Which Bitcoin wallet should you start with?
How to choose and create a secure Bitcoin wallet
A good Bitcoin wallet is more hands-on, but has less hands in it
Before you can start using Bitcoin, you will need a good wallet. Here we will cover the main types of wallets, and how to pick one that suits you.
Step 1: Choosing your wallet
Leather or fabric?
Choosing your Bitcoin wallet is more about function, not fashion. You can use an app, a storage device, or even a physical note.
To simplify the differences between wallets, we’ll compare them to traditional banking services.
Option A: Mobile App
A mobile app is like your chequing account. These are the easiest way to access the ‘Bank of You’.
Android: Coinomi, Samourai
Iphone: BreadWallet
Desktop: Exodus, Electrum
These software wallets are best for smaller, frequent transactions.
Just like a classic chequing account, there’s nothing to stop you from holding big funds in your app wallet. But it’s better not to. You may lose your phone, or someone else may access your device. If you’re confident that you only need an app wallet, skip down to Step 2.
Option B: Storage Device
A storage device is great as a savings account. It is a secure place to store larger amounts & multiple currencies.
These are perfect for protecting larger funds. These external devices keep your wallet off the cloud, and require PIN entry for every use. If someone enters the wrong PIN too many times, the device will wipe itself. Don’t worry, your funds can be recovered. We’ll cover that in Step 2.
*Both of these wallets are available for purchase at YAP Exchange.
Option C: Paper (or steel) Wallet
This physical print of your Bitcoin account information is cash-in-hand — unless you add a passphrase.
These wallets are best suited for users who want to keep their funds fully controlled. While these have less technology involved, caretaking for a printed wallet is a challenging process.
With these wallets, accounts can be accessed by anyone with the printed codes. As such, they must be handled with care. Printed wallets can be useful for gifts, safety deposit boxes, or ‘hiding under your mattress’.
There are services that let you create a paper wallet encrypted with a personal password. These will mask your private spending key using a phrase you choose. Even if someone gains access to the slip of paper, they will be unable to use the funds without the password.
Caution: if you lose all copies of your paper wallet, your funds will be unrecoverable. If your access depends entirely on a paper wallet, losing it will mean the end of your access. A lost paper equals lost money.
Step 2: Creating your secured wallet
A Chainalysis study estimated that 2,500,000 BTC had already been lost by mid-2017.
To keep your Bitcoin out of this statistic, you must backup your wallet before using it. Fortunately, most software and hardware wallets help you create a backup, in the form of a recovery passphrase.
This unique, ordered list of 12–24 random words can be used to recover your account, even if you lose your device. After all, your device doesn’t store your funds — it stores access to your funds.
Write down the 12–24 word phrase and store it somewhere where it will not be seen. This is a key to your private key, and your private key gives control to your account and your funds. Whoever knows the phrase can control your funds — so treat it with absolute care.
Some online services offer to manage your wallet (and your private key) for you. If you choose to keep your funds within exchanges such as Coinbase or Binance, be aware of the risks. These include withdraw delays, withdraw limits, and even hacking attacks against their company servers.
Remember the adage: “Not your key? Not your coin.”
Step 3: Ready to go!
You’ve chosen and secured your wallet — now let’s try it out.
Receiving Bitcoins
Your wallet will show your receiving address as a long string of numbers and letters. Give this address to anyone trying to send you Bitcoin.
In some cases, it is easier to share the QR code (the visual representation of your address). Devices will read this noisy square as the exact same string of numbers and letters.
Sending Bitcoins
To send bitcoin, get the address of the recipient. You can enter the address manually or scan the QR code.
Remember: it is not possible to cancel a send. Always double check the address and amount before confirming your submission.
This article is part of the YAP Exchange’s Bitcoin Essentials series.
Feel free to contact us or visit us in store to learn more about managing your Bitcoin storage, security, and trading.
