Guide to Bitcoin Wallets Security, Top Rated and More
If you have been trading with Bitcoins, then you are certainly aware that Bitcoin wallets are important before you can buy or sell Bitcoins. The wallet is similar to that of a bank account and that it allows you to receive Bitcoins, store them there for quite some time and then send them to other Bitcoin users.
Remember that there are two main types of Bitcoin wallets and one is the software wallet which you can install on your computer or mobile phone. With this wallet, you will be in complete control of the security of your Bitcoins although sometimes, the software wallet can be a bit tricky to install and maintain. The second type of wallet is the web wallet, also known as the hosted wallet since it is being hosted by a third party. The web wallet is much easier to use although for this type of wallet, you should be able to put your full trust on the provider in order to maintain a high level of security in order to keep your Bitcoins protected.
BitGo is an easy to use, high-security multi-sig wallet, which protects your bitcoin from theft and loss. BitGo uses a 2-of-3 key model, where BitGo holds one key, the user holds a second key, and the third key is stored in a secure offline location as a backup. This means that users maintain full custody of their bitcoin, and BitGo cannot spend or freeze funds. If BitGo were ever to become unavailable, users would still be able to retrieve their bitcoin.
In addition to its secure multi-sig key model, BitGo’s wallets offer additional security features such as spending limits, multi-user access, address whitelisting, and audit logs. By upgrading to a premium account, users can also take advantage of the BitGo Promise, an insurance-backed protection plan against theft and loss.
Coinbase is a type of web wallet that is ideal for beginners. This is because it features a simple design and it comes with several useful features that help both beginners and prod with their Bitcoin exchange. Here is a detailed Coinbase Review.
By signing up for an account with Coinbase, you will be able to send and receive Bitcoins through the mail and purchase and sell Bitcoins directly from Coinbase. Its full featured mobile app is compatible with Android and allows users to have access to all account functions even when on the go.
The founders of Coinbase have a good reputation within the Bitcoin network and they are the leading Bitcoin wallets when talking about legitimacy and security. Above all, they are among the few Bitcoin companies that have never suffered a major hack from since it started its operation.
If you will not mind waiting for a couple of days for your Bitcoins to arrive, Coinbase is a great place to purchase your Bitcoins. They have the easiest platform to use and they are the cheapest as well. After you sign up for an account, you need to link your Coinbase account to your bank account so you can start buying Bitcoins. Coinbase charges only 1% for the service fee and you will receive your Bitcoins after the transfer coming from your bank account will be cleared.
Coinbase is also one of those Bitcoin wallets that double as a web wallet and a mobile wallet. This means that you can buy and sell Bitcoins wherever you may be.
Bitcoin Wallet for Android and Blackberry
Those who are in need of Bitcoin wallets that they can use even when they are on the go can install those wallets that are compatible with Android and Blackberry. There is now a version of the wallet which will work for both Android and Blackberry operating systems. This type of wallet is called the software wallet and you retain complete control over your Bitcoins when using this. The wallet also works great for those phones that can read QR codes as well as NFC, which makes transferring coins to another user's account easier. It is even much easier than writing a check.
Just make sure that you back up your wallet or you might risk all your Bitcoins if your mobile phone gets damaged. To back it up, simply make use of the Backup wallet feature that comes with the app.
If you want an easier and faster way to obtain Bitcoin wallets, all you will do is to access Blockchain.info. When you are on the site, you need to fill out the form and provide the information needed. Basically, Blockchain.info works like a web wallet similar to Coinbase, but it has a simpler setup and you can get access to your Bitcoin account even if you are traveling. Blockchain.info also provides several other services that are useful for all traders within the Bitcoin network.
Electrum is a type of software wallet that allows Bitcoin users to set up an account with high level of security. The software must be installed before it can be used, but the great thing about the software is that it is extremely easy to install. Users will then be given a phrase that consists of 12 words and this will be used to recover all of the Bitcoins in case the computer fails.
The Bitcoin wallets are also encrypted by default in order to protect your account against hackers and other fraudulent transactions. The software is compatible with OSX, Linux, as well as Windows operating system. This software is highly recommended for beginners in the world of Bitcoins since it makes trading with Bitcoins easier.
Another place where you can purchase your Bitcoins is through BitInstant. They are able to provide more than 700,000 in cash deposit locations since they have partnered with ZipZap. With BitInstant, you can get your Bitcoins in only a few hours although be prepared for a little more complexity and cost.
ZipZap also charges $3.95 for the handling fee on top of the 4% that Bitinstant will charge you, so it can be a bit expensive. Also, you need to remember that BitInstant does not work like Bitcoin wallets, so you may have to go through a deposit location and deposit your cash then wait for a little while. It may not have that great feedback, yet it is still one of the best places to purchase Bitcoins.
Another great place to purchase Bitcoins is through LocalBitcoins.com. But unlike your usual Bitcoin wallets, the website works just like a Craigslist for Bitcoins, allowing sellers and buyers in the same area to find each other and then meet up in order to trade Bitcoins for cash. Although this might seem like an easy and fast way to do, there are lots of risks involved on this type of transaction so it is best to exercise proper precautions.
Remember that you will be meeting with some strangers that you just met through the World Wide Web. It is therefore recommended that you meet up with them in a public place and in an area that is not very secluded. LocalBitcoins.com also features a rating system that can help you to easily find a trustworthy seller or buyer, so make sure to check the rating of the person you plan on meeting with.
Online Bitcoin Exchanges
You can also choose to exchange Bitcoins through the online Bitcoin exchanges. These websites work like Bitcoin wallets where you can store your Bitcoins as well as your dollars into your account and then use it later on to purchase Bitcoins in the market. This also allows you to trade Bitcoins in the same way that you trade stocks. The biggest disadvantage of using Bitcoin exchanges is that it can be a bit difficult to fund your account with dollars or transfer your dollars out right after selling the coins.
Camp BX is also recommended. However, the company has recently suffered a hacking attack on their site, so it is not advisable to deal with them for now. But as soon as they will be able to settle this issue, Camp BX is definitely a great place to acquire your Bitcoins, so better watch out for updates.
Just like Camp BX, Mt.Gox has also faced lots of controversies in the past. As a matter of fact, they have declared bankruptcy early this year and are no longer in operation as of this time. But before any of the Bitcoin wallets came into the picture, it is Mt.Gox that is considered as the best place to trade Bitcoins.
They offered the highest trading volume at that time. One of the controversies that Mt.Gox has faced has something to do with their Dwolla account, which was frozen because of improperly registering it as a money transmitter. Due to such crackdown from the government, Bitcoin users were not able to send to and from Mt.Gox their dollars.
Bitcoin is a currency without borders, thus, you can find several other wallets and many other exchanges that can help you in buying and selling your Bitcoins internationally. There are Russian based Bitcoin exchanges as well with a really great interface. You can also find an EU based Bitcoin exchange, which is the Bitstamp.
Aside from the Bitcoin wallets already mentioned, there are several other wallets that are ideal for beginners of the Bitcoin network to use. If you want something that is more challenging, then Armory would be a good choice. Their interface might be a bit complicated, but you can guarantee the highest possible security when you choose them as your wallet of choice.
Aside from Armory, another recommended Bitcoin wallet is the Bitcoin-Qt client. It is highly reliable and trustworthy and is extremely easy to use.
Spending & Earning Bitcoins
Sending Bitcoins is just as easy as merely copying and pasting an address. After that, you need to key in the amount that you want to send and then click on the option that says “send”. That's how simple it is. This might seem difficult for people who are familiar with providing credit card information when shopping online, but this method allows the sender to be able to have full control of the payment process.
The transactions are also irreversible and essentially, sending Bitcoins is like sending an email. You will put in the address of the person to whom you will be sending Bitcoins to and then there is no going back right after you click “send”. So just like with sending emails, make sure that you finalize your Bitcoin transaction before you click send.
Do not worry if the payment that you have sent to the recipient has not reflected yet. It might take a few minutes before the payment will be cleared, but this will also depend on the network as well as the Bitcoin wallet that you have been using. In most instances, the transaction will not be longer than ten minutes. There are also some Bitcoin exchange services that will require up to six confirmations which could take up to an hour before they will recognize your payment.
In order to receive Bitcoins, you must first choose a receiving address from the Bitcoin wallet you are using. Then provide it to the person who will be sending you Bitcoins and then wait for them to send the Bitcoins you have purchased. And as stated, it could take about ten minutes for the transaction to clear and to be confirmed by the Bitcoin network.
Any Bitcoins that you have is at risk to be stolen or be taken by a third party individual if the security of your Bitcoin wallet is weak. This can also happen due to computer failure. Therefore, it is highly advised to keep several backups in a highly secure area.
Just imagine that you have a hefty amount of money stored in a safe and that it is in a public area where everybody can readily access and the only protection it has is the combinations. If you think you can easily forget the combinations, then write it down on a paper and keep it somewhere safe and secure. This way, you can be sure that no one will be able to have access to it.
There are two ways that you can end up losing the Bitcoins in your Bitcoin wallet. First is when you lose your combinations, since the safe cannot be opened by anyone. And second, if someone stole the combinations and will then access your wallet and steal whatever Bitcoins you have there.