Over the past decade there has been a surge of interest in the cryptocurrency Bitcoin. Many people are talking about it and the underlying Blockchain technology it runs on as “the internet of money”.
There are varying levels of understanding of this new technology. Some people are still wondering what the Bitcoin use cases are while others have made the jump and begun investing. But, even for these more experienced users, questions often arise about how they should store their new investment. Today we will look at three different options for how t o best secure bitcoins.
Online wallets are probably the most convenient of all Bitcoin wallets. All you need is a connection to the internet and the service will take care of the rest for you. Checking your balance becomes as easy as logging in to check your email account: all you need is a username and password.
As you would expect, the gains you receive from convenience mean that online wallets are a little bit less secure than other Bitcoin storage methods. They can be hacked just like your email can and, in the end, you are relying on the 3rd party service to take care of the money for you.
Coinomi (iPhone & Android)
Mobile wallets bring many of the convenient factors of an online wallet but pack them into a simple app for your mobile phone. One nice perk of these apps, even though they are attached to your phone, many come with a “recovery phrase”. This usually consists of a string of unique words. If you lose your phone, you can recover your Bitcoins by utilizing this phrase via a new download of the same app.
While recovery phrases do work, they can be tedious to keep track of. If you lose the phrase and lose your phone, your Bitcoins could be lost forever. Another big concern is security. Mobile phones can be targets for hackers and they are constantly available for attack because many people take their phones everywhere and connect to public WiFi.
Hardware wallets are widely regarded by the Bitcoin community as the most secure of all the methods for storing coins. This is because they are designed to operate without the need for an internet connection. Thanks to this design, they are free from hacking attacks. They are even designed so that, if an attacker has physical access to the device, the bitcoins within can not be accessed. Finally, like a mobile wallet, they utilize recovery phrases in case the hardware is lost.
The only real cons to hardware wallets is that they are more difficult to use. Without the easy access to the internet, new bitcoin users are often left scratching their heads at how exactly you can spend and receive transactions with a hardware wallet. The good news is that the process is simple once you learn it, but there is a curve that takes time. However, this is very much a skill worth mastering.
When you are dealing with Bitcoin or any other cryptocurrency, learning the best way to secure your coins is essential. Beyond the examples above, Bitcoin.org has a great run-down of the different options that we highly recommend you check out. Take your time, learn, and make a good decision!