9/13/2019 How to store your bitcoins - bitcoin wallets - CoinDesk

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Before owning any bitcoin, you need somewhere to store them. That place is called a “wallet.” Rather
than actually holding your bitcoin, it holds the private key that allows you to access your bitcoin
address (which is also your public key). If the wallet software is well designed, it will look as if your
bitcoins are actually there, which makes using bitcoin more convenient and intuitive.

Actually, a wallet usually holds several private keys, and many bitcoin investors have several wallets.

Wallets can either live on your computer and/or mobile device, on a physical storage gadget, or even
on a piece of paper. Here we’ll briefly look at the different types.

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Electronic wallets

Electronic wallets can be downloaded software, or hosted in the cloud. The former is simply a
formatted file that lives on your computer or device, that facilitates transactions. Hosted (cloud-based)
wallets tend to have a more user-friendly interface, but you will be trusting a third party with your
private keys.

Software wallet

Installing a wallet directly on your computer gives you the security that you control your keys. Most
have relatively easy configuration, and are free. The disadvantage is that they do require more
maintenance in the form of backups. If your computer gets stolen or corrupted and your private keys
are not also stored elsewhere, you lose your bitcoin.

They also require greater security precautions. If your computer is hacked and the thief gets a hold of
your wallet or your private keys, he also gets hold of your bitcoin.
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The original software wallet is the Bitcoin Core protocol, the program that runs the bitcoin network.
You can download this here (it doesn’t mean that you have to become a fully operational node), but
you’d also have to download the ledger of all transactions since the dawn of bitcoin time (2009). As
you can guess, this takes up a lot of memory – at time of writing, over 145GB.

Most wallets in use today are “light” wallets, or SPV (Simplified Payment Verification) wallets, which do
not download the entire ledger but sync to the real thing. Electrum is a well-known SPV desktop
bitcoin wallet that also offers “cold storage” (a totally offline option for additional security). Exodus can
track multiple assets with a sophisticated user interface. Some (such as Jaxx) can hold a wide range of
digital assets, and some (such as Copay) offer the possibility of shared accounts.

Online wallet

Online (or cloud-based) wallets offer increased convenience – you can generally access your bitcoin
from any device if you have the right passwords. All are easy to set up, come with desktop and mobile
apps which make it easy to spend and receive bitcoin, and most are free.
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The disadvantage is the lower security. With your private keys stored in the cloud, you have to trust
the host’s security measures, and that it won’t disappear with your money, or close down and deny Sign Me Up
you access.

Some leading online wallets are attached to exchanges (such as Coinbase and Blockchain). Some
offer additional security features such as offline storage (Coinbase and Xapo).
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Mobile wallets Let us know here »

Mobile wallets are available as apps for your smartphone, especially useful if you want to pay for
something in bitcoin in a shop, or if you want to buy, sell or send while on the move. All of the online
wallets and most of the desktop ones mentioned above have mobile versions, while others – such as
Abra, Airbitz and Bread – were created with mobile in mind.

Hardware wallets

Hardware wallets are small devices that occasionally connect to the web to enact bitcoin transactions.
They are extremely secure, as they are generally offline and therefore not hackable. They can be
stolen or lost, however, along with the bitcoins that belong to the stored private keys. Some large
investors keep their hardware wallets in secure locations such as bank vaults. Trezor, Keepkey and
Ledger and Case are notable examples.

Paper wallets
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9/13/2019 How to store your bitcoins - bitcoin wallets - CoinDesk

Perhaps the simplest of all the wallets, these are pieces of paper on which the private and public keys
of a bitcoin address are printed. Ideal for the long-term storage of bitcoin (away from fire and water,
obviously), or for the giving of bitcoin as a gift, these wallets are more secure in that they’re not
connected to a network. They are, however, easier to lose.

With services such as WalletGenerator, you can easily create a new address and print the wallet on
your printer. Fold, seal and you’re set. Send some bitcoin to that address, and then store it safely or
give it away. (See our tutorial on paper wallets here.)

Are bitcoin wallets safe?

That depends on the version and format you have chosen, and how you use them.

The safest option is a hardware wallet which you keep offline, in a secure place. That way there is no
risk that your account can be hacked, your keys stolen and your bitcoin whisked away. But, if you lose
the wallet, your bitcoin are gone, unless you have created a clone and/or kept reliable backups of the
keys.

The least secure option is an online wallet, since the keys are held by a third party. It also happens to
be the easiest to set up and use, presenting you with an all-too-familiar choice: convenience vs safety.

Many serious bitcoin investors use a hybrid approach: they hold a core, long-term amount of bitcoin
offline, while having a “spending balance” for liquidity in a mobile account. Your choice will depend on
your bitcoin strategy, and your willingness to get “technical.”

Whatever option you go for, please be careful. Back up everything, and only tell your nearest and
dearest where your backups are stored.

For more information on how to buy bitcoin, see here. And for some examples of what you can spend
it on, see here.

(Note: specific businesses mentioned here are not the only options available, and should not be taken
as a recommendation.)

Authored by Noelle Acheson. Wallet image via Shutterstock.

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NEXT: WHAT CAN YOU BUY WITH BITCOIN?

At some point you’re going to want to spend your bitcoins. But where can you go to exchange it for goods and
services?

INDEX: A BEGINNERS GUIDE TO BITCOIN AND BLOCKCHAIN TECHNOLOGY

What is Bitcoin? It's a decentralized digital currency

Why Use Bitcoin? It's fast, cheap to use, and secure

How Can I Buy Bitcoin? From an exchange or an individual

How to Buy Bitcoin in the UK Buying bitcoin in the UK

How to Store Your Bitcoin Use a digital or paper wallet

What Can You Buy with Bitcoin? Spend your bitcoins

How to Sell Bitcoin A guide on how to sell your bitcoins

How to Accept Bitcoin Payments for Your Store Learn about bitcoin POS systems

How do Bitcoin Transactions Work? Bitcoin addresses and private keys

Is Bitcoin Legal? The current regulation around bitcoin

Who is Satoshi Nakamoto? The founder of bitcoin

Understanding Bitcoin Price Charts A primer on bitcoin price charts

How Bitcoin Mining Works By confirming transactions

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How to Set Up a Bitcoin Miner Generate bitcoins yourself

What are Bitcoin Mining Pools? What are pools how and how to join them?

How Does Cloud Mining Bitcoin Work? Alternative bitcoin mining solutions

How to Calculate Mining Profitability Can you make a ROI?

How to Make a Paper Bitcoin Wallet Creating an unhackable bitcoin wallet

Can Bitcoin Scale? A look at the debate and the tech

What is SegWit? A new way of storing transaction data

What is Bitcoin's Lightning Network? Off-chain transaction channels

What is Ethereum? A blockchain application platform and 'world computer'

What is Ether? The 'fuel' of the ethereum network

How to Use Ethereum Wallets, trading and ‘dapps’

Who Created Ethereum? Vitalik Buterin

How Ethereum Works 'Turing-complete' programming, 'state' and the 'EVM'

How Ethereum Mining Works 'Proof of Work' and 'Proof of Stake'

How to Mine Ethereum GPUs, mining software and pools

How Will Ethereum Scale? ‘Sharding’ and ‘off-chain’ transactions

How Do Ethereum Smart Contracts Work? Code, transaction fees and 'gas'

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What is Bitcoin Cash? Same blockchain, different characteristics.

Hard Fork vs Soft Fork Why and how do blockchains split?

What is the Difference Between Litecoin and Bitcoin? It's the silver to bitcoin's gold

How to Buy Litecoin How to buy the bitcoin alternative litecoin

How to Mine Litecoin and other Altcoins How to generate your own altcoins

What is Ripple? Is it a token? Is it a payments platform?

What is Blockchain Technology? A system of distributed data and logic

How Does Blockchain Technology Work? Cryptographic keys, distributed networks and network servicing protocols

What Can a Blockchain Do? Identity, recordkeeping, smart contracts and more

What is a Distributed Ledger? A dynamic, independently maintained database

What is the Difference Between Public and Permissioned Blockchains? Can anyone read or write to the ledger?

What is the Difference Between a Blockchain and a Database? It begins with architectural and administrative decisions

What Are the Applications and Use Cases of Blockchains? Tokenization, auditing, governance, settlement and more

How Could Blockchain Technology Change Cross-border payments, new asset classes, regulatory compliance and
Finance? more

What are Blockchain's Issues and Limitations? Complexity, size, costs, speed, security, politics and more

Why Use a Blockchain? To manage and secure digital relationships as part of a system of record

What is a Decentralized Application? A distributed 'smart contract' system

What is a DAO? A 'decentralized autonomous organization'

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What is an ICO? Initial Coin Offerings refer to the distribution of digital tokens.

What is Dash? (DASH)

What is Stellar? (XLM)

What is Filecoin? (FIL)

What is EOS?

What is Grin?

What is Zilliqa? (ZIL)

What is Cardano? (ADA)

What is 0x? (ZRX)

What is Decentraland? (MANA)

What is XRP?

What is Litecoin?

What is Binance Coin (BNB)?

Who is Jed McCaleb?

Who is Coinbase CEO Brian Armstrong?

What is Bakkt?

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9/13/2019 How to store your bitcoins - bitcoin wallets - CoinDesk

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How to Trade Crypto On A step-by-step guide for how to use the Bitfinex exchange to buy, sell and trade
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How to Trade Crypto on Huobi A step-by-step guide for how to use the Huobi exchange to buy, sell and trade cryptocurrency.

How to Trade Crypto On A step-by-step guide for how to use the Bitstamp exchange to buy, sell and trade
Bitstamp cryptocurrency.

How to Trade Crypto On A step-by-step guide for how to use the BitMex exchange to buy, sell and trade
BitMEX cryptocurrency.

How to Trade Crypto On A step-by-step guide for how to use the Kraken exchange to buy, sell and trade
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