With great freedom comes great responsibility.

Below, you will learn the advantages and disadvantages of different types of digital wallets. You will also learn how to properly store your bitcoins and keep them secure. Bitcoin will provide an incredibly high level of security for your funds, as long as it's used correctly. If you have any questions, please feel free to email us directly. The Bitcoin ecosystem is constantly evolving; as time goes on, digital wallets will become even more secure and user friendly.





A digital wallet is a mobile app or computer software that allows you to send, receive, and store bitcoins. Every digital wallet consists of one or more pairs of public and private keys. These keys are what give you access to the bitcoins that you control. A digital wallet's public key is the public address used for sending money to that wallet; it works much like a email address that you give out to receive messages. The private key acts like your password; it allows you to send bitcoins (think email) from that address. Digital wallets are designed for all different kinds of devices and offer varying degrees of accessibility and security.


Advantages
Mobile wallet apps run on a smartphone or tablet and are the most convenient for daily transactions. Send and receive bitcoins by scanning QR codes with your device's camera. Some mobile wallets include bitcoin directories and local exchanges, showing you who is buying and selling bitcoins nearby.

Disadvantages
Mobile wallets store your private keys on your phone, so if you lose or damage your phone, and your wallet file is not backed up, you can lose access to your bitcoins. If you are using an Android device, malware can compromise the security of your wallet. Apple devices are much less susceptible to malware; however, the risk is still present.

Recommendations


Instructions
Download your wallet from Google Play Store or Apple App Store. It will take you through the set-up steps. If you are not automatically prompted to back up your wallet, be sure to do so manually by exploring your wallet settings.

Security Tips

  • Always make a backup of your wallet and store it somewhere safe. This will allow you to restore your wallet if you lose or break your phone.
  • Install Malwarebytes Mobile to protect your phone from malware.
  • Search Google to research how to identify if malware is on your phone.
  • Set up a PIN or password on your phone and mobile wallet to prevent unauthorized spending.
  • Enable full disk encryption if your phone offers it.
  • Only keep a small amount of bitcoins on your phone – treat bitcoins like cash, don't carry large amounts on you.

Advantages
You can access your bitcoins from any internet-connected device by navigating to a website. Several such online services are available, some of which can be synced across mobile and desktop wallets.

Disadvantages
Some web-based wallets, such as Circle and Coinbase, do not give you access to your private keys, eliminating some of the major benefits of Bitcoin. These companies are like banks -- they hold your money for you and can restrict access to your bitcoins. If their servers are compromised or damaged, you run the risk of losing your bitcoins.

Hybrid Wallets
Some web wallets such as GreenAddress.it offer "hybrid" web wallets. These wallets give you access to your private keys while also restricting themselves from having access to them.

Recommendations


Instructions
To create a web wallet, simply navigate to the wallet website of your choosing and follow their steps to create your wallet.

Security Tips

  • Web wallets should always be secured with a strong passphrase.
  • Enable two-factor authentication whenever available.
  • Do not use web wallets that don't give you access to your private keys.
  • If you choose to purchase bitcoins through Coinbase or Circle, be sure to transfer them to a secure wallet after you buy them.
  • If you choose to use a hybrid wallet, be sure to make backups. Your web wallet service should provide instructions for doing this.
  • NEVER store large amounts of bitcoin in a web wallet.

Advantages
Easily installed on any laptop or desktop computer. Always gives you access to your private keys and also offers advanced control of your bitcoins. Easily encrypted and backups are made simply by copying your wallet file once.

Disadvantages
Like mobile phones, computers are vulnerable to malware, which could allow attackers to access your wallet. Some desktop wallets are also full bitcoin clients, meaning that the entire bitcoin blockchain is automatically downloaded. This requires a substantial amount of hard disk space and a fast internet connection.

Recommendations


Instructions
Choose your desktop wallet and download and install the software onto your device. You will be prompted to follow set-up instructions and to create a passphrase. This ensures that even if someone has access to your computer, your passphrase is still required to access your bitcoins. To make a backup of your wallet file, navigate the toolbar menu until you find the save/backup option. Once saved, you can make as many copies as you want.

Security Tips

  • Choose a strong passphrase that can be easily memorized. If necessary, write down your passphrase and keep it in a safe place.
  • Make multiple backup copies of your wallet file to ensure that you don't lose access to your funds.
  • Install anti-malware software to better secure your computer system and files.

Advantages
The best balance between very high security and ease of use. A hardware wallet is a specialized, tamper-proof, hardware device that stores your private keys. It is able to sign transactions with your private key without ever connecting to the internet. However, you must still have an internet connection to send the transaction after it has been signed. Creating a gap between your private keys and the internet allows you to keep your bitcoins securely protected. Users can also make backups of hardware wallets on paper, which can be used to regain access to your bitcoins in case of damage, loss, or theft.

Disadvantages
Hardware wallets can be somewhat expensive. If you lose or damage your hardware wallet and don’t have a backup, you can lose access to your bitcoins.

Recommendations

  • Trezor is Windows, Apple, and Linux compatible.


Instructions
Purchase the device online and follow their included instructions.

Security Tips

  • Keep your hardware wallet in a safe place so that it won’t be vulnerable to damage or theft.
  • Make a backup of your hardware wallet. Trezor will provide you with step-by-step instructions.

Advantages
Created offline and never exposed to the internet, cold wallets are unreachable to online hackers. They can be saved on a USB drive or other digital storage devices, or can be printed on paper, carved into wood, or even laser-etched in metal. Copies can be made and stored in a personal safe or bank deposit box. This is the most secure way to store bitcoins.

Disadvantages
Paper and ink can degrade, and paper is relatively fragile. If you lose a cold storage wallet, you’ll never be able to access the bitcoins on it. In order to move the funds out of cold storage, one must expose the wallet to the internet to send the funds to a desktop, web, or mobile wallet, so cold wallets are intended for single use. See change addresses for more info.

Recommendations


Instructions
  Paper Wallet - Be sure to review our Security Tips before continuing.

    1. Download the ZIP file of the cold storage wallet from GitHub.
    2. Turn off your Internet connection. (Power off the modem.)
    3. Extract the ZIP file and open "bitaddress.org.html" in Safari, Firefox, or Chrome.
    4. BitAddress will ask you to create some randomness by either randomly typing characters into the form or moving your cursor around.
    5. You will be presented with your public and private keys and their respective QR codes.
    6. Click the ‘Paper wallet’ tab, and choose how many cold storage addresses you want to generate.
    7. Click the ‘Generate’ button. Two new alphanumeric keys and their respective QR codes will be created. The first one is a public key, which is an address you can use for receiving bitcoins. The second key is the private key, which is the one you use for retrieving the bitcoins.
    NOTE: At this point, the private key is unencrypted, which means that if someone finds it, they can access your bitcoins. If you don't want to encrypt the key, be sure to keep it in a safe place. To encrypt it, check the BIP 38 box, and enter a strong passphrase.
    8. Click the ‘Print’ button to make a hard copy.
    9. Reboot your computer and power cycle your printer before going back online.
    10. Make a note of the public addresses, or scan the public address QR code in your bitcoin app to deposit funds. You can also watch your public address through one of your other wallets or on blockchain.info.
    11. Accessing the funds on your cold wallet is called “swiping” or "sweeping" your wallet -- the equivalent of transferring the bitcoins from your cold wallet to a live wallet (like one listed above). You will always want to swipe the complete balance; it's not safe to attempt a partial swipe, because the remaining balance could go to a different change address.


Security Tips

  • There is no way to guarantee 100% that your machine is clean of malware, aside from a complete reformat, so you should use a clean operating system when generating your wallet. You can create a USB flash drive or DVD with a ‘LiveCD’ Linux distribution, such as Ubuntu. This site sells Ubuntu CDs with paper wallet software pre-installed.
  • Use BIP38 encryption to password-protect your private keys. Be sure to test decrypting the key.
  • Store paper wallets in a sealed plastic bag, laminate them, or print on waterproof paper to protect them against damage.
  • Store your cold storage wallet in a safe to protect it from theft and fire.
  • You could entrust your cold storage wallet with a solicitor, like the person who holds your last will & testament.
  • Store your wallet in several locations, with trusted family members and/or in deposit boxes.
  • Make backup copies of your wallet files to ensure that you don't lose access to your funds.
  • Always swipe the full amount off a cold storage wallet when you use it!

Advantages
Your public and private keys can be restored from a seed of random words that you alone, have memorized. This means that no matter where you are, as long as you remember this seed, you can access your bitcoins.

Disadvantages
Some brain wallets are generated with low entropy (randomness), making them very easy to compromise by thieves. Generating bitcoin keys requires a high level of entropy that is not easily achieved by humans. Also, forgetting your seed means that you will lose all access to your bitcoins.

Recommendations

  • Not recommended.


Instructions
See "Brain Wallets: The What and the How" and follow the provided instructions. If the instructions do not make sense to you, do not use a brain wallet!


Security Tips

  • Do not use a brain wallet unless you are 100% confident in your ability to create sufficient amounts of entropy.





Security Tips

  • Install MalwareBytes, free software that protects your computer from many types of malware. There is also a mobile app version.
  • Keep your computer's anti-virus software up-to-date.
  • Install HTTPS Everywhere, Disconnect, and AdBlock Plus on your devices.
  • Do not click on any suspicious links on the internet.
  • Do not download any suspicious software or files on the internet.
  • Keep your digital wallets updated to the newest version.
  • Keep your computer's operating system updated.
  • Don’t make wallets on new Bitcoin websites that you haven’t researched and found to be trustworthy.

  • Enable two-factor authentication (2FA) wherever possible. Bitcoin wallets, email addresses, and online bank accounts are the most common places you'll find 2FA security options. 2FA requires that the user provide a verification in order to allow access to the wallet or account. The verification code will be sent to your mobile device or email address, you'll then have to enter this code when you login.
  • 2FA adds a second layer of security on top of your passphrase.
  • To enable 2FA, check the security/privacy settings on your accounts and Bitcoin wallets. Some services may not offer 2FA.
  • Make backup copies of the initial verification code used for all of your two-factor authentication accounts.

  • Always choose unique passphrases; never reuse your passwords across multiple wallets.
  • Use an original sentence that is unique to you in some way.
  • 20 characters or more is recommended for strong passphrases.
  • Do not use famous quotations from literature, songs, holy books, etc.
  • Deliberate misspellings, inconsistent capitalization, and substituting letters for visually similar numbers or symbols is an easy way to strengthen a passphrase.
  • Use this website to test a passphrase that is similar in length to the one you're considering using. DO NOT type your actual passphrase into this website.
  • If necessary, write down your passphrases on paper and keep it in a very secure location.
  • Use a password manager like Last Pass to easily generate and save strong passphrases.

  • Back up your wallets in multiple locations on a regular basis.
  • Always create a passphrase for your wallet before making a backup.
  • Store your backups in safe place so they are not easily found.
  • Never store your backups online unless they are securely encrypted.

    Be suspicious of any Bitcoin websites or services that sound too good to be true. There are many investment scams, so it is best to ignore any unsolicited propositions. Some exchanges and centralized web wallets have suffered from security breaches in the past, and such services generally do not provide enough insurance or security to be trusted to hold large amounts of bitcoins. Most of the negative press that has been associated with Bitcoin has to do with Bitcoin exchange platforms who restrict access to your private keys. It’s important to note that the dangers in exchanges and online wallets are due to poor management and security practices, rather than with the Bitcoin protocol itself.

    Multi-signature Wallets
    The multi-signature feature requires two or more private keys to sign a transaction in order for it to be sent. Multi-signature wallets can be useful for contracts and business scenarios where the approval of more than one individual is necessary to release funds. It can also be used as a form of two-factor authentication, helping to prevent theft of funds. There are currently a few wallet providers that allow multi-signature transactions: Electrum, MultiBit, Armory, and GreenAddress.it. Refer to them, individually, for instructions.

    Cryptographic Sharing
    Split up your passwords using a cryptographic sharing technique, which allows you to share pieces of your password with trusted parties, to be recombined later in case something happens to you. Bitcoin Armory supports this capability natively with the Fragmented Backups feature. In fact, Armory's solution will allow users to combine multisig with their fragmented backup feature.

    Stealth Addresses
    Stealth addresses allow the recipient of a payment to generate a stealth code in place of a public address. This allows you to keep all your public addresses private, effectively making Bitcoin completely anonymous. This feature isn’t ‘user friendly’ yet and is still considered experimental. Currently the only implementation of stealth addresses is within Dark Wallet (a lightweight browser-based wallet that provides services including coin-mixing and stealth addresses. This software is currently not considered stable or safe for large amounts of money; use at your own risk).

    Coin-Mixing / Tumblers
    Tumblers or mixing services obscure the record and source of digital currencies by mixing your bitcoins with the bitcoins of other users. The coins are then distributed back to the individuals randomly, preventing people from tracking their source.
    Mixing services may themselves be operating with anonymity. As such, if the mixing output fails to be delivered or access to funds is denied, there is no recourse. Use at your own discretion.

    Virtual Private Networks (VPNs)
    Enables a computer to send and receive data across shared or public networks as if it is directly connected to a private network, benefiting from the functionality, security and management policies of a private network. A VPN is created by establishing a virtual point-to-point connection through the use of dedicated connections, virtual tunneling protocols, or traffic encryptions. You can purchase a VPN at Private Internet Access, but other options are also available. This article provides more information.

    Offline Transaction Signing
    This approach involves having two computers sharing some parts of the same wallet. The first one must be disconnected from any network. It is the only one that holds the entire wallet and is able to sign transactions. The second computer is connected to the network and has a watch-only wallet that can create unsigned transactions. Because the computer that is connected to the network cannot sign transactions, it cannot be used to withdraw any funds if it is compromised. Armory can be used to do offline transaction signing.

    Use a Dumb Printer for Paper Wallets
    Some advanced printers have internal storage (even hard drives) that preserve copies of printouts. This is a risk if someone gets access to your printer, or if you dispose of your printer. There is also the possibility that a smart enough printer can be hacked. Some viruses exist that rewrite the firmware of non-computer devices indirectly connected to the Internet. If this concerns you, don't use a fancy printer, and never let your printer have access to the Internet or to an Internet-connected computer.

  • Never make a transaction that you’re not absolutely sure about; Bitcoin transactions are irreversible.
  • Always double-check any sending or receiving Bitcoin addresses!
  • Check back with us. New tools, features, and services are constantly being developed to make Bitcoin more secure and accessible to the everyone.



For more information about specific wallets you can choose from, check out Bitcoin.org.
To learn more about storage and security best practices, Udemy’s free online course,
"Bitcoin or How I Learned to Stop Worrying and Love Crypto" is a great resource.

Become familiar with bitcoin by creating different wallets and transferring small amounts between them. Always remember that you are solely responsible for learning and adopting proper storage and security practices in order to keep your bitcoins safe.

Services

Resources

News & Events

    Follow Us