Excerpt
I help you find the best Bitcoin wallet for your needs using my comprehensive checklist and recommendations. I discuss different wallet types, key security features, and the compatibility with other devices. Watch now to make an informed decision!
Transcript
The important thing is that you have the knowledge to know for which properties to look for in a wallet, and that’s why I want to tell you now about the principles that I have to find my perfect wallet. So it’s principles over knowledge in that sense. Yeah, so it’s not about the detail of what each wallet can do or whether the usability is better or not; it’s about the basic principles so that you know which wallet you want to choose for your purpose. Because the wallets are very different; they have different possibilities, different coins that you can use. Some are for the Lightning network; some are especially only for the Lightning network. But the question actually was regarding on-chain Bitcoin, and that’s why I’m talking about on-chain Bitcoin now. So the principles to choose a Bitcoin on-chain wallet that I suggest you to look for are: first, of course, you have to ask yourself which operating system are you using? Are you using an Android phone, an iPhone, are you using it on the desktop? Is it a Mac, Windows computer, or Linux? So that’s the first thing you have got to look out. Then, of course, you should always go for a self-custody wallet. And a self-custody wallet gives you 12 or 24 seed words. I prefer wallets that have only 12 word seeds because a 12-seed is basically secure enough, and you have fewer words that you need to store. Then the wallet should offer you a passphrase. A passphrase is an additional security that you can set on top of the seed, meaning the seed is the most important thing for you to secure your bitcoin. With the 12 or 24-word seed, you are always able to import that into a new wallet and to access your bitcoin. The passphrase is a security on top of that because if someone gets access to your seed words, to your seed phrase, they can import it into a wallet and send your money to themselves. A passphrase makes that much more difficult or impossible. A passphrase is an additional password that you can set and you can store apart it from the seed phrase, meaning if someone finds your passphrase, they can’t do anything with your bitcoin on the wallet. If they find the seed, they also can’t access your funds because they are missing the passphrase. So that’s quite a good opportunity to increase the security of your funds. The only problem is if you forget your passphrase, you can’t access your funds anymore. So from that perspective, you have an additional word or passphrase or secret that you need to keep safe. So you have to think about that yourselves how you are comfortable how you want to do that. Another property a wallet should have or has to have is a good fee customization possibility, meaning you can choose the fees for your on-chain transactions and set them as custom fees because then you can quite specifically say I want to use 15 sats per vByte on this transaction. Some wallets only give you options of fast, medium, or slow, but you can’t set the amount yourself. Then what’s of course also very, very important is the software for the wallet is open source? I always say look for open-source software; don’t use closed-source software. Why is this important? Because it’s basically the Bitcoin principle of transparency. A lot of people can look into the open-source code and check if there is any security hole or maybe a company wants to steal your funds. So use open-source software, and for open-source software, it’s also important that you verify the software, and you should look out if this is possible with the specific software. Then what’s the trust? What’s the proof-of-work that the vendor and the wallet have built in the last years? Is it a totally new wallet? You don’t know anything about the company or the people behind the wallet? Has the developing team built trust in the Bitcoin community or not? So the reputation is also important. Then I suggest if you want to use Bitcoin or only Bitcoin, then go for a Bitcoin-only wallet because each altcoin that is added to a wallet is an additional risk factor basically because the more code there is that needs to be maintained, the more possibilities for bugs are in the software, of course. So less complexity is better. So I prefer Bitcoin-only wallets or maybe wallets that also add Liquid or the Lightning Network. And of course, it’s important that your wallet gives you the opportunity to set a PIN or a password so that no one can access it when you lose your phone, for instance. Or you have to, or not have to, I mean it’s a very intense recommendation: please set a PIN for your smartphone or phone, and it shouldn’t be a biometric security but a PIN or a passphrase. And last but not least, if the amount of the funds you want to store gets into higher areas where you feel, “This is more likely my lifetime savings,” then you should obtain a hardware wallet. If you can’t obtain a hardware wallet, I suggest a mobile wallet because, in general, they are a little bit more secure than desktop wallets. Okay, so that were the principles. Now, my wallet recommendations as of July 2024. I’m talking about self-custodial wallets only. And for Bitcoin on-chain desktop, I think the Sparrow wallet is one of the best wallets ever, and you can also use it with a hardware wallet like the BitBox02. Then for desktop and mobile, we have the Green wallet from Blockstream. The Green wallet facilitates Bitcoin and Liquid, which is a sidechain of Bitcoin, and they are also building a self-custody Lightning wallet or node into the wallet, into the software, but this is still in experimental mode. And you can use the Green wallet together with the Jade hardware wallet, which is also from Blockstream, where you can secure your bitcoin and your Liquid at the same time. Then there is the OG wallet for Bitcoin for desktop and mobile, which is the Electrum wallet. It also offers self-custody Lightning. Last but not least, my favorite mobile wallet for Bitcoin still is the BlueWallet. It’s also available for desktop. And another wallet which is mobile-only and is one of the new of its kind is the AQUA wallet. The AQUA wallet is for Bitcoin on-chain and for Liquid and for Lightning, but Lightning is facilitated via Liquid, so it’s actually not a real Lightning payment, but you can send and receive Lightning payments, and it’s actually a great wallet or system, I would think, or idea to manage Bitcoin and Liquid together and Lightning for beginners and for people who want to save on fees or who don’t have the funds to pay higher fees because you can use Lightning and you hold it in self-custody because it’s Liquid, and Liquid is self-custody. It’s not totally self-custody like with Bitcoin because Liquid is a federation-based system with different signers, so you have to put a little bit of trust in these companies, but it’s still very secure. And I actually use Liquid. If you want to know more about Liquid, I have a video, a non-technical explainer of Bitcoin, Lightning, Liquid, and eCash on YouTube, and also in my talk at Adopting Bitcoin in Cape Town. The talk is called Own Your Future. I’m talking about possibilities to use Bitcoin, Liquid, and Lightning together and what these things are and how they relate to each other.
