A Bitcoin or an altcoin wallet is exactly what it sounds like, a place to store your cryptocurrencies. In the early days when Bitcoin exchanges were still popping up left and right, hackers and internal employees of Bitcoin exchanges would easily hack their way into people’s accounts and steal millions of Bitcoins away. Since then great security measures have been put in place to stop those kinds of thefts. Things such as 2FA/MFA, encrypted private keys, passphrases, and cold storage.
With every wallet, you are given an address of 30+ digit combination of numbers and characters. That is the address you would use to receive Bitcoin.
Now there are two kinds of wallets, one called hot storage and one called cold storage. Let’s take a look at the differences.
Hot storage means it’s being stored by someone else and it is accessible anytime. That means you can deposit and withdraw at any time. Most exchanges you buy from offers at least some form of hot storage for convenience. And as for security, they usually they enforce 2FA/MFA when you try to withdraw and enforce some kind of passphrase to lock your account more secure.
There are also hot storage companies that offer app wallets and web wallets who are not exchanges. Let’s look at a few options.
My favorite website based wallet is called StrongCoin. The wallet provider not only offer 2FA/MFA but they also encrypt your personal passphrase so that they don’t even have the ability to unlock your wallet even if they wanted to. They also offer you a complete printout of all your transactions so that you are assured there is no funny business.
Exodus is a Bitcoin and Altcoin desktop wallet with beautiful design and an intuitive interface. Exodus is an independent wallet that stores the private key on your machine and not on any external server. This means you have full control (and full responsibility) for your coins.
Exodus allows you to accept Bitcoin, Ethereum, Dash, Dogecoin and Litecoin. Just go to “Wallet” and choose the cryptocurrency you want. Afterward click on “Receive” to view your Ethereum address. Because this is on your desktop, remember to encrypt and backup the wallets appropriately or you might end up losing all your coins if your computer crashes.
As for cold storage, there are two kinds. One that you store on your own computer (or device) and one that third-parties offers.
Hardware wallets are secure, offline USB devices. Hardware wallets use 2FA or MFA by making sure that in order to access a wallet you prove your identity by something you have (the physical wallet) and something you know (the PIN code for the wallet). If you’re serious about Bitcoin, you need to get a hardware wallet.
Hardware wallets are immune to malware and nearly impossible to hack. The screens also provide extra security by verifying and displaying important wallet details. Since the hardware wallet is nearly impossible to hack, its screen is more trustworthy than data displayed on your computer.
The Best (and supports Bitcoin Cash)
Ledger Nano S is one of the first to market and simply the best hardware wallet out there. It has a sleek design, intuitive user interface, a wide support of coins (Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Dogecoin, Zcash, Dash, Stratis) and most importantly an attractive price tag.
For instructions on how to get Bitcoin Cash on your Ledger, check out these instructions.
If you are looking to get a Ledger Nano S with next day or two day air, then check them out on Amazon.
TREZOR is the oldest hardware wallet on the market. It has a nice design, a very easy to understand user interface, and it supports Zcash, Dash and Ethereum aside from Bitcoin (ETH is supported through an external wallet called MyEtherWallet). The price on the TREZOR is higher than the Nano S and is often sold out. Therefore it’s in 2nd place.
The second kind of cold storage is when an exchange offers it as a service. For example,Bitsdigit offers you the ability to store your Bitcoin & alt coin on cold storage which they call it the “vault.” It has several advantages:
- TIME DELAYED WITHDRAWALS – Withdrawals from your vault have a 48 hour window during which they can be canceled.
- MULTIPLE APPROVERS – Joint accounts can be used for extra security, requiring multiple approvers to initiate a withdrawal.
- OFFLINE STORAGE – 98% of bitcoin is stored totally offline, in geographically distributed safe deposit boxes and physical vaults.
A lot of advantages but also some disadvantages. All withdraws take at least 48 hours so you can’t get your money out fast and no matter what your valuable coins are in someone else’s hands.