Last updated: January 23, 2019
Yes, there are 5 different types of bitcoin wallets available across technology platforms today. Each of the 5 different types of bitcoin wallets has a purpose and use case. In this post we will share the value added of eachbitcoin wallet and share uses cases and examples for each bitcoin wallet. So you can determine which is the best bitcoin wallet for you. Now, lets jump right into the 5 different type of bitcoin wallets.
There are 5 different types of bitcoin wallets
Each types of bitcoin wallets works very well. Understanding your personal needs is is absolutely essential for selecting the type of bitcoin wallet to use. You do not want to use the wrong type of bitcoin wallet for your need as it may result in missing functionality or security risks. The goal to selecting the best type of bitcoin wallet is to match your personal needs with the correct type of bitcoin wallet. Odds are you will use multiple different types of bitcoin wallets to fit your lifestyle. Now lets jump into describing the 5 different types of bitcoin wallets to help you understand which are the best bitcoin wallets for you.
Mobile wallets - the first type of bitcoin wallet
Mobile wallets are apps downloaded on your phone from popular app stores like Google, Microsoft and Apple for your iPhone and Android phones. Like their name, mobile apps are best used when on the go on your mobile device. There are two popular mobile wallets Copay and CoinSpace that are supported across Android, IOS and Windows phones.
A mobile wallet use case and example
Traveling overseas is a good use case for a mobile bitcoin wallet. Bitcoin can be loaded to your mobile wallet and used in case of an emergency or everyday purchase to buy hotel, airfare, food and drink. A mobile bitcoin wallet is the modern way to stash a couple hundred in your ‘zipper belt’ for safe keeping. Although I suspect those savvy enough to take a mobile bitcoin wallet with BTC with them when they travel also have a few hundred USD in their belt zipper too!
Online wallets - the second type of bitcoin wallet
Online bitcoin wallets are hosted online traditionally only a login is needed for authentication. Most online wallets have multi-factor authentication by means of an e-mail or text message of special codes to confirm authentication with your existing user id and password. No apps or downloads are needed for your phone or laptop which make access easy because all that is needed is an internet connection. The downside to an online wallet can be security local to the device you are using or the wallet.
Online bitcoin wallet use case and example
Crypto exchanges are examples of online wallets in addition to BTC.com, BitGo and Coin.Space. Buying .5 BTC on an exchange like Gemini is a use case for an online wallet. You purchased bitcoin from USD and your bitcoin will sit in the online wallet of the exchange. This is fine for trading, however long term holding or storage is not the designed purpose of an online wallet. Online wallets are to be used short-term on and off of exchanges and in situations for quick access to your bitcoin and crypto.
Please note, many online wallets and exchanges do not allow access to your private keys. Coinbase is an example of a great exchange to buy or sell crypto however you cannot access your bitcoin private keys and that may be of concern for many people who like to know they have ownership of thier private keys. Do check your specific online wallet provider to determine if you have access to your private keys. This is a critical piece of information to understand when storing bitcoin in your online wallet. Always remember, when understanding the 5 different types of bitcoin wallets: if you do not hold your private keys in your possession you do not own your bitcoin.
Paper wallets - the third type of bitcoin wallet
Paper wallets are old school and printed on paper and physically stored. The design and watermarks have become very attractive and this type of wallet is great for long-term savings or investment holding.
Paper wallet use case and example
Paper wallets are best used for cold storage and long term holding or HODL (hold on for dear life) as you own your private keys. This means you have bitcoin from 2016 on a paper wallet and you want to hold bitcoin until 2022 to begin spending your bitcoin. This is the ultimate use case for paper wallets. You do need to make sure the paper is safe from fire, water and other physical threats. A product called CryptoSteel can ensure your paper wallet private keys are water proof and fireproof.
Paper wallets are not good for every day use and transactions because of complexity to take a cold paper wallet online. Note, if you have done this multiple times like anything else its easy but it’s just not functional for buying online or getting coffee at Starbucks.
Desktop wallets - the fourth type of bitcoin wallet
Desktop wallets are downloaded to your mac or PC. They require installation of the wallets program and require program updates for your wallet to be current and function. A very popular and user friendly desktop wallet that allows access to your private keys is the exodus wallet.
Popular desktop wallet
Large amount of coins supported and best of all you own your private keys
Desk top wallet use case and example
The best uses for desktop wallets are mid-term storage and when using a crypto exchange when trading crypto. A desktop wallet like the exodus desk top wallet is very good for coins with limited wallet availability as desktop wallets traditionally support a large variety of coins and tokens. Desk top wallets are not good for travel and when on the go unless you have your laptop with you but even then a mobile wallet would better serve you.
Hardware wallets - the fifth type of bitcoin wallet and the most secure crypto wallet
Hardware wallets are small hardware devices that are connected to a laptop, Mac, PC, iPhone or Android to securely store private keys, send or receive bitcoin and make trades on exchanges directly from your hardware device. Hardware wallets like Ledger Nano X and Trezor Model T offer maximum security for your bitcoin and crypto. The key security benefits of hardware wallets include: pin authentication, transaction approval, encryption and cold storage.
Hardware wallets use case and examples
Hardware wallets are best used for short, mid and long term storage. Hardware wallets offer maximum security for your bitcoin and cryptocurrency. A super choice for hold on for dear life, HODL. Large amount of crypto are best kept on hardware wallets. You can also exchange cryptocurrency within a hardware wallets for maximum protection from external risks. There is no need to send crypto to an exchange any longer. As you may know crypto theft and losses are rising rapidly as exchanges are being hacked daily for $2.5M USD on average.
Hardware wallets costs can range between $60 USD and $150 USD. The models closer to $60 USD are the Trezor One and Ledger Nano S. The hardware wallets that are closer to $150USD in price are the Trezor Model T and Ledger Nano X. These more expensive models provide the latest technology and features like color touch screens and Bluetooth enabled crypto wallet hardware along side of expanded coin support approaching the 1,000. All crypto wallet hardware allows for ownership of private keys, approval of transactions, encryption and cold storage, which are significant benefits over the other 4 wallet types discussed in this post.
Did you like this post about the 5 different types of bitcoin wallets? I hope you found the best bitcoin wallet for you and your lifestyle. Let us know what you think in the comments below.