After the first step of buying your first Bitcoin, you’ll need a Bitcoin wallet to secure your Bitcoin. Knowing which Bitcoin wallet to choose is the second most important step in becoming a Bitcoin user. Since you are investing money in Bitcoin, choosing the right Bitcoin Wallet is an important step for you and should not be taken lightly. There are many wallets to choose from, including the official wallet from Bitcoin.com.
In this guide we will guide you through the key points in our checklist that we recommend before deciding on a Bitcoin wallet. Remember, these are just suggestions to help you make an informed decision. In the end, things can always change, based on the purse and the market. But doing your first homework is very desirable.
Security is paramount
Knowing that the purse is safe is important and should not be overlooked. If it’s a web wallet, should you always check if the site has HTTPS or HTTP? For it to have a secure protocol, it must be HTTPS. Does the wallet provide secure and strong logins? Does the wallet additionally offer two-factor authentication (2FA)? These are just a few things you should look at before making a final decision.
In addition to a secure wallet platform, check if the wallet offers a Multisig option. This is a preferred method to protect Bitcoins from theft and attacks. Multisig refers to requiring more than one key to authorize a Bitcoin transaction (multiple parties must spend the funds). An easily understandable analogy is a lock box that requires two parties with two different keys to open the lock box.
Own your Bitcoin
If you do not have access to the private keys for the Bitcoin in your wallet, you have no technical control over it. This is a very important factor when choosing a Bitcoin Wallet. By owning the private key you always have control over your Bitcoin and can move it in and out of your wallet at any time. This also allows you to secure your wallet outside the wallet service.
Does the wallet promote the reuse of addresses?
Is the wallet hierarchically deterministic (HD)? If so, that’s a plus, as HD wallets are always using new Bitcoin addresses, increasing user privacy. The privacy of Bitcoin users in using wallets has been an important issue over the years (see address reuse). Deterministic wallets are a step towards a well-rounded architecture and added protection for their users.
Is the wallet provider transparent on how it works and who it is, and more importantly, is the wallet code open source? If not, it’s hard to tell how the purse provider secures your Bitcoin. Open source code can be peer-reviewed and checked for vulnerabilities. Also, make sure the source code is up to date.
Is anonymity important to you? Do you need to register to use the wallet? Does it accept minimal registration information (e-mail only) to use the wallet? Is there a user verification process (Know Your Customer / KYC)? These are just a few things to consider before making a choice.
Is the wallet easy to use or is it confusing? Theoretically, it should be easy and not require too much experience to start with a new wallet. Think about how you will use your Bitcoin too. Maybe it’s a wallet designed specifically for mobile devices, or if you’re an advanced user, you can download a full Bitcoin client directly to your computer. Other options may involve a tougher approach, with wallet hardware devices that allow you to save your Bitcoin offline.
Secure your wallet
Backups are another important aspect of Bitcoin Wallets. Does the wallet provider offer a way to secure the wallet? Is the backup encrypted? Is a backup recovery process available and easy to use? You should explore these options before loading your wallet with Bitcoin.