The choice of a Bitcoin wallet is as important as choosing a bank to open an account with. The type of account, its purpose, and background of the intended bank are amongst the top reasons that inform the choice of a bank. Similarly, these reasons and more inform the choice of a Bitcoin wallet.
A Bitcoin wallet is a platform that basically allows the reception, storage and sending of the digital currency to others. There are varieties of Bitcoin wallets available in the cryptomarket today. They include the Hardware, Mobile, Desktop and Web wallets with their unique differences from a variety of vendors. Therefore, before you decide to open a Bitcoin wallet, it is strongly advised you go beyond recommendations of friends and do your personal research on the attributes to look out for. This will enable you to make informed decisions for or against any of the many available wallet options.
This article examines some of the attributes of a good Bitcoin wallet to enable you to make an informed decision.
Security is an important factor to consider when choosing a Bitcoin wallet. Bitcoin is valuable and as such keeping it secure from hackers and scammers is usually the intentions of everyone. There are different wallets with different levels of security. The security level you desire your wallet to have should be determined by the purpose of your wallet and your operational expertise. Security tips that affect your Bitcoin wallet choice should include: the authentication process, preferably it should be a Two-Factor Authentication (2FA) process. This means that it will require your username, passwords and sometimes another information privy to you. If you desire a web wallet, it is important to know the security protocol of your wallet. For example, you should know whether its web address begins with HTTPS which is more secure than the HTTP.
2. Operating System
Some Bitcoin wallets are specifically designed for the particular operating systems of different electronic devices. If you intend to use a computer system, be aware that some wallets are explicitly for Windows, Linux or OSX operating systems – while some are multipurpose. With mobile devices, some wallets are also multipurpose while others are specifically for Android or iOS devices. Therefore it is critical to know which Bitcoin wallet is compatible with the operating system of your device.
Bitcoin and cryptocurrencies, in general, are decentralized in nature and this is one of their leading attributes. In the same vein, it is advisable that Bitcoin wallets should be decentralized. Although most of the wallets available are decentralized, the quest for greater operation speed have led some wallet developers and vendors to create semi-decentralized, semi-centralized and hybrid decentralized wallets. These wallets often come with a cost on vulnerability to hackers and scammers as opposed to the conventional decentralized wallets. Therefore, to ensure the safety of your Bitcoin and transactions, it is strongly encouraged that the type decentralization should determine the choice of your wallet.
4. Ease of Use
Different Bitcoin wallets require different levels of expertise in their usage. Choose a Bitcoin wallet you can easily understand and operate. This, however, should not entail compromise on security and other basic features. Rather it should enable an informed choice and strike a balance between the complexity level of your wallet and your operational expertise.
Different Bitcoin wallet vendors offer different features to sway potential customers to their products. Features have been an age long marketing strategy and usually will determine our choices for products. Features generate competition and ensure customers get the best. It is important you review the features of prospective Bitcoin wallets and make a choice based on the attributes that suit your purpose more than your likeness.
6. Transaction Charges
Many Bitcoin and crypto wallets and exchanges impose transaction charges on their users. It is advisable you know the transaction fees and other financial policies of the different Bitcoin wallets before you make a choice. Select a wallet that will give you the required features and services together with minimal transactions costs.
The withdrawal procedure of some Bitcoin wallets can be too rigorous requiring very stringent Know Your Customer (KYC) documentation. This documentation may include ID cards, photographs, and proof of income. Whereas these KYC requirements are usually geared towards forestalling money laundering, they hardly allow you to remain anonymous. Anonymity is one of the major pros of cryptocurrencies and their transactions. Therefore your knowledge of the level of anonymity a Bitcoin wallet affords you is important before making a choice.
8. Possibility to store other cryptocurrencies
The ease and flexibility to have different digital currencies in one wallet is very convenient. Dedicated wallets for Bitcoin are quickly being faded out. Most Bitcoin wallets are cross-chain and permit the storage, sending, retrieval and general transactions between other currencies like Ethereum and Monero. Although some people may argue that this feature may amount to the incautious “putting your eggs in one basket”, but with adequate security features typically common with most Bitcoin wallets, the convenience of cross-chain wallets usually outweighs its threat.
The transparent nature of a Bitcoin wallet will play to its advantage over other wallets. Open source wallets are usually transparent, secure and can have its code peer-reviewed. It can also be updated with the intent to identify potential threats and vulnerabilities. Ensure that you determine the level of transparency of your potential Bitcoin wallet before you select it.
10. Previous user experience
Reading reviews written by other customers with regards to their experiences with different Bitcoin wallets is important in making informed choices. Pay attention to the merits of these wallets and their challenges. Ascertain if they are reputable and if their merits are the things you desire and their challenges the things you can accommodate. Ask questions if there are still certain things unclear to you. You will almost always find someone ready and handy to answer and enlighten you. Certain online forums like Bitcoin Reddit or Bitcoin Forum will be useful for this purpose.