Where to Keep Bitcoin – Wallets

The Bitcoin wallet is the elementary tool we need when we want to keep and use BTC. Actually, it is software (or a hardware device) that allows us to manage our bitcoin addresses and private keys.

Warning! If you have bitcoins on a stock exchange, a currency exchange, or in a wallet that you are not the only one to have private keys to, it is essentially not a wallet. Such pseudo-wallets include, for example, a very popular blockchain.info service. In that case, your bitcoins are kept by someone else: an intermediary. We do not recommend keeping cryptocurrencies by third parties.

The basic rule:
Your private keys, your bitcoins. Not your private keys, not your bitcoins.

There are several types of wallets, but each wallet, except for Bitcoin Core (running on a full node), is a so-called Simplified Payment Verification (SPV), or “lightweight”. The SPV relies on the full nodes from which it receives the transaction information and the status of the bitcoin network.

Based on how safe they are and how often we want to use them, the types of wallets are as follows:

Hot wallets are wallets that are connected to the Internet at all times. They pose a greater security risk, but allow easy access to bitcoins. There are all kinds of mobile and online wallets, or wallet software, run on computers that are connected to the Internet.

Cold wallets are wallets that are offline, and we only connect them to the Internet if we want to use them. They are much safer to use, we can hold more money on them, but be careful when sending transactions. It’s mainly about hardware wallets (like TREZOR) and software wallets that are disconnected from the Internet.

Freeze wallets are special wallets that are considered to serve for long-term storage of bitcoins. Their seed is well secured and we do not plan to use them regularly. We often do not even have them at our disposal, but they are stored in a safe place. They can exist as backups of private keys, hardware wallets, or paper wallets. What is important here is that they are not available for regular use.

According to the media on which the wallet runs, the wallets can be divided as follows:

Mobile – they run on Android or iOS

Desktop – they run on Windows, Mac, and Linux operating systems.

Hardware – they are separate encrypted devices

Paper – they are backups of private keys and addresses on paper

For mobile phones, we recommend these wallets:

Samourai Wallet (Android) – Although this open source wallet is only in the alpha version, we recommend testing it. Samourai offers above-standard anonymity and security.

Bread Wallet (Android and iOS) – This is a very simple and user-friendly wallet.

Bluewallet (Android and iOS) – simple to use mobile wallet which also supports Lightning network.

Copay (universal for desktops and mobiles) This is a secure wallet for the iPhone that offers above-standard features, such as multisig addresses (where transactions must be signed by multiple parties).

We recommend the following desktop wallets:

Electrum This is the most popular desktop wallet. I tis easy to use and reliable. The offline computer can serve as a relatively secure cold wallet.

Wasabiwallet – Great desktop wallet with many advanced privacy features and active developer team.

Bitcoin CoreThis wallet is part of software that synchronizes with the entire BTC blockchain. Use it to run the entire bitcoin node.

Armory – A bit more complicated to set up, but it includes advanced security features for demanding users.

The safest and most comfortable solution is hardware wallets:

TREZOR – Arguably the best HW wallet – easy to use and safe. It supports many cryptocurrencies and can be used as a password manager. Currently, there are two models, the older Trezor 1 and the new Trezor T model.

Ledger Nano SAlthough it’s not an open source like TREZOR, it nevertheless offers support for a wider variety of cryptocurrencies.

Open DimeMinimalistic USB hardware that allows bitcoins to be used as banknotes.

Papierová peňaženka:

Bitaddress.org – umožňuje vygenerovať si BTC adresu a peňaženku offline cez prehliadač a následne vytlačiť na papier – tento typ peňaženky môže slúžiť ako záloha, je však zastaralý a pre neskúseného užívateľa potenciálne rizikový.

Did you know? All the wallets mentioned in this article are free of charge.

How to store and backup private keys?

Bitcoin uses public key cryptography. A Bitcoin wallet does not “keep” any bitcoins in itself in literal sense. It just serves only as front-end software to manage the private keys of our address.

A private key is a secret string of characters that allows Bitcoin users to send bitcoins. Each BTC wallet contains one or more private keys that are mathematically associated with all the public addresses that the wallet generates. Since the private key is used to control bitcoins at that address, it is very important that it be securely backed up, ideally on paper, offline. Sometimes, a so-called a mnemonic seed is derived from the “private key”, i.e. between 12 and 24 random English words in a row that serve as a backup and a private key can be restored.

Warning! Securing and backup of your private keys is your responsibility. If you lose them, nobody else can help you, unlike losing password for internet banking.  Be careful.

The private key in its „raw“ form might look something like this: Kyhn5qVvEF1XKfkA6yj1CrB9XR51pQvTeUSFDa34Tis53zBRwLw3

If we deduce the mnemonic seed from it, which is a group of random words, it can look like this (note that the exact order of words is also important):
witch collapse practice feed shame open despair creek road again ice least”

TIP: If you worry about lack durability of a paper copy, you can use the nearly indestructible Cryptosteel backup, or simply place the paper in a fireproof envelope.

The private key for regular wallet access is not needed, so most wallets will offer you a PIN or a passphrase. However, the private key is the last backup we can recover the wallet from at any time, even from another medium, for example. Regardless of the private key format, it is therefore necessary to securely back it up offline, away without our wallet.

It is best to write it on paper with a pen (printers can be hacked) and store the paper in several safe places so that there is no risk of loss or destruction.

TIP: There are advanced ways to back up private keys offered by, for example, Shamir‘s Secret Sharing (allowing you to split a private key between a group of people to recover most, but not all of it), or the Glacier Protocol (an offline backup that is supposedly safer than HW wallets). Both should be used only by experienced users.

Once you have picked out the right wallet, fill it with the first bitcoins! Read our article How to buy bitcoin.

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