How to Setup a Bitcoin Wallet

When you decide to invest in Bitcoin, the first thing you need to understand is the importance of having a proper Bitcoin wallet. A great digital wallet is necessary for storing and managing your Bitcoin securely. Next, you’ll have to decide what type of Bitcoin wallet is the most suitable for your individual needs as a crypto trader. In this article, we’ll introduce you to the basics of digital wallets, discuss different wallet types, and provide you with the best practices for setting up the wallet of your choice.

What Is a Bitcoin Wallet?

Generally, a digital wallet is a software or a physical device that allows users to store, exchange, and keep track of their BTC and other cryptocurrencies. Unlike fiat money, Bitcoin can’t be stored physically, so the wallet actually stores something known as a private key.

A private key is an automatically generated set of characters that works as a password. Private keys grant you full ownership of your wallet and give you the authority to buy, sell, and transfer your Bitcoin. Therefore, whoever is authorized to access this information, has access to your digital assets as well. If you somehow lose access to that address, you won’t be able to control your funds by any means.

Setting up your Bitcoin wallet depends on the type of wallet. Due to the growing popularity and expansion of Bitcoin, there’s a wide range of Bitcoin wallets available on the crypto market today. Basically, they fall into three main categories:.

  • Online Bitcoin wallets (hot wallets)
  • Software Bitcoin wallets (hot wallets)
  • Hardware Bitcoin wallets (cold wallets)

Paper Bitcoin wallets were once considered one of the safest Bitcoin cold storage, generated with a key program and printed out on paper as two character strings and two QR codes. However, they were omitted from this list since they’ve become technically obsolete and unpopular with new digital trends.

Online Wallets

Online or web wallets are free and require an internet connection. Technically, they don’t differ from any other online platform we use on a daily basis. All you need to do is select a wallet, create an account, and follow the instructions on the screen. .

Online wallets are set up through a web browser, from any device, without any restrictions. Web wallets are convenient and intuitive but the very fact that your private key is kept on the provider’s server makes them extremely unreliable in terms of security. Therefore, we highly recommend that you avoid keeping large amounts of Bitcoin in online wallets.

Pros:

  • User-friendly;
  • Easily accessible from any device.

Cons:

  • Web wallets are most vulnerable to hacking attacks, viruses, and other online frauds;
  • Unsuitable for large amounts of Bitcoin.

Software Wallets

Software wallets are also classified as hot storage as they require internet access for executing transactions. However, unlike web wallets, they’re set up by downloading the app either on your desktop or mobile phone, so private and public keys are stored on your device. The same rule for online wallets applies to the software ones: do not keep a large amount of Bitcoin on them. Just imagine that a software wallet is like the purse you carry when you go shopping at a grocery store, not the bank locker where you keep your life savings.

From a security point of view, desktop wallets are a slightly safer alternative to online wallets, though they’re still vulnerable to hacker attacks or malware. Additionally, their platforms tend to be way more advanced than mobile wallets in terms of design and functionalities.

Mobile wallet apps are available on App Store or Play Store for free download. They’re perhaps the most convenient wallets for storing small amounts of Bitcoin. Mobile wallets can be a perfect choice if you use Bitcoin for buying purposes, as your smartphone enables you to scan the QR code directly at the register. It goes without saying that they’re becoming more and more popular in the contemporary crypto world.

Pros:

  • Simple set up;
  • Easy-to-navigate interface that provides clear instructions.

Cons:

  • Relying exclusively on a personal or portable device is not the most secure way to store your Bitcoin.

Hardware Wallet

Hardware wallets are the most secure way of storing your Bitcoin as they hold your private keys offline, in a physical device complemented with plain software. In order to set up a hardware wallet, you need to plug the device into your computer and follow the instructions provided by the manufacturer. There are some advanced versions of hardware wallets that have separate screens to execute transactions and prevent exposure of sensitive data on the internet. Some of them can even be paired with a desktop application, combining the hardware’s security and the software’s user-friendly interface. However, the added security comes at a price. Hardware wallets cost between $50-$200, depending on the features.

Pros:

  • Suitable for large sums;
  • Long-term solution;
  • Safe investments.

Cons:

  • Some people find hardware wallets difficult to set up as a result of their basic software configuration.
  • They can be an expensive investment for some traders.


How to Set Up a Bitcoin Wallet

How to Set Up a Hot Wallet

We’ll use Exodus as an example of how to set up hot wallets. Exodus is considered to be the best wallet overall for 2021 and is available both as a mobile and a web (online) app.

  1. Download the app from Play Store/App Store for mobile use or from their official website for desktop use.
  2. Once you’ve installed it, you’ll be given a choice between two activities: Get Started or Restore Wallet. As a new user, click on Get Started to create a new wallet.
  3. Next, you’ll be diverted to the wallet page where your token details are displayed. On this page, you’ll get details about the asset’s name, trading volume, portfolio value, etc.
  4. Go to Settings to turn on the Add toggle button against Bitcoin.
  5. Here you can also find all Bitcoin-related operations: send, receive (share your public address or QR code), buy, or exchange.
  6. Under Token Price and Balance, you’ll find Bitcoin market trends and prices within a specific time frame that you select.

Some other popular Bitcoin hot wallets include Electrum, Wasabi, BTC.com, and Mycelium (mobile only).

How to Set Up a Cold Wallet

Our top pick among cold wallets is Trezor. Even if you’ve never come across this type of hardware, the process of setting up the Trezor wallet won’t take you more than 15 minutes.

  1. Open the Trezor wallet box carefully while ensuring that the security seal on the parcel hasn’t been damaged.
  2. Plug the wallet into your computer using a USB cable.
  3. On the little screen, you’ll see a Lock icon followed by an instruction that directs you to trezor.io/start.
  4. On their website, you will find out how to control TREZOR PIN and the recovery seed.
  5. Next, you’ll be directed to wallet.TREZOR.io, where you’ll need to install an extension, either TREZOR Chrome Extension or TREZOR Bridge, depending on your operating system.
  6. For security purposes, there will be no previously installed firmware. Go to Yes, Install to initiate the firmware installation for the first time, and click Continue.
  7. Reconnect the Trezor wallet and after plugging it in again, write down a name for your device. You are all set to go!

Some other popular Bitcoin cold wallets include KeepKey, Bitlox, and Ledger.

A Few Words Before You Go...

We hope you found this article helpful in your search for the perfect Bitcoin wallet for your trading needs. Now that you have a much better understanding of digital wallets, you can carefully consider their features, prices, interface, and what’s more, the level of security they can offer before you make your final decision.

We hope this article will help you choose the most suitable cryptocurrency wallet for your Bitcoin buying and selling needs on MyBTC.ca.

Published: 2021-03-18

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