So, you’ve decided to make the leap and start buying cryptocurrency. Now, in addition to keeping up with blockchain, Bitcoin, and Ethereum news, and keeping up with the highs and lows of blockchain, Bitcoin stocks, and Ethereum stocks, you have to consider, you need to make some practical decisions regarding how you will store your cryptocurrency.
After buying your first Bitcoin, you will need to obtain a Bitcoin wallet.
Much like physical wallets that you might browse in a store, there are many types of Bitcoin wallets. Understanding which Bitcoin wallet is best for you is an important step in becoming a savvy Bitcoin user.
Bitcoin users have many wallets from which to choose. One is Bitcoin.com’s Official Wallet. However, it is not your only option, and this article is going to help you better understand the different types of wallets available as well as their benefits and qualities. Being an informed consumer is very important as the cryptocurrency market grows, and your options, likewise, increase.
When choosing a Bitcoin wallet, you should be certain that it is secure.
Just like you would not buy a physical wallet that has holes in it through which you could lose money, your Bitcoin wallet should be secure. Web wallets should be on a website that has HTTPS, a secure protocol. Also, the wallet should have both secure and strong logins. Furthermore, the wallet should offer two factor authentication, also known as “2FA.” Additionally, does the Bitcoin wallet allow you to back up your data elsewhere?
You need a Bitcoin wallet which offers a “multisig” (multi-signature) option, the preferred way to secure Bitcoin from potential attack or theft.
Mutlisig requires more than one key to authorize a Bitcoin transaction. A good, concrete analogy to explain multisig is requiring two people to each have a key to open a lock box. One person alone cannot do it, but when the other person is present, the box can be opened. This additional requirement makes a Bitcoin wallet more secure.
If you do not have access to your Bitcoin wallet’s private keys, then you technically do not have control over the Bitcoins in it. This added measure is important to consider when selecting a Bitcoin wallet. If you possess the private key, then you will always have control over your Bitcoin. This means that you will be able to move the cryptocurrency into and out of the wallet when you choose to. It also gives you the ability to backup your wallet outside of the wallet service itself, giving you an extra layer of protection and peace of mind.
Consider whether the Bitcoin wallet is “Hierarchical Deterministic,” which increases security when exchanging cryptocurrency.
Hierarchical Deterministic wallets use new Bitcoin addresses, which increases user privacy and thus also increases your peace of mind when using Bitcoin. User privacy with respect to Bitcoin wallets has been an important issue for years. Wallets that are Hierarchical Deterministic allow users to feel a little more at ease when using their cryptocurrency.
When selecting a Bitcoin wallet, you should consider its transparency.
This does not mean it is clear and you can see through it–it means that the wallet code is open source. If the code is not open source, then it is difficult to determine with any certainty that the code has been peer reviewed and checked for vulnerabilities. Basically, open source code has been tested by a community of users and coders. Also, it is important to be sure that a Bitcoin wallet’s source code has been kept up to date, which means that any vulnerabilities or bugs in the code might have already been noted and addressed.
Review the Bitcoin wallet’s ability to grant you anonymity.
Do you want to remain anonymous during your Bitcoin transactions? Would this Bitcoin wallet require you to register it in some way, such as submitting an email address, before you can use it? Is there a user verification process that is more robust? How much does this matter to you, and how much are you willing to compromise?
One’s need for anonymity might be important, but, arguably, a Bitcoin wallet’s user experience is much more important. Factors to consider include whether the Bitcoin wallet is made for mobile devices or can be used on a laptop, PC, or Mac. Also, you should consider whether the Bitcoin wallet “makes sense” to you as a user, a highly subjective measure, but a very important one.
Lastly, and most importantly, you should ascertain whether the Bitcoin wallet is reputable.
To get the best sense of this, you should conduct a bit of research on the Internet. Good resources include the Bitcoin subreddit and the Forum on the Bitcoin site. Through these venues, you will be able to read other users’ reviews and about their experiences. Of course, you should be careful; not everyone online is necessarily who he or she says. Nevertheless, this research will help steer you in the right direction.
Finding the Bitcoin wallet that best suits your needs takes a lot of research, careful thought and consideration, and perhaps even trial and error. Nevertheless, this work is important to do. A good Bitcoin wallet will protect your Bitcoin, allowing you to use the cryptocurrency without any concerns for the safety of either your assets or your identity. (To learn more about using Bitcoin, read Getting Started with Bitcoin.)