I’m a big fan of Bitcoin. I believe it will be inevitable as the best and safest store of value in the future (which is why you need your own unique Bitcoin wallet). Over the next few decades, I genuinely believe it will take an exciting ride up to its future status as the world reserve currency. I also see it as generally a better long-term option than index funds—but I still invest in normal stocks, too.
That said, if you own Bitcoin, you need a way to store it, and you need to own the storage yourself. If you don’t store your wealth in your own bitcoin wallet, you are risking losing your investment. There is no authority who can recover your Bitcoin for you if it’s lost.
So, which wallet do you need?
This post is aimed at Bitcoin newbies. I’m not buying and testing 100 different wallets—I’m doing research and then I’ll purchase one (or more, or none, don’t worry about it) for myself and my family.
This is only about Bitcoin. I’m not hating on Ethereum or Doge or any other altcoin out there. But this post is just about Bitcoin.
If my opinion changes or I find better options in the future, I’ll come back and update this post.
Firstly, there are three types of wallets:
- Fake Wallets
- Hot Wallets
- Cold Storage Wallets
You need to know the difference.
Spoiler: the meat of this post is about what cold storage wallet to get.
Fake Bitcoin Wallets: Do Not Use
There are fake wallets out there that act like they’re holding your Bitcoin, but these aren’t real wallets. The biggest thing you should know about wallets is “not your keys, not your coins.” If you don’t personally hold the private keys to your cold storage wallet, you coins are vulnerable to the whims of your hot wallet holder, hackers, etc.
RH is tempting because it’s hella easy to use. Don’t fall for it. I got burned by them changing the rules on me with my stock call options and missed out on gains. Also, it’s a fake wallet.
Again, “not your keys, not your coins.” You are not buying Bitcoin here, you are buying an IOU for Bitcoin that a company is holding in your stead.
“Hot” Bitcoin Wallet Options
A hot wallet is one that exists online. When you buy off an exchange like Coinbase, this is where your Bitcoin first arrives. There’s nothing wrong with that (because you more-or-less have to use an exchange to convert your fiat into Bitcoin) but I highly highly recommend not leaving your crypto in there long term.
- Coinbase Pro
FYI, if you’re an American citizen, you are supposed to use Binance.us and not the normal Binance website. The OG binance site is still up and running, but for some reason Americans aren’t supposed to use it, probably because the US wants to be able to observe who is using it so they want you to use the one hosted on US servers. Kind of creepy, unfortunately.
Nevertheless, whatever you use to exchange, don’t keep it there. It’s your wallet, but you don’t have the keys…so you ultimately don’t control it. I keep a tiny amount in hot wallets on exchanges in case I want to spend it on something directly.
Factor in costs of sending your coins to a cold storage wallet as part of your cost basis to buy and store your coins.
“Cold Storage” Bitcoin Wallet Options
This is a wallet where you do own your keys. These are your coins.
This is what you actually want as a long-term solution (i.e. if you’re one of those who are planning on holding Bitcoin for 10+ years, which is my plan).
These are wallets you have to set up with personal, private keys. A key is typically a series of 12 random words (“lava monkey table coffee tablet…”).
Without your key, you can’t decrypt and access your wallet. Your Bitcoin isn’t technically stored on your wallet—it’s stored on the entire chain everyone can see. Your wallet is kind of like the right to access those coins stored at the address.
A Literal Piece of Paper: the Coolest Bitcoin Wallet
This is as low-tech and un-hackable as you can get. Generate a wallet address and write it down on a piece of paper (or print it) as well as your private keys for that wallet.
This is a good start for setting up your own. And if you hate that, here’s another. The purpose of my post isn’t to explain how wallets work in their entirety or how the heck a piece of paper works as a secure Bitcoin wallet. Using a paper wallet isn’t risk-free, but at least an EMP won’t destroy your hardware (if you’re worried about that).
As a reminder, you’re not actually storing any coins, you’re securing the access to your coins which are secured on the public blockchain. It’s like everyone’s gold is in a pile and everyone has guns guarding it. To take any gold out of the pile, you have to go prove your name is on the specific coins you want to move.
Ledger Nano X & Nano S
Ledger and Trezor are the leaders in cold storage options. So we’ll start with these brands’ two wallet products.
Nano X is the successor to Nano S. Nano X lets you install up to 100 apps on your device. What kind of apps? Basically, the thing that verifies your bitcoin wallet transactions and lets you actually use it.
This matters because you can have different wallets on here that won’t interact with each other. So you could theoretically spend out of one wallet and not have to worry about your long-term cold storage,—on the same device—being compromised.
Nano S on the other hand only allows between 3–20 apps. Also, X has a larger screen and it can do Bluetooth because a USB cable is too hard to use or something.
This is a USB-sized stick. Hence the name. The screen matters for things like generating your keys and such. So I guess a screen on that small of a device kinda matters?
Nano X costs $119.00, and an S costs $59.00. If you’re just buying something to do long-term cold storage and nothing else, and it’s just one wallet, then I would lean towards getting an S and letting it be.
Trezor Model T & One
This is like Ledger, but it came first and it’s made in the EU. While anyone can use it, it’s marketed as an EU wallet for some reason. This is a bit odd since Bitcoin’s main focus is about being decentralized, but there’s still a little nationalism (supranationalism?) that sneaks in there.
Model T is the “better” one. It’s the newer version of the One. It does all the same things, plus a bigger screen (kind of like the Nano X is to the S). Also more backup options (like a MicroSD slot). Costs $189.00.
Weirdly, the Trezor site doesn’t clarify why it’s actually better than the One. Maybe it has more wallet options like Ledger? Maybe not. I wish it said as much. The site doesn’t even say that Model T’s screen is a touchscreen which makes it easier to use than the One’s couple buttons.
Trezor One is the other option. “The first hardware wallet to hit the market.” It’s got a screen on it and two buttons next to it. Neat. This is essentially what all other hardware wallets are based on (including Model T, the Ledger options, and KeepKey). Costs $79.00.
Not a fan. This is made by a company called ShapeShift. They gave me a free hardware wallet so I was inclined to give them a shot, but unfortunately, it was unusable for me.
The idea for a KeepKey is you can buy straight to your wallet and get around having to use exchanges as middlemen. Neat idea. Unfortunately, this device simply isn’t usable in practice.
I made an account with my Gmail, but because of their app security rules, it made me verify who I was. Unfortunately, the system they have for verification simply doesn’t work. I emailed them to ask about it and they said it was a “known issue” that wouldn’t be resolved for a while.
The irony is I literally waited over a year after receiving my wallet before even trying to connect my account to it. So I have no faith they will be a great long-term solution, nor do I want to require my Bitcoin transactions to be facilitated through a company.
If you want to check it out for yourself, the wallets can also hold Ethereum, Litecoin, Dash, Dogecoin, and Namecoin (wtf is that). I don’t want any of these so IDGAF. You might though.
Multi-sig support. Multi-sig is useful when you don’t want all your bitcoin just on one wallet if you fear it as a single point of failure.
Definitionally this does not make it a cold storage option because you’re giving one of the signatures to access your Bitcoin wallet to a third party. Not a bad idea if you understand how it works, but multisig is a different kind of solution altogether, so do some more research first.
Pricing tiers from free to various levels of multi-sig support (into the thousands). Bitcoin only. See more.
Hot Wallet (not your keys). Multiple currencies. This is designed more for trading (phone and desktop app support). First impression: not a great long-term storage option. They do have an option to combine with Trezor (see above) to make it a bit more secure.
Honestly, I didn’t spend much time looking at this one because it didn’t seem like the kind of thing I’m looking for. Maybe it’s awesome. I don’t know. Find out for yourself.
Open the Electrum.org homepage and the first thing you’ll see is a warning saying “Electrum versions older than 3.3.4 are susceptible to phishing. Do not download Electrum from another source than electrum.org, and learn to verify GPG signatures.”
I admire the sprit of open source which is a core tenet of decentralization, the philosophy behind Bitcoin. However, on a primal level, it does make you wonder if “uhh, maybe this isn’t the best option to store my Bitcoin.”
FYI, GPG is a way to verify cryptographically secure your BTC transactions. You need a bit of technical know-how to verify its veracity yourself. It’s definitely possible to figure it out, but heads up, you’ll have to do a little work to get this going.
That said, you an do pretty much everything with Electrum: multisig, cold storage, and the software is decentralized. You’re storing this on your copmuter if you want—you don’t need to buy a separate piece of hardware.
If you want to be hardcore, this might interest you. If you’re just trying to find a cold storage solution and nothing else, this probably isn’t it. See more.
I like this one a lot. It’s probably the best on-ramp to managing your own wallet I’ve seen. This is a wallet you download to your own computer. To turn it into cold storage, you could just download and save this to an external hard drive…then unplug the hard drive and put it in your closet and forget about it for 10 years.
The broader Mycelium organization also has some interesting projects in the works for things like creating a debit card equivalent for spending your coins. That’s neither here nor there, but I think it’s cool. See more.
Other Bitcoin Wallet Options
There is no shortage of wallet options available. I can’t speak to any of these other than a quick blurb. I do not vouch for (or disparage) the quality of any of these options.
Do your own research. This should be your starting point, not your Bible.
Want more? Here’s a great reddit about wallets, including some I didn’t mention.