Bitcoin Keys and How to Store Them
Tags: Best Practices, Bitcoin, Bitcoin Wallet, Cryptocurrency Wallets, Cryptocurrency

If even the basic paper wallet sounds too inconvenient. it’s okay. There are friendlier options.

Web/App Wallets and Desktop Wallets

Phone apps and websites for storing your bitcoin are a great step up from storing it on an exchange. They are usually very easy to use and not very inconvenient. Non-custodial wallets also provide a very large security jump from storing your bitcoin on an exchange. Be absolutely sure to back up your seed, as unlike a password there is absolutely no way to recover it if it is lost. That means that if your phone is bricked or stolen, your kid throws it in the toilet, you reformat your computer, or you forget an encryption password you have no way of ever getting your bitcoin back if you haven’t backed it up elsewhere.

There are a variety of apps for storing your bitcoin.

The first class of options are Custodial Wallets such as freewallet.org. These are like exchanges in how they store your bitcoin; instead of you having the keys, they keep the keys and you have a login username and password though their website or app. Custodial wallets come with few benefits and most of the same risks as exchanges, although they do usually have more auditing and/or transparency in how they hold your funds. I do not recommend a custodial wallet for anyone unless you, in your own personal assessment, do not think you can be trusted to keep your seed safe. Remember the adage, not your keys not your crypto.

The second class of options are Non-Custodial Wallets, also often called software wallets or hot wallets. Some of these are much more reputable than others. Some are open source, some are not. Some have great and sleek interfaces, some don’t. Some only store one cryptocurrency, some can store hundreds of different cryptocurrencies. They are simple to set up — just download an app on your phone or a program on your computer or navigate to a website, write down your seed, and deposit some bitcoin with a few taps. A great step up in security over leaving your coins on an exchange or a custodial wallet, these apps are great as long as you backup your seed safely and choose a reputable one. Desktop apps generally provide somewhat superior security to phone and web apps because they are usually under more scrutiny and the veracity of the build is easier to verify, but this is not a very large difference. Web apps are comparable to desktop apps in the level of scrutiny they receive but could potentially be running different code every time you load the website and are much more likely to require re-entering your seed for one reason or another, so on the whole are also slightly less secure than desktop apps. Reputable phone apps, web apps and desktop apps, collectively software wallets, are where the majority of people should keep their bitcoin for minimum hassle with decent security.

Popular software wallets which I am not recommending, but appear to be reputable options include:

Exodus — A popular Android, Apple store, and desktop app

Coinbase Wallet — A popular Apple store app (distinct from Coinbase exchange)

Mycelium — A popular shared source Android app

Electrum — An old and popular free software desktop app

Shared source means you can read the full source code and compile it yourself, but the license does not permit you to modify and distribute yourself. Free software means you can read and contribute to the full source code, as well as modify and distribute it. Open source is an imprecise term that could mean anything from free software to shared source, and so I avoid using it here for clarity. I use it elsewhere in this article to denote software that is at least shared source.