Instead of choosing a wallet at random or the first one you hear about, you should ask yourself a couple of questions and understand what that wallet offers. Unfortunately, Google is FULL of articles suggesting Brokers or Exchanges by pretending they are wallets. Whoever does this earns on whoever signs up on these platforms, so they have every interest in advising you that way. In reality, there is a huge difference between wallets and exchanges/brokers .
We’ll show you the key features to consider when choosing a wallet to store your funds. Are you ready?
How to choose a Bitcoin wallet: the 3 fundamental questions to ask yourself
By definition, wallets are the tools you use to store bitcoin and other cryptocurrencies .
Wallets, therefore, are NOT exchanges or platforms that let you trade , although these platforms also offer you custody of the funds (which are in their hands though).
However, there are dozens of different wallet models to choose from, each with its own advantages and disadvantages. How can you decide for yourself then?
Contrary to what you might believe, the process of choosing a wallet is much more intuitive than you imagine ; in fact, there are only 3 important distinctions to make:
- Cryptocurrencies supported by the wallet (Bitcoin only or multi-currencies)
- Wallet custodial e non-custodial
- Hot wallet and Cold wallet (hot and cold wallets)
In the rest of the article I will show you these 3 distinctions (you can also find my insights) and then I will show you some Bitcoin wallet lists with which you can’t go wrong.
1 – Cryptocurrencies supported by the wallet
What cryptocurrencies does the wallet support?
Some wallets allow you to store multiple cryptocurrencies while others only allow you to store Bitcoins.
Although a rather remote possibility, this choice adds some relative risk.
Storing multiple cryptocurrencies in the same wallet adds fragility to your overall custody model. Therefore, you want to keep bitcoins in wallets that only support bitcoins and not mix them with other cryptocurrencies.
2 – Choose between Non-Custodial and Custodial wallets
A fundamental question to ask yourself when choosing a wallet should be “ but is this a custodial or non-custodial wallet? ”
Non-Custodial wallets make you the only one who has control over the Bitcoins or other cryptocurrencies you hold in them.
Custodial wallets, on the other hand, are intermediaries that offer custody services and usually let you trade. A bit like the banks where you keep your money.
This is why the difference between custodial and non-custodial wallets is fundamental. Because it’s a bit like asking yourself: “ Do I want to be the only one to control my funds or not? “
As you’ll see in a minute, there may be reasons why you don’t want to be the only one in control of your funds. The important thing is to decide it consciously.
Bitcoin gives you absolute power over your money. Then you decide whether to use this power or not.
3 – Choose between Hot Wallet and Cold Wallet
This is the third distinction to make in order to consciously choose a bitcoin wallet. The reason is well known to computer scientists:
Any device connected to the internet inherently carries the risk of being attacked. For this reason, wallets are defined as hot and cold on a scale that depends on the contact of the wallet with the internet.
The more contact you have with the internet, the greater the risk you incur.
The wallet is considered hot when this link is direct, while it is considered cold when this link is distant or absent.
Therefore, when you choose a wallet (and decide how much to keep inside it) you NECESSARILY need to understand whether it is a hot or a cold wallet because it defines how much risk you accept to bear.
Practical advice for choosing the best Bitcoin wallets
So far we have seen that, basically, to choose a crypto wallet you need to understand if you will be the only one who can manage the funds and how close the wallet is linked to the internet.
But in practice, how can you choose a wallet for Bitcoin or for your cryptocurrencies?
The answer can be found by evaluating YOUR situation:
How much value do you want to keep
What do you intend to do with it in the future
If you have a few tens/hundreds of equivalent value in euros to keep, a smartphone or computer wallet offers you satisfactory security guarantees.
However, your situation may change over time. Another good rule is therefore to use multiple wallets and distribute your total cryptocurrencies.
By following this rule, you will keep on the exchange or hot wallets the amounts that you know you want to use frequently or that you would otherwise accept to lose, while you will keep the bulk of your funds safe in cold wallets.
31 responses to “The 3 Fundamental Questions For Choosing A Bitcoin Wallet”
Great article! I have a question though, what are the advantages of using a hot wallet versus a cold wallet?
Hi EmmaG23! Thanks for your question. Using a hot wallet provides the advantage of quick and easy access to your funds, as it is connected to the internet. This makes it convenient for daily transactions and trading. However, due to its online presence, there is a higher risk of potential security breaches. On the other hand, a cold wallet, which is offline, offers enhanced security as it is not susceptible to online attacks. Cold wallets are great for long-term storage and keeping your funds safe. However, they may not be as convenient for frequent transactions. It’s important to evaluate your needs and consider the level of security and convenience that suits you best. Hope that helps!
Great article! But I have a question: Can you recommend any wallets that are both non-custodial and support multiple cryptocurrencies?
Hi BitcoinEnthusiast! Absolutely, I can recommend a few wallets that meet your criteria. One popular option is Exodus, which is a non-custodial wallet that supports multiple cryptocurrencies including Bitcoin, Ethereum, and many more. Another great choice is Atomic Wallet, known for its user-friendly interface and support for various cryptocurrencies. And if you’re looking for more advanced features, you can check out Coinomi, a non-custodial wallet that offers support for a wide range of coins. Give these a try and let me know if you have any more questions!
Great article! It’s important for beginners to understand the difference between wallets and exchanges. I learned the hard way and lost some funds because I didn’t research properly. Now I know better!
What are the advantages and disadvantages of a hot wallet versus a cold wallet?
A hot wallet and a cold wallet have their own advantages and disadvantages.
A hot wallet, also known as an online wallet, is connected to the internet and allows for easy accessibility. It is convenient for frequent transactions and quick access to your funds. However, being connected to the internet also means it is more vulnerable to potential cyberattacks.
On the other hand, a cold wallet, also known as an offline wallet, is not connected to the internet. This makes it highly secure against cyber threats. Cold wallets are ideal for long-term storage as they provide maximum protection for your funds. However, they may be less convenient for frequent transactions as you need to connect them to the internet to access your funds.
So, the main advantage of a hot wallet is convenience, while the main advantage of a cold wallet is security. It ultimately depends on your needs and preferences. I hope this helps!
Great article, but I still have a question. Can you recommend a specific wallet that supports multiple cryptocurrencies?
Sure, crypto_guru_23! If you’re looking for a wallet that supports multiple cryptocurrencies, I would recommend checking out the “Exodus” wallet. It’s a user-friendly wallet that supports various cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and more. Plus, it provides a sleek and intuitive interface for managing your assets. Give it a try and let me know if you have any more questions!
Great article! I always had trouble understanding the difference between wallets and exchanges. This article cleared it up for me. Thank you!
This article provides a great guide for those looking to choose a Bitcoin wallet. It’s important to do your research and understand the differences between wallets and exchanges. I appreciate the emphasis on the 3 fundamental questions to ask yourself. Thanks for the valuable information!
Great article! Can you recommend a specific wallet that supports multiple cryptocurrencies and is non-custodial?
Sure, JohnSmith86! Based on your requirements of supporting multiple cryptocurrencies and being non-custodial, I would recommend you to check out the “Exodus” wallet. It supports a wide range of cryptocurrencies including Bitcoin, Ethereum, and many more. Moreover, it gives you full control of your private keys, ensuring your funds are secure. Give it a try and let me know if you have any more questions!
Great article! It’s crucial to be aware of the differences between wallets, exchanges, and brokers. Many people get confused and end up signing up on platforms that aren’t actually wallets. Trusting the wrong platform can lead to losing funds. Keep up the informative content!
Can you explain the difference between a hot wallet and a cold wallet?
Sure, AlexanderSmith123! A hot wallet is a wallet that is connected to the internet, making it more convenient for frequent transactions. It is like carrying cash in your pocket. On the other hand, a cold wallet is offline and not connected to the internet, offering more security for long-term storage of your cryptocurrencies. It is like storing your valuables in a safe deposit box. I hope this clears up the difference for you!
Great article! It’s important to do your research and ask yourself these fundamental questions before choosing a wallet. I’ve made the mistake of using a platform that pretended to be a wallet, and ended up losing my funds. It’s crucial to understand the difference between wallets and exchanges. Thanks for shedding light on this topic!
Great article! It’s important to do your research before choosing a wallet. I’ve seen so many people get scammed by brokers pretending to be wallets. Trustworthy wallets are key for keeping your funds safe.
Great article! It’s important for everyone to be aware of the differences between wallets and exchanges. I’ve learned the hard way that not all platforms offer the same level of security. It’s definitely worth taking the time to do the research and ask the right questions before choosing a wallet. Keep up the good work!
I couldn’t agree more with this article. It’s crucial for anyone entering the world of cryptocurrency to understand the difference between wallets and exchanges. Many newbies make the mistake of signing up for platforms that claim to be wallets, only to find out later that they have limited control over their funds. It’s important to ask these fundamental questions and do proper research before choosing a wallet. Keep up the informative articles!
Great article! I have a question about the difference between custodial and non-custodial wallets. Can you explain that?
Hi Jenny06, glad you enjoyed the article! When it comes to wallets, the main difference between custodial and non-custodial wallets is who has control over your funds.
In a custodial wallet, the wallet provider holds the private keys and is responsible for securing your funds. This means that they have control over your assets. It can be convenient for beginners or users who prefer to rely on someone else to handle their security, but it also means that you have to trust the wallet provider with your funds.
On the other hand, non-custodial wallets give you full control over your private keys. You are the sole owner of your funds and responsible for their security. While it requires a bit more technical knowledge and responsibility, non-custodial wallets offer greater security and privacy since you are not relying on a third party.
I hope this clarifies the difference for you! Let me know if you have any more questions.
Great article! It’s really important to understand the difference between wallets and exchanges/brokers. Choosing the right wallet is crucial for the security of your funds. Keep up the good work!
Great article! It’s crucial to ask these questions before choosing a wallet. So many people are misled by platforms pretending to be wallets. Educating users about the differences is important to prevent them from falling into traps. Keep up the good work!
Great article! I couldn’t agree more with the importance of asking yourself these questions before choosing a Bitcoin wallet. It’s unfortunate that there are so many articles promoting brokers or exchanges as wallets. People need to be aware of the key features and differences between wallets and exchanges. Thanks for providing this valuable information!
I completely agree with the author. It’s important to do your research and ask these fundamental questions before choosing a Bitcoin wallet. There are so many options out there, but not all wallets are created equal. It’s crucial to understand the differences between wallets, exchanges, and brokers to ensure the safety and security of your funds.
As a seasoned investor in the cryptocurrency space, I completely agree with the importance of asking these fundamental questions before selecting a Bitcoin wallet. The distinction between wallets, exchanges, and brokers is crucial to avoid falling into misleading traps set up by profit-driven entities. I appreciate the focus on educating readers about the key features to consider in securing their funds. Well done!
Are you suggesting that some articles online purposely mislead readers into confusing wallets with exchanges? How can one distinguish between them effectively?
Choosing a Bitcoin wallet can be a challenging task for many. It is crucial to do thorough research and ask the right questions before making a decision. The distinction between wallets and exchanges/brokers is often overlooked, but it plays a significant role in the security and control of your funds. I appreciate the article shedding light on the key features to consider when selecting a wallet. Looking forward to learning more!
Are there certain wallets that prioritize security over ease of use? How can one effectively assess this balance when choosing a Bitcoin wallet?
Choosing a Bitcoin wallet can be a daunting task, but it’s crucial to do your research and ask the right questions. Many online articles blur the lines between wallets and exchanges, ultimately serving their own interests. It’s important to understand the difference and choose a wallet that aligns with your needs and goals.