Security is paramount when you invest in Bitcoin, you are in effect your own bank, there is nobody responsible for your Bitcoin other than yourself. To really own Bitcoin (or any other Cryptocurrency) you need to be in possession of your private keys. A Bitcoin Private key is the secret number that lets you send Bitcoin – with this key you have control of your Bitcoin. You should never, ever give out your private key to anyone or any program. Private keys need to be kept secret, this is different than a public key which is safe to share and allows coins to be received.
So you need to keep your Private key safe but how do you do that if you just bought Bitcoin on Coinbase or QuadrigaCX? The simple answer is you can’t. When you store your coins on an exchange they are in your control, you have passed that responsibility to the 3rd party. While storing your Bitcoin on an exchange may be easier it is not safer. Bitcoin exchanges can and do get hacked… frequently. Part of the problem with Bitcoin exchanges is they need to keep wallets online, to facilitate customers sending and receiving coins quickly, this plus the fact that they store large quantities of coins makes them a huge target for hackers. While it’s practical to keep some Bitcoin on exchanges try to limit your exposure and only keep small quantities and have the rest of your crypto in a wallet you control.
Fortunately for major coins like Bitcoin, Ethereum and Litecoin there are lots of options in safe and convenient wallets. I recommend once you have an amount of coin you’re worried about losing (maybe the equivalent of one week pay) to invest in a hardware wallet. A hardware wallet is a physical device that stores your private keys, they offer a great balance of ease of use and security. I would consider them the equivalent of a bank savings account or safety deposit box. For day to day transactions (if you are already living the Bitcoin dream :P) I recommend and Mobile Wallet on your Android or IOS device, these are less secure but much easier to use for everyday payments.
Hardware wallet options
Here are a few popular hardware wallets that you can buy to store your bitcoin or other cryptocurrencies.
Ledger Nano S
This is my personal hardware wallet, its small, supports many currencies and very secure.
- Small keychain size
- Supports many cryptocurrencies
- While I find the user interface easy, my 60-year-old father does not (sorry dad)
- Not usable with a phone
- Small device memory (Sometimes you have to remove/add currencies to free up space )
While these devices are secure if you buy one make sure that you either import your wallet seed or generate a new one. There have been reports of criminals selling hardware wallets with private seeds already generated, allowing them to steal your bitcoin.
Tezor offers a pretty similar product in terms of small package and security
- Small size with a larger screen
- Supports many currencies
- No as nice looking in my opinion
- Doesn’t support as many currencies as Ledger
- Higher price than Ledger
Bitcoin Mobile wallets
As great as a hardware wallet is they do require a computer to interface with, not practical if you want to buy a cup of coffee send bitcoin to a friend in the bar after one too many drinks (I may be a bit of an evangelist after a few drinks). Here are some popular multi coin mobile wallets.
Coinomi is my personal mobile wallet and I no complaints so far, plus it looks like they have just added beta access for Apple users which is great
- Lots of supported coins
- Free with ads (Generally not annoying)
- built-in Shapeshift and Changelly support which allows you to swap coins right in the app
- I have had a few issues with the QR code reader
- Lots of ICO ads which wile not intrusive could open up new users to questionable projects.
- Apple IOS is still in Beta
What devices and wallets do you use? Leave a comment below and I will try and update this list over time.