobile wallets given their online connectivity but are not stored on any servers. This Bitcoin wallet also has similar pitfalls such as hack and virus attacks (only in case private keys have been stored on third party websites). They are also risky in the case of a hard drive crash when the wallet is not backed up and could lead to information loss. They are for the most part free and some of such wallets include Jaxx.
This is generally known to be the more secure type of Bitcoin wallet given their hack proof status. These forms of wallets are not hosted on any servers neither do they need online connectivity to be assessed. The two most popular forms of Bitcoin offline wallets include;
Hardware wallet: This is a fancier wallet option where the private keys and coins of the Bitcoin owner can be stored. It comes with a screen and these type of wallets can be easily carried around. It is believed this form of Bitcoin wallet is more secure than other forms of wallets such as desktop and mobile wallets because they are immune to viruses and hack attacks though they can fail to protect users from malware swaps and random number generation. Also, there have been recent cases of hardware wallet theft in the US. The more popular of such wallets include ledger Nano s and Trezor.
Paper wallet: This is said to be one of the safest Bitcoin wallet types because they are 100% hack and virus free. With a Bitcoin paper wallet, the owner has a private key which he can use to transfer and store his funds. The only problem with a paper wallet is the fact that it cannot be retrieved if missing and needs to be kept safe because it only requires exposure of it’s private keys to a robber or hacker either online or offline to lose coins.
No matter what type of Bitcoin wallet you use, never share your private keys with anyone.