How to Choose a Bitcoin Wallet

Need a bitcoin wallet? Don’t know where to start? Here’s a guide.

Bitcoin wallets are how you interact with the protocol. The average user doesn’t even need to know anything about nodes, cryptography or miners in order to send and receive bitcoin, and frankly, they shouldn’t.

Like Andreas Antonopoulos said years ago, bitcoin is as easy as sending money with an email.

But there are many wallets out there to choose from, so let’s break down what’s what.

Is it Cold or Hot?

What does that mean? It’s nothing hard to comprehend, on the contrary. Hot wallets are connected to the internet. Cold wallets are disconnected from the internet. But how can cold wallets work? Well, you connect them for a short amount of time to look up the balance or send a transaction. In Coldcard’s case, not even that, it’s completely air-gapped.

Keeping a wallet disconnected from the internet reduces the attack surface. Simply put, there are less things that can be hacked or go wrong.

Do You Hold Your Keys or Not?

The keys are the most important thing in bitcoin. In fact, as far as you’re concerned, they are your bitcoin. Anyone with access to those keys has access to that bitcoin. The keys, or seed words, come in either 12 or 24 batches. You should write them down and store them somewhere safe. But you do need to input them in a wallet so you can interact with the bitcoin network, and the safest place is to put them inside a hardware wallet.

Please try to understand that despite what bitcoiners like to scream about on twitter, there is nothing wrong with any option. In some cases, you need a custodial wallet. In others, you need a secure, cold wallet. Both are fine. What matters is that you understand what you’re doing and using layers of security appropriate for your use case.

Using a custodial, hot wallet like Wallet of Satoshi for example is perfectly fine for small amounts. Think of it like spending money, cash in your wallet. You wouldn’t mind losing a few.

But when talking about generational wealth and buying a house or a car, you should probably go with a cold storage solution that is safer.

Usability and security are on opposite ends on a scale, you need to sacrifice one to have the other. You wouldn’t want to bother with extreme security when transacting 20 times per day.

Everyone can use a software wallet

Just download and go! These are considered hot wallets, meaning that they’re always connected to the internet. They’re free to download.

Here are the best hardware wallets to choose from

The hardware wallets afford a lot more security for your bitcoin. Think of it as a digital vault for your money. With bitcoin, the responsibility falls to you to secure your sats. The protocol and the cryptography will make sure it will never get hacked, but anyone with access to the seed words can simply use the coins. Not your keys, not your coins.

A cheap hardware wallet provides the maximum amount of security for the least possible cost. There are pros and cons to any one of them so it’s up to your personal preference. Here’s what we suggest.

Or, just create your own wallet!

It might sound weird but yes, it is possible to create your own DIY hardware wallet. Why do that, you might ask?

If you don’t want a wallet purchase traced back to you, and you want to build it from scratch, you can do that with open-source software and the right parts. By getting the parts, compiling the source code yourself and assembling the wallet you can be extra-ultra certain that there’s nothing weird running on your signing device. There are many projects but the most impressive one is Seedsigner. You can also run the software from Blockstream on your own device.