No matter your investment strategy in cryptocurrencies, you must be fully informed about how they work. The ecosystem is new and complicated already; you don’t want to be left out because you’re already unaware of all the ins and outs. Finally, you need to choose the perfect Bitcoin wallet to get your money working for you. Start your trading journey with Wealth Matrix.
There are three categories of wallets. The more popular ones are software wallets such as Electrum, available on all major platforms and through an iOS app. These wallets store your private keys on the device where they’re installed, so if you lose your phone or it gets stolen, your funds will be gone forever. Hardware wallets have a physical device to protect your private keys from hackers’ access. These devices come in different forms (such as USB sticks) and are often used with paper-and-metal offline “cold storage” systems to ensure security against data breaches.
Tips for choosing the perfect bitcoin wallet:
When choosing a Bitcoin wallet, you must ensure it’s secure. Always check to ensure your wallet has a multi-signature feature in case anyone gains access to your device or account.
Check the fees:
Different Bitcoin wallets will have different fees associated with them, so when selecting a wallet, pay attention to the fees. For example, some wallets will charge transaction and currency exchange fees if you buy or sell bitcoin within that wallet’s system. On the other hand, some wallets won’t charge extra fees on top of cryptocurrency network miner fees, making them cheaper than buying and selling directly through cryptocurrency service providers.
Custody of cryptocurrency assets:
Usually, the cryptocurrency exchange inbuilt wallets do not provide the custody of digital currency assets to the users by not revealing the private keys to these users. These wallets are known as custodians. Therefore, you must ensure that the cryptocurrency wallet you choose is non-custodial.
Identify the “gap” in the system:
The type of Bitcoin wallet you choose must fit your current needs and suit your situation. When searching for a Bitcoin wallet, it’s essential to try to identify which type of wallet might not meet your exact requirements because some of them may have several useful features that you might like but aren’t the best for what you are looking for. Therefore, it’s worth spending time on different aspects of wallets before settling on something, so you can get the one that provides what you’re looking for.
The wallet must have 2-factor authentication:
When selecting a Bitcoin wallet, the wallet you choose must have 2-factor authentication. If it doesn’t have a 2-factor authentication feature, it will be easy for your Bitcoins to get stolen by hackers. The rule of thumb to selecting the bitcoin wallet with a 2-factor authentication feature is that if you cannot protect your bitcoins from being stolen by keeping them offline in cold storage, then don’t even try to invest in Bitcoins at all.
No third-party involvement:
The first and foremost reason for choosing an open source Bitcoin wallet is the user’s control over their funds and privacy. Open source wallets don’t require third-party involvement, meaning no one else can access your funds or freeze your account. The most important thing to look for when it comes to a Bitcoin wallet is that it must have backup and recovery options for the users in case of any kind of data loss.
Multisignature wallets allow users to choose two or 3rd party signatures to verify the transactions sent from that particular Bitcoin wallet address. More levels of verification will provide some extra protection against frauds and scams.
Ease of use:
When selecting a Bitcoin wallet, it must be easy to use, easy to understand and simple enough even if you are an absolute beginner who knows nothing about cryptocurrencies or has never used a bitcoin before.
In general usage, Bitcoin wallets are split into three categories: web-based or desktop wallets, hardware wallets, and mobile wallets. While each type of wallet serves different purposes ranging from offering more privacy to being more secure, there are two leading wallets for a Bitcoin user to consider: online and offline.
Some examples of popular online bitcoin wallets include Blockchain and Coinbase. In addition, some companies have developed hardware products that can be used as offline Bitcoin storage devices, such as TREZOR or Ledger Nano S.