There are a myriad of tools for using Bitcoin and other cryptocurrencies, but not all of them have the same characteristics or the same advantages and disadvantages. Everything you need to know about wallets, with a selection of the best multi-crypt wallets. The wallet (or “electronic wallet”) is the basic tool for using cryptocurrencies. It is used to store, send, receive and sometimes exchange cryptocurrencies. Choosing it well is therefore crucial, since a wallet provides both the safe and everyday management tools of your money (from this point of view, the wallet can be seen as the future of banking type services).
While crypto-currencies are spreading and becoming more democratic, the wallet is therefore the central element of the crypto universe, much like the web browser is for the Internet. It must be understood that there is a considerable number of wallets. Each of the 2000 existing crypto-currencies generally has its own wallet, and the main crypto-currencies (Bitcoin, Ethereum, Litecoin in particular) can be managed by innumerable wallets and services.
While searching the Web, you will find lots of distinguishing between different types of Bitcoin wallets. Hot or cold wallet, multisig or not, on mobile or desktop, online or offline. These distinctions are interesting, but often obscure the main feature of wallets: the concrete way in which addresses are created that house your bitcoins (Bitcoin Zero Wallet), and who has control. From this point of view, there are in fact two (and only two) types of Bitcoin wallets: those based on services that manage the keys (called “custodial wallets “), and those that are self-controlled. itself ( “non-custodial” ). In the first case, saying that you have a Bitcoin wallet is a misnomer: you actually have a right to access Bitcoin wallets created and maintained for you by a third party. In the second case, you own (fully and independently) your own Bitcoin wallet (and the bitcoins therein).
Without going into technical details, the difference lies in the way cryptographic keys associated with bitcoins and cryptos are created. If you want to make an analogy, imagine that you rent a safe in a bank. Whenever you want to access your safe, you provide proof of identity and a signature, and the banker gives you the key to open the safe (key you must leave before leaving). Thus, you do not really own the safe and its keys, you just have a right of access, as part of a service offered by the bank. In the second case (non-custodial), not only are you really the owner of the safe (who is at home), but you are the one who makes the keys, and no one but you have access to these keys.
Services (wallet custodial):
Advantages: In appearance simple and without headache, you rely on a company that manages for you your cryptos. You just have a login and password to access your corners which are, in practice, stored on the wallets of this company.
Disadvantages: You do not control anything (especially not the transaction or withdrawal fees). These services are a favorite target of hackers: loud hacking has taken place in the past and when it does, you risk losing everything. Some services, including crypto-banks but also many exchange offices, require a lot of documents and proof of identity (and are also likely to inform the authorities about your assets).
In this category are the vast majority of traditional exchange offices (exchanges), companies offering banking-type services ( Xapo for example) and probably some other solutions of “hosted wallets”.
User controlled wallets (non-custodial wallet):
Advantages: You are the only master on board. Your bitcoins and cryptos are at home and no one else has access to them. Purses require nothing at startup, and you become “your own bank”. In general, it is very easy to import the contents of a wallet into another wallet.
Disadvantages: You must respect some rules and good practices. For example, if you have not saved the keys of the purse stored on your mobile and you lose your mobile, you lose (forever) access to your bitcoins (Bitcoin Zero Wallet). In this category are: “physical wallets”, paper wallets and many Bitcoin and multi-corner electronic wallets.