What Is a Bitcoin Wallet?
A Bitcoin wallet is a software program in which Bitcoins are stored. Technically, Bitcoins are not stored anywhere. For every individual who has a balance in a Bitcoin wallet, there is a private key (secret number) corresponding to the Bitcoin address of that wallet. Bitcoin wallets facilitate the sending and receiving of Bitcoins and give ownership of the Bitcoin balance to the user. The Bitcoin wallet comes in many forms. The four main types are desktop, mobile, web, and hardware
Best Bitcoin Wallets of 2020
- Coinbase: Best Overall
- Trezor: Best for Hardware Wallet for Security
- Ledger: Best Hardware Wallet for Durability
- SoFi: Best for Beginners
- Robinhood: Best for Free Buying and Selling
- Edge: Best for Mobile
- Exodus: Best for Desktop
Should I buy a bitcoin wallet?
If you’re going to own more than $100 USD worth of Bitcoin, Ethereum or any cryptocurrencies, you want to buy a cold storage wallet immediately! I use the number $100 USD because that’s how much a cold storage device costs.
Maybe you’ve heard people say “Bitcoin is so empowering because you can ‘Be your own bank’”? It’s true. You are your own bank. Not Bank of America. So with that responsibility comes some pros and cons. At the end of the day crypto has fewer middleman fees, and less sloppy bank regulation etc, but it is your responsibility to ensure your crypto investments are stored in a safe are yours and yours alone.
Generally, as a rule of thumb, you should only leave as much money on your hot wallet as you would with a leather wallet that you’d keep in your pocket. Think of it this way, if you were held at gunpoint while holding a leather wallet, then you’d only lose that money in your pocket, and not your entire bank account. If you keep all your money in Coinbase it’s as if you are walking around town with all your money in your pocket.
In short, here’s an analogy to help you out: a hot wallet can be thought of like a pocket wallet that you walk around town with, cold storage is a bank vault.
Can you explain the difference between a Hot Wallet and Cold Storage?
Hot wallet refers to any cryptocurrency wallet that is connected to the internet. Generally hot wallets are easier to set up, access, and accept more tokens. But, hot wallets are also more susceptible to hackers, possible regulation, and other technical vulnerabilities.
Cold storage refers to any cryptocurrency wallet that IS NOT connected to the internet. Generally cold storage is more secure, but they don’t accept as many cryptocurrencies as do many of the hot wallets. Cold storage devices (aka. Trezor, Ledger) also cost close to $80 USD, whereas hot wallets are free.
What is Trust Wallet?
Trust Wallet is a mobile wallet app that allows you to send, receive and store a wide range of cryptocurrencies. Designed with a focus on simplicity, this open-source wallet aims to provide a platform that’s easy and straightforward to set up and use.
Trust Wallet allows users to store private keys on their own device, an important security feature, and it includes a backup facility for simple recovery. Other features include a built-in decentralized exchange through a partnership with Kyber Network as well as a Web3 browser that allows you to interact with decentralized applications directly from the Trust Wallet app.
How secure is Trust Wallet?
Trust Wallet offers a number of security features to help protect your crypto holdings against hacking and theft. These features include:
- Private key. You’re not required to store your private key on Trust Wallet servers but instead get to store the key locally on your device.
- Anonymity. You can download, install and set up Trust Wallet without having to provide any personal details. Trust Wallet also promises to never store any of your private data.
- Open source. You can review Trust Wallet’s code online, and the app has also been audited by security experts, Stateful.
- Backup facility. By backing up your Trust Wallet during the setup process, you can restore your wallet from an encrypted file in less than 30 seconds.