Best Bitcoin Wallets of 2021

Bitcoin is the world’s most valuable cryptocurrency. At the time of writing this blog, a single Bitcoin is valued at $34,815, making it far more valuable than other cryptocurrencies like Ethereum. The popularity of Bitcoin means that it’s attracting a lot of attention from people who want to invest and make some profit.

Best Bitcoin Wallets

Because of the growing interest in Bitcoin, and cryptocurrency in general, there’s a lot that newcomers need to get up to speed with. For instance, a crypto wallet is an essential part of owning and spending cryptocurrency. It works just like the physical wallet that you are accustomed to carrying for paper currency. The blog aims to ensure that you have all the fundamentals you need to keep your Bitcoin safe with the best bitcoin wallets.

What is a Bitcoin Wallet and Why Do You Need it?

A Bitcoin wallet is a place to store information about the coins that you own. It holds important information like the private key that is required to make transactions. The wallet is more of a place to store your private key for authorizing a transaction than anything else.

A crypto wallet, or a Bitcoin wallet, provides you a cryptographic address that’s used for receiving and sending cryptocurrency. It is unique to you, the public key is hashed so that any changes would be immediately known.

Cryptocurrency runs on public-key encryption, which you can learn more about in our blog here. But to give you a brief explanation, public-key encryption relies on two keys: a public key and a private key. Anyone who wants to send you Bitcoin will use your public key to identify you before making the transactions. The private key – on the other hand – is used to authorize transactions by you. The public key cannot be reversed engineered to find out the private key because it’s computationally extremely challenging.

Types of Bitcoin Wallets

Bitcoin wallets are split into two categories. You can use either one to store your Bitcoin, but they differ in functionality and purpose. However, as you’ll see, using both is recommended for the security of your Bitcoins.

Hot Wallet

A hot wallet is most common as it’s needed to make transactions because of its online nature. Its most appropriate example is the wallet that we carry with us to hold paper currency or credit cards.

Your physical wallet lets you carry some of your money that you expect to spend throughout the day or the week. Just like you don’t carry your entire savings in the wallet, a hot wallet should never be used to store all of your bitcoins. Because it runs on top of an operating system and is connected to the internet, it is susceptible to certain threats.

Hot wallets are more popular because most of them are free. Furthermore, cryptocurrency exchanges like Binance, Bitfenix, and Coinbase offer a hot wallet as part of your trading account on the exchange.

Cold Wallet

A cold wallet does not remain connected to the internet. And the only time you access is when you need to move some coins to your hot wallet for making transactions. If you are serious about Bitcoin as an investment, using a cold wallet is highly recommended.

You can either pick a hardware-based or paper-based cold wallet. Hardware wallets are the size of a USB thumb drive and plug directly into your computer. They don’t run an operating system, their sole purpose is to store your bitcoins and the cryptographic keys, making them ideal from a security perspective. Paper wallets are basically QR codes imprinted on paper. It holds information about your coins and the private key. The paper has to be scanned every time to import coins to your hot wallet.

Cold wallets cost money. A decent hardware wallet will cost you around $80.

Best Bitcoin Wallets for 2021

Below is a list of some of the best Bitcoin wallets that you can use. The list contains both hot wallets and cold wallets and is mentioned accordingly.

Exodus

Exodus has a user-friendly and modern interface that lets you track the cryptocurrency market. Aside from making transactions, Exodus can connect with your hardware wallet for storing coins in a cold state.

  • Wallet type: Hot
  • Supported platforms: Windows, macOS, Linux, iOS, Android
  • Price: Free

Coinbase

Coinbase is a cryptocurrency exchange that offers a hot wallet to store your Bitcoin, among various other cryptocurrencies. You can track the market in real time, and buy and sell Bitcoins. Coinbase also provides a limited insurance policy, but it does not cover losses that occur through unauthorized access to your account.

  • Wallet type: Hot
  • Support platforms: iOS, Android
  • Price: Free

Electrum

Electrum is a hot wallet that can connect to a cold wallet. It is built for Bitcoin and does not support any other cryptocurrency. But, what Electrum offers, it does it really well, especially when it comes to security. It is paramount for any wallet that connects to the blockchain.

It does not have an exchange of its own, but you can use any of the exchanges and send coins to your Electrum wallet.

  • Wallet type: Hot
  • Platforms: Windows, macOS, Linux, Android
  • Price: Free

Trezor

Trevor is one of the leading hardware wallet for storing cryptocurrency that is no bigger than your credit card. As a cold storage, it is inherently much more secure for long-term storage. People coming from online wallets might find the price of the hardware as a downside, but anyone serious of about the security of their Bitcoins must consider a hardware solution.

  • Wallet type: Cold
  • Platforms: Windows, macOS, Linux, Android
  • Price: Starts from $79

Ledger

Ledger is another hardware wallet that’s ready for Bitcoin. You can connect Ledger to the Ledger Live app on your phone via Bluetooth that allows you to keep track of the market and buy and sell cryptocurrency. In addition to Bitcoin, it currently supports a growing list of 1800+ coins. Once connecte to an exchange, you can easily send cryptocurrency to your Ledger.

  • Wallet Type: Cold
  • Platforms: Windows, macOS, Linux
  • Price: starts at $59

Conclusion

It should be kept in mind that wallets don’t actually store your coins, it connects to the blockchain and retrieve the information about how much coins you own. The wallet is a safe place to store your private keys that is needed to make a transaction. The level of security varies between wallet type, which is why it is important that you protect your keys.

The going phrase in the cryptocurrency space “Not your keys, not your coins” is a reminder that if you don’t control your keys, you don’t really own the coins.

Hence, we do not recommend using exchanges for storing the coins. Exchange wallets only let you control your coins, it does not give you control of the private key. If the exchange is hacked, which they certainly have in the past, you may lose your keys.

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