How do I create a Bitcoin wallet?
Which Bitcoin wallet should you choose?
You may need to choose another type of wallet depending on how you use your bitcoin. Below is a breakdown of the various types of Bitcoin wallets, along with their pros and cons.
Software wallets: Easy buying, selling, storing and trading
Software wallets are available as an app that can be downloaded to your smartphone or desktop for free. The app is easy to use and you can begin making Bitcoin transactions in a matter of seconds.
Software wallets can be connected to the Internet so hackers are unlikely to get access. It is best to avoid storing large amounts of bitcoin within your software wallet. However, it is safe to keep bitcoin in a software wallet if you use password management best practice.
Although there have been isolated instances of software wallets being hacked in rare cases, the greatest risk is losing your private key. This is the same password that protects your wallet. It's important to backup your wallet, and keep the password safe.
Tip: Make certain the software wallet you use is fully self-custodial, like the Bitcoin.com Wallet. This means that only you have access to your crypto and not the wallet provider. This will protect you against fraud and bankruptcy by the wallet provider.
Hardware wallets: Long-term storage for larger bitcoin amounts
Hardware wallets are also known as cold wallets and are physical devices that are designed to store cryptocurrencies. Because they are physically isolated from the Internet, they offer the most security for digital assets. This makes it virtually impossible for hackers to hack your wallet.
Hardware wallets can take longer to access so they aren't the best choice for frequent Bitcoin transactions. Instead, use them to store long-term data.
You must back up and follow the best password management practices , just like software wallets.
Tip: Hardware wallets can be worth the initial investment, especially if you have a lot of Bitcoin. Only buy one wallet from a trusted company to ensure it is safe.
Centralized exchange wallets allow for easy buying, selling and trading
Because they simplify the buying process, centralized exchanges (CEXs), have been popular places for new bitcoin buyers to purchase their first bitcoin. It's similar to opening a trading account.
The CEX retains full control of your funds. This puts you at risk of the exchange being hacked or going bankrupt. It also means that you will need to ask permission to withdraw bitcoins, wait longer for withdrawals, and pay higher transaction fees.
We recommend that you use centralized exchanges for trading only, and not for storing your Bitcoin.
Tip: Digital assets cannot be stored in secure places like CEXs. If you do not plan to trade your bitcoin immediately after you have purchased it, it is a good idea to transfer it to your hardware or software wallet.
Paper wallets are an alternative to metal wallets and a unique way to gift bitcoin.
To create a paper wallet, you first need to download a package of software. Next, run the software offline (for security), to generate a public/private pair. Finally, print it out on a piece. Once you have created a Trustee wallet, it is possible to send any amount of Bitcoin to the address. You will need the private key on the paper to spend it.
Paper wallets can be used to store bitcoin offline, just like hardware wallets. They are a cheaper alternative to hardware wallets.
The public/private key pair can be written on paper so handing it over to someone is like giving cash. Paper wallets are a unique way to exchange bitcoin face to face.