By ERIC ROSENBERG, thebalance.com
While the concept of Bitcoin may be new to some people, this well-known cryptocurrency has been around for more than a decade. Bitcoin is one of many digital currencies that have become fairly common holdings among tech-savvy households.
Proponents of cryptocurrencies argue that digital currencies are easier and safer, and come with better privacy than traditional currencies. Because of its limited supply, Bitcoin has shown up on some people’s radar as an investment opportunity as well. However, it should be noted that cryptocurrencies are still risky investments.
If you understand the risks and you’re ready to move forward, the following best Bitcoin wallets can serve as good options for storing your bitcoins.
Best Bitcoin Wallets of 2020
- Coinbase: Best Overall
- Trezor: Best for Hardware Wallet for Security
- Ledger: Best Hardware Wallet for Durability
- SoFi: Best for Beginners
- Robinhood: Best for Free Buying and Selling
- Edge: Best for Mobile
- Exodus: Best for Desktop
Coinbase
Coinbase is one of the easiest ways to buy, sell, and hold cryptocurrencies. With Coinbase, you can connect a U.S. bank account and easily transfer dollars in or out of your wallet. You can use those dollars to buy Bitcoin and other cryptocurrencies.
This digital exchange and online cryptocurrency wallet provider is great for people new to Bitcoin. It makes buying and selling very similar to buying and selling stock through your brokerage account. Coinbase wallets can hold more than 20 cryptocurrencies including U.S. dollars and the USD Coin pegged to the dollar.1
Another great feature is Coinbase Earn, which gives you free cryptocurrencies in exchange for watching videos and taking quizzes.
If you use Coinbase, watch out for high fees and costs. There are flat transaction fees plus a spread Coinbase charges when converting between currencies. Those can add up quickly. Also, while they are definitely not a common occurrence, Coinbase has experienced outages in the past that left users unable to buy or sell.
Type of wallet: Mobile and web
Purchase cost: None
Incorporated exchange: Yes
What We Like
Easy to start
Best known cryptocurrency exchange
Strong security track record
What We Don't Like
High transaction fees
Past incidents of downtime
Trezor: Best for Hardware Wallet for Security
Just like cash in your wallet, if someone steals your cryptocurrencies, you are probably out of luck. After high profile cryptocurrency hacks and losses in the past, it’s wise to keep a strong focus on the security of your cryptocurrency.
The Trezor hardware wallet is a device you store your bitcoins on. It plugs into your computer or smartphone. The device has a small screen you can use to manage your secure connection. Current models sell for $55 to over $500 depending on which one you choose. The cheapest version, a black or white plastic device called the Trezor One, is an incredibly secure device that includes multi-factor authentication and supports more than 1,000 digital coins.
Just make sure you never lose your Trezor or your Trezor password, otherwise your bitcoin could be gone for good.
Type of wallet: Offline hardware for desktop and mobile devices
Purchase cost: $55 and up
Incorporated exchange: Yes
What We Like
Ultra-secure offline storage
Supports more than 1,000 currencies
Easy-to-use touchscreen
What We Don't Like
Complex setup for less tech-savvy users
Cheapest version has fewer features
Ledger: Best Hardware Wallet for Durability
The Ledger Nano X and Ledger Nano S are hardware wallets that keep your bitcoins safe in an offline device. About the size of a USB flash drive, Ledger devices connect to your phone or computer to store and access your digital holdings. The device is surrounded by a stainless steel cover, which makes it very durable.
With the included Ledger Live software, you can check your balance, and send and receive currencies. Ledger supports over 1,200 digital coins and tokens, so you are far from limited to Bitcoin. Ledger Live even supports coin staking, in which you can earn rewards based on your balance.
The basic Ledger Nano S and Bluetooth-enabled Ledger Nano X cost $59 or $119, respectively.4 Nano S supports up to 20 currencies at a time while Nano X holds up to 100 at a time. Both use highly secure chips similar to the ones used in a chip-based credit card or passport.
Type of wallet: Offline hardware for desktop and mobile devices
Purchase cost: $59 and up
Incorporated exchange: No
What We Like
Extremely secure offline storage
Supports many currencies
Highest-end version includes Bluetooth
What We Don't Like
Complex setup for less tech-savvy users
No incorporated exchange
SoFi: Best for Beginners
SoFi is a financial company that offers banking, investing, lending, and other products. Within SoFi Invest, you can buy, sell, and hold bitcoins and other cryptocurrency. There is a $1 minimum to open an account.5 When buying crypto, SoFi charges up to 1.25% of the transaction as a markup.
As of May 2020, SoFi supports five different currencies. That’s not as impressive as some of the digital wallet providers and dedicated crypto exchanges that offer hundreds or more. But the most popular coins are supported. SoFi Invest supports Bitcoin and four other cryptocurrencies.5
SoFi offers a great user experience and works well for crypto beginners. It’s good for buying and selling, but not as much for transfers to other wallets. Advanced users may find the platform and trading system at SoFi limiting. Fees are average.
Type of wallet: Mobile and web
Purchase cost: None
Incorporated exchange: Yes
What We Like
Easy to get started
Manage investments and crypto with one account
Many additional free finance tools and features for customers
What We Don't Like
Limited currencies available
Robinhood: Best for Free Buying and Selling
Robinhood started as a free stock trading platform and has expanded to include Bitcoin and other cryptocurrencies. Robinhood is both a wallet (to store currency) and an exchange like Coinbase (to buy/sell currency), so everything is in one place. However, you can't transfer coins to and from Robinhood with another wallet.
Robinhood is a mobile-first platform but has a desktop version, too. And what really sets Robinhood apart is that it’s completely free to use. There are no commissions when buying or selling Bitcoin.
Robinhood customers can currently buy, sell, and hold Bitcoin, as well as six other cryptocurrencies.
Also, it’s important to note that Robinhood has experienced some outages in the past, so it may not be quite as reliable as some other wallet providers.
Type of wallet: Mobile or web
Purchase cost: None
Incorporated exchange: Yes
What We Like
No transaction cost
Quick to get started
Manage on desktop or mobile
What We Don't Like
History of downtime
Limited currencies available
Edge: Best for Mobile
Edge is a mobile wallet for iOS and Android devices. You can quickly install it from the Apple App Store or Google Play Store to get up and running in just a few moments. Edge allows you to buy, sell, and exchange fiat (“real” money) and cryptocurrency from your phone.
One username and password gets you into your secure Edge account. Once logged in, you can access more than 30 different coins. These include top coins like Bitcoin, Ethereum, Ripple, Stellar, Tezos, and more.6
Integrations with the app allow you to do more than just exchange currency, which makes it a strong choice for mobile users. It taps into blockchain services that allow features like discounted gift cards. Its login system is very secure—so secure, in fact, that some other online sites use it as an authentication system.
Type of wallet: Mobile
Purchase cost: None
Incorporated exchange: Yes
What We Like
Easy to get started on mobile
Two-factor authentication supported
Support for more than 30 popular currencies
What We Don't Like
No desktop/web interface
Exodus: Best for Desktop
Exodus is a software wallet that lives on your laptop or desktop computer. There’s a mobile app version available as well. This digital wallet includes an attractive user interface that puts many investor-focused tools in your hands.
The desktop-first wallet, which also integrates with Trezor wallets, turns your digital currencies like Bitcoin and many others, into a portfolio with graphs and charts. You can exchange and store coins right on your desktop or in the app. It supports more than 100 different digital assets, too.7
There is no account setup, so your currency and wallet are just for you. Exodus gives you a private key to access your bitcoin, as well as other useful security tools to keep your assets as safe as possible. Remember, though, that your private key is stored on your computer. Make a backup of the key to ensure it’s safe just in case your computer is stolen or dies.
Type of wallet: Desktop and mobile
Purchase cost: None
Incorporated exchange: Yes
What We Like
Desktop and mobile versions available
Integrates with Trezor
High-quality user interface
What We Don't Like
No two-factor authentication
Sometimes high transaction fees
How Do I Use a Bitcoin Wallet?
Bitcoin wallets act like a virtual wallet for your digital currencies. Just as you could put dollars, euros, pounds, and yen in your physical wallet, you can put Bitcoin, Ethereum, Litecoin, and Ripple in your Bitcoin wallet.
Some wallets featured in this list allow you to buy and sell bitcoins with an integrated platform. Others are only made for storage. There are pros and cons to keeping your cryptocurrencies online or in an offline wallet. It’s up to you to decide on the right mix of security and convenience for your needs and comfort.
How Much Money Do I Need to Invest in Bitcoin?
If you’re looking to buy Bitcoin, it’s important to understand the costs and risks involved. There is no minimum purchase rule for digital currencies, but some exchanges have minimum order sizes and, when you take fees into account, small purchases may not always be practical.
Examples of places you can buy small amounts of Bitcoin are Coinbase ($2), Robinhood (0.00001 BTC minimum purchase), and SoFi (minimum $10 purchase).
It’s not a good idea to put more money into Bitcoin than you can afford to lose. While many people made millions when Bitcoin skyrocketed to nearly $20,000 in 2017, the price dropped below $3,500 one year later.8 Bitcoin is highly volatile and not backed by any specific company or government.
Pros & Cons of Digital Bitcoin Storage
Pros
Securely store Bitcoin and other digital currencies
Ability to buy and sell coins to take advantage of market fluctuations
Flexibility to keep your coins online and accessible, or offline and ultra-secure
Cons
Some exchanges charge high fees
Setting up some wallets can be complex
Hardware wallets require an initial cost
How Should I Choose a Bitcoin Wallet?
The best bitcoin wallet for your needs depends on your comfort with technology and your goals. Here are some of the best types of wallets for different situations:
Advanced users: Hardware wallets offer the best security and people very comfortable with computers should have no problem navigating the additional complexities. Trezor and Ledger are great choices for this group.
Beginners: Consider starting with an online wallet that charges very low fees for transactions. SoFi, Robinhood, and Coinbase are best for this group. If you have a strong investment background, SoFi, Robinhood, and Exodus are good choices.
Crypto enthusiasts: Consider a dedicated cryptocurrency wallet that gives you either added security or enhanced features. Coinbase, Trezor, Ledger, Edge, and Exodus are solid options.
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