Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.
A Bitcoin wallet is a software program used to store Bitcoin. It contains a public and private key that provides access to a unique Bitcoin address. By accessing this address, Bitcoin can be stored, transferred or withdrawn. There are wallets for desktops, mobiles and tablets, as well as specialized hardware wallets that can be used to store crypto offline. Think of Bitcoin wallets as a way to “store” Bitcoin—they’re the bank accounts of the decentralized web.
Why do you need one?
Bitcoin wallets are useful because they provide you with a valid Bitcoin address. Without a trusted address that only you have access to, you won’t be able to receive Bitcoin securely. And while you can store your Bitcoin on an exchange, you should have a personal wallet for larger sums. This is because exchanges are often unstable: in 2019 the Canadian company, Einstein Exchange collapsed despite owing customers $16 million.Buy and Sell Bitcoin, Ethereum, and over a dozen other cryptocurrencies with Wealthsimple. Sign up and Trade here.
That’s why, for instance, crypto enthusiasts worldwide celebrate #ProofOfKeys day, an annual event on January 3 where everyone is encouraged to withdraw their funds from the exchange to a wallet they control, to bring to light the fact that exchanges often aren’t so trustworthy or reliable. Since Bitcoin is a relatively new invention, regulation surrounding exchanges is still developing, and the remaining gaps threaten customers’ security. #ProofOfKeys day asks people to question whether the exchange they’re holding their Bitcoins on is solvent and to remind everyone of the dictum popularised by Bitcoin expert Andreas Antonopoulos: “not your keys, not your Bitcoin.”
Hardware or software?
Bitcoin wallets come in a variety of different forms. One of the most important distinctions is between hardware and software wallets. A software wallet uses a program that lets you store cryptocurrencies on its protocol. A hardware wallet is a physical object. Consider it like storing your crypto on a flash drive. Software wallets are often free, whereas a low-end hardware wallet costs CDN $38.74.
A software wallet will be sufficient for relatively small quantities of Bitcoin, but it is potentially less secure than a hardware wallet because there’s always the possibility that your account or computer can become compromised. If you have a large amount of Bitcoin, you may want to consider a hardware wallet.
Because a hardware wallet is a physical object, it doesn’t have to remain connected to the internet, it’s pretty difficult to hack into it. Though it’s safe from hackers, you must not lose it or forget your password. If you do, there’s no way to get your Bitcoin back. (Such was the case when the CEO of Canadian crypto exchange Quadriga CX, Gerard Cotten, died on a honeymoon with his wife in India. Over $250 million was stuck in a hardware wallet that only Cotten had access to. (Investors have questioned if Cotten died, or instead faked his own death to evade the authorities.)
Now that we’ve explored the advantages (and disadvantages) of Bitcoin wallets, let’s look at the best options available in Canada.
The best Bitcoin wallets available in Canada
The following are some great hardware wallets:
Accepts crypto payments while offline
Supports 1184 coins
Ledger‘s flagship wallet, the Nano X, is bluetooth enabled, meaning it can connect to other devices such as a mobile phone or laptop. Thus, the wallet owner has access to a complete transaction history of the account. Ledger pushes updates to the wallets frequently, useful when it comes to protecting against future attacks, should, for instance, hackers work out a way to get into the system via the wallet’s bluetooth function.
Older than Nano X—bugs have been smoothed out
Supports over 1000 coins
Ledger has a second hardware wallet, the Nano S, which is considerably cheaper than the Nano X. It’s an older product, but tried and tested—it’s sold over 1.4 million units globally since its inception. The main difference between these two wallets is that the Nano S does not feature Bluetooth capability. To connect to another device you’ll have to use a USB cable.
Supports over 700 coins
Trezor is one of Ledger’s main competitors, and its wallets are also supported in Canada. Trezor’s premium option, the Model T, is intended to be used without the need for another device. While the wallet is set up via USB connection, the device can be unlocked without this connection, as PIN entry and passphrases can be entered on the Model T. Although the price might be a deterrent, the model is one of the most comprehensive available, with extensive security features.
Works on Windows, OS X and Linux
Similar to Ledger, Trezor has a cheaper, older wallet which still works well if you don’t want to break the bank. The Trezor One shares many of its features with the Model T, but it needs to be connected to another device to work and its screen is a primitively monochromatic. It lacks some of the flash of the Model T, but it’s still a reliable and secure wallet.
Easy recovery without loss of private keys
KeepKey is a far cheaper alternative to the bigger brands like Ledger and Trezor. Since it doesn’t have an operating system, its creators claim that the wallet is much more resilient against viruses or other malware, which are usually installed on operating systems. The wallet also supports currencies other than Bitcoin. It even features its own exchange, so you can exchange currencies on the wallet. KeepKey works on PC, Mac, Linux, and Android so you shouldn’t need to worry about device compatibility. However, the wallet supports far fewer assets than its competitors. Those are Bitcoin, Bitcoin Cash, Bitcoin Gold, DASH, Dogecoin, Ethereum, and Litecoin. Granted, these are some of the most popular coins, but it falls behind its competitors offerings.
Free (mining fees)
Wide coin support
The UK-based wallet is available in Canada and is completely free, although outgoing transactions are charged according to a variable rate. This rate depends on the cryptocurrencies involved and is used to pay miners who verify transactions by adding it to the blockchain.
Free (network fee)
Dedicated Bitcoin “cold storage”
User retains private keys
If you plan on only holding Bitcoin—and don’t care about any other cryptocurrencies—Armory is a free wallet which is suited to long term storage. It has a host of security features such as multi-signature transactions—where multiple people have to sign off on a transaction at the same time—and GPU-resistant encryption (GPUs can perform cryptographic operations with a tiny amount of memory. Armory increases the memory of their keys to protect against these GPUs). Like Coinomi, fees are variable and depend on the quantity of Bitcoin in a transaction.
Free (network fee)
In 2018, Binance acquired Trust Wallet, a mobile Ethereum wallet. It works on both Android and iOS. The wallet has the backing of one of the largest exchanges in the world. You can also use the wallet to take part in “staking.“ With staking, you put some of your crypto up as a “stake,” which is then used to validate transactions. This generates a passive income, a little like interest on a bank account.
Free (miner fees)
Easy access to popular exchange
Coinbase, one of the most popular crypto exchanges by volume, also has a software wallet. Instead of storing the keys to your address on the exchange, the keys to your address are stored on your phone. As with other software wallets, miner fees apply and if you buy cryptocurrencies with fiat currency, a transaction fee will also apply. The wallet can be used to pay merchants who accept cryptocurrency, and the funds held on the wallet can be easily transferred to the Coinbase exchange for use in trading.
There is, of course, one type of wallet that is neither software or hardware. These are paper wallets, where you store the private keys to your Bitcoin address on a piece of paper. This has the advantage of, potentially, absolute security—to get the key, someone would have to break into your house and find a teensy scrap of paper. Of course, you run the risk of losing the key yourself, so make copies and keep them somewhere you won’t lose them. This is a good option if you want to buy and hold Bitcoin offline, but don’t want to use a hardware wallet. It won’t work for crypto trading, but for long term cold storage it’s considered one of the best options.
Final things to remember
Find the right wallet is important, sure, but also keep in mind several things before you load up on Bitcoin.
First, make sure you’re always careful with your security information, and keep your hardware wallets in sight—losing them also means losing your investment. Still, for large amounts of money, consider using a hardware wallet, as software wallets are more vulnerable to hacking.
Second, the market is volatile, and you must be comfortable with potentially taking significant losses before making any investments. And remember: just because you store your Bitcoin in a wallet, it doesn’t mean that the price won’t fluctuate. Only invest what you can afford to lose.
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