Responsibility

The first question you need to ask yourself is where your bitcoins, or more specifically, your private keys should be stored. There are a few different types of options.

Personal responsibility

This means that you have full responsibility yourself, and also full control. If you lose your keys they are gone but it is possible to keep backups in multiple locations to minimize the risk of that happening.

  • Hardware wallet. A hardware wallet such as Ledger or Trezor is the safest option for storing your bitcoins if you want to keep them secure as well as making transactions every now and then. This is because the sensitive information, your private keys, never leave the storage unit. They will never be stored, even temporarily, on your computer or your cell phone, where there is always a risk of malware or hacking. The only downside is that you need access to both your hardware wallet and a computer or cell phone in order to make transactions.
  • Your cell phone. Your private keys are stored on your cell phone. This is convenient since all you need is your cell phone, which you usually have with you anyway, but there is always a risk that someone could access the information. Your cell phone is connected to the internet which means that the risk of being hacked is always present.
  • Your computer. The pros and cons are similar to a cell phone with the difference that computers are even more susceptible to malware etc. It is also cumbersome to keep your computer around for making transactions when you are not at home.
  • Offline. You can print your private keys on a piece of paper, save them on a USB stick, engrave them in metal or pretty much anything you can think of. These methods are useful if you are just looking to store your bitcoins long term. The downside is that it makes it more difficult to make transactions.
  • Encrypted in the cloud. This is a kind of hybrid where the storage is handled by a third party, but encrypted so that they have no way of accessing your bitcoin. This is usually combined with a web based wallet or an app for a convenient user experience. Remember though that since the site cannot decrypt the information it is extremely important not to lose your password. Nobody can help you get it back, and that is why this is also sorted under "personal resposibility".

Delegated responsibility

This is when you let somebody else handle your keys so that you don't have to deal with trying to keep them safe. This is of course what most of us are used to, when having money at a bank. If you would lose your login information you still know that there is always a way to get it back as long as you can identify yourself in an acceptable way.

The downside of this has mostly to do with how much trust you have in your counterpart. Especially during the early years of Bitcoin there were plenty of shady web sites, whose only purpose was stealing people's money. There are also numerous examples of companies that, while being honest, lost customer funds in hacks. So be very careful when choosing to trust a company with your money.

Type of app

Regardless of how much responsibility you choose to have there are different types of wallets to choose from.  

  • Mobile app. An app on your iPhone or Android. This is the most obvious choice for people nowadays as it makes it simple to pay in stores or making other payments without having access to a computer.
  • Web app. Convenient if you want to be able to access your bitcoins from any computer. Usually these are of the "delegated responsibility" type but there are also options with personal responsibility and some that can be used with hardware wallets.
  • Desktop app. If your prefer to use your own computer there are several apps for Windows, Mac or Linux.

Time to choose

Now that you know what you need to consider, please check out the wallet page to find the wallet that suits your needs the best.

Latest articles:

Slide
More articles