Getting Started with Bitcoin Wallets

Bitcoin is growing in popularity - both in the number of people who use the cryptocurrency and in the number of companies that accept it - but getting started with Bitcoin can be seem like a daunting task. It’s not a tangible thing like fiat currencies; you need a digital wallet to keep it safe, and the jargon is impenetrable.

Bitcoin works in much the same way as dollars and pounds, the major distinction being that you control your money (not a bank or similar intermediary) and it’s not subject to things like inflation as a consequence. You don’t need to know anything about the technical side of Satoshi Nakamoto’s cryptocurrency (blockchains, mining, etc.) to use it.

Currency Exchanges

Bitcoin’s slight learning curve is the impetus behind the growth of bitcoin casino, a small corner of the internet that operates in Bitcoin exclusively. Some sites, such as Vegas Casino, offer the use of a Bitcoin ‘faucet’, which allows users to accrue their own cryptocurrency, as well as options for currency exchange.

That latter point – currency exchange – is the first step on your Bitcoin journey. You can buy and sell Bitcoin on sites like Cubits and Coinbase, with a single Bitcoin retailing for $706*. However, Bitcoins break down into individual units called Satoshis (0.00000001 of a Bitcoin), meaning that you don’t have to make the huge investment of a full coin.

Wallet Types

There are five different kinds of Bitcoin wallets: mobile, desktop, web, bank, and hardware. The first three (mobile, desktop, and web) simply describe the different ways you can access a Bitcoin wallet, and will likely be one of the first decisions you make as a Bitcoin beginner, while the latter two require a little more explanation.

Bank-type wallets work much like regular banks, in that a third party controls your money and there are options for things like debit cards. Hardware wallets resemble physical dongles and offer enhanced security by requiring the owner to ‘sign off’ every transaction with the press of a button.

A bit of advice here – avoid web-based Bitcoin wallets. While they might be convenient, they offer the lowest security of all, and your crypto-coins are only as secure as the weakest server in the company’s basement. If, for some reason, you must use a web-based solution, make sure it offers key encryption.

"bitcoin accepted here" (CC BY-SA 2.0) by Francis Storr

As a bit of an introduction to the world of Bitcoin wallets, here are three of the most popular Android and iOS apps out there. You’ll need to consider what you intend to use your Bitcoin for (mobile payments, savings, etc.) and the level of security you require before choosing a wallet. There’s nothing to say you can’t have several different ones though.

Coinbase

A strictly mobile or web-based app, Coinbase doesn't do anything revolutionary - it's just good at what it does. Coinbase has bank grade security and allows the user to set up accounts for Bitcoin and Ether. The app includes price tracking and conversion rate functionality, as well as remote locking to deter fradulent use.

Breadwallet

Breadwallet is a decentralized wallet, meaning that it uses a direct connection to the Bitcoin network to improve transaction speed rather than routing communications through (hackable) company servers. It’s arguably the most popular mobile wallet on the market, a trait that owes a lot to its usability.

Copay

One of the highest-rated Bitcoin wallets available, Copay is a versatile solution that can be installed on most platforms (Windows, Linux, Android, iOS, etc.). It has support for multiple accounts and utilises the Bitcoin Payment Protocol to protect users from man-in-the-middle attacks.

*October 30th, an increase in value of $386 over last year.