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Bitcoin Wallets – Which, What, Why? NEBINION

Choosing the right Bitcoin wallet can be confusing, with so many options available. Hot or cold, custodial or non-custodial, hardware or software each type has its own purpose, security level, and use case. In this guide, we’ll break down different wallets, explain how they work, and help you decide which one suits your needs best. Whether you’re a beginner or an experienced user, understanding your wallet choices is key to keeping your Bitcoin safe and accessible.

Types of Bitcoin Wallets

Bitcoin wallets come in various forms, each suited to different needs and levels of security. Here are the main types:

Online Wallets: Access your Bitcoin from any internet-connected device through web-based services.
Software Wallets: Downloadable apps for phones, computers, or tablets, offering convenience and control.
Hardware Wallets: Physical devices designed for maximum security, keeping your private keys offline.
Paper Wallets: Printed private keys generated offline for cold storage and long-term security.

Choosing the Right Wallet

When selecting a wallet, consider these factors:

Mobility: If you need to make payments in person, a mobile wallet like Edge (Android) or Breadwallet (iOS) is ideal.
Usage Frequency: For frequent transactions, a software wallet offers easy access and usability.
Security Needs: Large Bitcoin holdings require secure storage—hardware wallets or offline solutions like Armory work best.
Combination Approach: Use a mobile wallet for daily transactions and a hardware or offline wallet for savings. Mixing wallets balances convenience and security.

Picking the right wallet depends on your specific needs, so choose wisely to keep your Bitcoin both accessible and safe.

Desktop Wallets

Desktop wallets are software applications installed on your Mac OS X, Windows, or Linux computer, offering varying levels of security, privacy, and functionality. Here are some of the most notable options:

Bitcoin Core

As the official Bitcoin client, Bitcoin Core functions as a full node, meaning it helps validate and relay Bitcoin transactions while maintaining a full copy of the blockchain. While not the most user-friendly due to slow speeds and limited features, it provides enhanced privacy, especially when routed through Tor—one of the best ways to use Bitcoin privately without relying on external servers.

Wasabi

Wasabi is an open-source, non-custodial, privacy-focused Bitcoin wallet designed for desktop users. It features Chaumian CoinJoin, a trustless coin-mixing technique that provides mathematically provable anonymity. Wasabi integrates Tor by default to enhance user privacy.

Armory

Known for its advanced security features, Armory is one of the most robust Bitcoin wallets available. While it may be intimidating for less technical users, it’s a great choice for both individuals and institutions handling large amounts of Bitcoin. Armory users have full control of their private keys and can set up a secure offline-signing process for maximum protection.

Electrum

Electrum is one of the most popular desktop wallets, valued for its speed and simplicity. It supports:

Cold storage, allowing users to keep an offline computer for secure transactions.
Tor integration for better privacy.
Multisignature wallets for added security.
Hardware wallet compatibility for seamless integration with devices like Trezor and Ledger.

Bitcoin Knots

An alternative to Bitcoin Core, Bitcoin Knots is a Bitcoin Core derivative that includes various enhancements and features backported from external developments. It offers greater flexibility and improvements while maintaining the reliability of the original client.

Each desktop wallet caters to different needs whether it’s privacy, security, or usability so choosing the right one depends on your specific requirements.

Mobile Wallets for Android

Android users have a variety of Bitcoin wallets to choose from, each offering different features tailored for privacy, security, and ease of use.

Samourai Wallet

A privacy-focused Bitcoin wallet inspired by Amir Taaki’s Dark Wallet. It features its own implementation of Chaumian CoinJoin for enhanced transaction privacy and includes built-in Tor support for anonymous transactions.

Bitcoin Wallet

The first-ever Bitcoin wallet for Android, known for its simplicity and reliability. It connects directly to the Bitcoin network using SPV (Simplified Payment Verification) and offers an easy backup system.

Edge

Previously known as Airbitz, Edge is a user-friendly wallet ideal for everyday transactions. It manages accounts with usernames and passwords, eliminating the need for technical backup methods like HD seeds. Edge is also open-source, ensuring transparency and security.

Blockstream Green

The Android version of GreenAddress, this wallet is fast, simple, and supports hardware wallets like Trezor One, Ledger Nano S, and Ledger Nano X for added security.

Electrum (Android)

A lightweight, fast, and feature-rich wallet. Electrum supports:

Cold storage, allowing offline computers to sign transactions.
Tor integration for better privacy.
Multisignature wallets for extra security.
Hardware wallet compatibility for safe storage.

Unstoppable Wallet

A truly decentralized Bitcoin wallet with a focus on privacy and security. It connects directly to the Bitcoin network, ensuring no reliance on third parties. Open-source and verified by WalletScrutiny.com, its code is publicly available on GitHub for transparency.

Mobile Wallets for iOS

iOS users have several secure and user-friendly Bitcoin wallet options, each offering different features for privacy, security, and ease of use.

Breadwallet

Known for its simplicity and security, Breadwallet is one of the most popular Bitcoin wallets for iOS. It’s an excellent choice for beginners, offering an intuitive interface while keeping users in full control of their funds.

Blockstream Green

A feature-rich Bitcoin wallet available on the App Store, Blockstream Green provides strong security and supports hardware wallets like Trezor One, Ledger Nano S, and Ledger Nano X.

Edge

Previously known as Airbitz, Edge is a user-friendly and open-source Bitcoin wallet that allows account-based access with usernames and passwords instead of traditional backup phrases. Available in the App Store, it’s a great option for beginners looking for an easy-to-use yet secure wallet.

Unstoppable (iOS)

A privacy-focused, non-custodial Bitcoin wallet that works directly with the Bitcoin network without relying on third parties. It’s open-source, with its code publicly available on GitHub and verified by WalletScrutiny.com for transparency. Unstoppable features a user-friendly design, secure storage, and privacy-enhancing tools.

Online Bitcoin Wallets

Online Bitcoin wallets, also known as web wallets, store your private keys online, allowing access from any internet-connected device. These wallets can only be accessed with a user-set password, offering convenience but requiring careful security measures.

BitGo

A high-security multi-signature wallet designed to protect Bitcoin from theft and loss. Users maintain full custody of their funds, meaning BitGo cannot spend or freeze them. The wallet includes advanced security features, such as:

Spending limits
Multi-user access for businesses and teams

Coin.Space

A free HD (Hierarchical Deterministic) online Bitcoin wallet that allows global payments with no fees. It’s available on both mobile and desktop, making Bitcoin transactions simple and secure.

Xapo

Xapo combines an everyday Bitcoin wallet with an insured deep cold storage vault for added security. It also offers a Xapo Debit Card, allowing users to spend Bitcoin at millions of merchants worldwide.

While web wallets provide easy access and usability, they require strong security practices to protect your funds.

Paper Wallets

Before hardware wallets, paper wallets were the go-to method for cold storage. A paper wallet consists of private keys printed on a physical sheet of paper, keeping them completely offline and safe from cyber threats—provided they are generated and printed using a secure, offline computer.

Pros & Cons of Paper Wallets

✅ Highly secure if created properly
✅ Completely offline (immune to hacks)
✅ No reliance on third-party services

❌ Inconvenient for frequent transactions (requires generating and printing a new wallet each time)
❌ Risk of physical damage or loss
❌ Difficult to recover if lost

To save time and avoid address reuse, users can bulk print multiple paper wallets at once. If you’re considering this method, check out a cold storage guide that explains how to create a secure paper wallet step by step.

Hardware Wallets

Hardware wallets are dedicated devices designed to securely generate and store Bitcoin private keys offline. They sign transactions in an air-gapped environment, protecting funds from hacks and malware.

Ledger Nano

The Ledger Nano is a smartcard-based hardware wallet that securely generates and stores private keys offline. It features:

A 24-word recovery seed, generated during setup and stored offline.
PIN protection to prevent unauthorized access.
Compatibility with Windows, macOS, Linux, and Android (via Mycelium or Blockstream Green).

Trezor

Unlike the Ledger Nano, Trezor is a tiny computer, not a smartcard. It offers:

Offline key generation for security.
A built-in display for showing the 24-word seed during setup.
An optional passphrase for additional protection (without it, even with the recovery seed, funds cannot be accessed).

Opendime

Dubbed the first Bitcoin Bearer Bond, Opendime is a USB stick that allows Bitcoin to be spent like cash:

Acts as a read-only USB drive.
Private key is never exposed to anyone—not even the owner—until it’s unsealed for spending.
Can be passed along multiple times, making it unique among wallets.

KeepKey

Acquired by ShapeShift, KeepKey functions similarly to Ledger and Trezor but stands out with:

A larger, 3.12″ OLED display for better readability and QR code support.
Built-in ShapeShift exchange, allowing users to swap cryptocurrencies directly from the wallet.
A more robust design, though its larger size makes it less portable.
Supports fewer cryptocurrencies than Ledger and Trezor.

Cobo Vault

Built for extreme durability, the Cobo Vault meets military-grade standards (MIL-STD-810G) and features:

IP68 water resistance & IK9 impact resistance.
Air-gapped security—it has no USB, Wi-Fi, Bluetooth, or NFC connectivity, eliminating remote attack risks.
Supports multiple cryptocurrencies but comes at a premium price, with models priced at $99, $149, or $479.

Each hardware wallet offers a different balance of security, portability, and features, making it essential to choose based on your needs.

Lightning Network (LN) Wallets

Lightning Network wallets enable faster, cheaper Bitcoin transactions by operating on a second layer above the Bitcoin blockchain. Here are some of the most notable LN wallets:

Eclair Mobile (Android)

Open-source & non-custodial, giving users full control of their funds.
Developed in Scala by ACINQ, making it the first mobile Lightning Network wallet.
Can function as both a regular Bitcoin wallet and an LN wallet.
Runs on mainnet, making it more practical than testnet-based alternatives.

Zap (Windows, macOS, Linux, Android, iOS)

Cross-platform, non-custodial, and open-source.
Still in Beta development but already supports mainnet LN transactions.
Allows users to create multiple wallets and maintain privacy.
Future updates will add Tor support and full node compatibility.

Spark (Windows, Linux, macOS, Android, iOS)

Runs on c-lightning, a C-based Lightning Network implementation.
Near-zero configuration, making it user-friendly.
Privacy-focused—automatically installs Tor for added anonymity.
Important Note: Not related to IOTA Spark Wallet, which serves an entirely different purpose.

Other LN Wallets to Consider

Aside from these three, other Lightning Network wallets include:

LND Thin Wallet
Shango
Wallet of Satoshi
Breez
Blue Wallet
Bitcoin Lightning Wallet
Peach Wallet

⚠️ Always perform due diligence before using any LN wallet, as some are still in experimental stages or running on testnet instead of mainnet.

Not Recommended or Outdated Wallets

The following wallets are either outdated or not recommended for use due to security, performance, or other concerns. These wallets should be avoided! Note that this list includes wallets that were once recommended or suggested by others, but are no longer considered safe or reliable. This does not cover every wallet that is not recommended, but these are the most notable ones:

Wallets to Avoid:

Copay, Bitpay, Blockchain.info, BTC.com untrustworthy, misleading customers, high fees, lacking implementation.
Mycelium — iOS app has been abandoned. Mycelium team was involved in various unethical scandals, e.g. raising money from ICOs, partying with the collected money and more..
Multibit — This wallet is discontinued.
Coinbase, Freewallet — Custodial wallets. Freewallet has also many scam accusations against it.
Ledger HW.1, Ledger Unplugged — Discontinued hardware wallets.
Bitfi – John McAffee’s “unhackable” hardware wallet, named also as “the world’s first unhackable device”. Besides McAffee’s notorious lack of ethics and besides the admitted vulnerabilities of this product, McAffee offered in 2018 a 100.000$ bounty (raised afterwards to 250.000$) to anyone able to hack the hardware wallet. One week later, a 15 years old teen cracked the wallet and launched Doom on it, but he never received a dime from McAffee.
Coinomi — Initially open source, then changed again to closed source. Had controversial situations in the past.
Trust Wallet — Mislead users that it was open source (only iOS app was). Later both versions of the wallet became closed source.
Exodus — high fees (not customizable), security flaws, sync problems.

Best Practices for Bitcoin Security and Privacy

Bitcoin gives you full control over your funds, but with that comes the responsibility to ensure their security and privacy. Here are some essential best practices to follow to safeguard your Bitcoin:

Control Your Private Keys

Many services, like Coinbase or Circle, offer what they call “Bitcoin wallets,” but they actually control the private keys. It’s crucial to use a wallet where you control the private keys, as this is the only way to have full control over your funds without relying on third parties.

Protect Your Privacy

Whenever you request blockchain data from a wallet, your IP address can be exposed to the server, which may link your IP to the address data requested. To maintain privacy, consider using wallets that download the entire blockchain, like Bitcoin Core or Armory. For additional privacy, use Tor with other wallets to mask your IP address. However, keep in mind that using Tor doesn’t prevent a server from connecting addresses to a single identity. For wallet privacy rankings, check out the Open Bitcoin Privacy Project.

Don’t Reuse Addresses

To prevent exposing your identity, avoid reusing Bitcoin addresses. Modern wallets typically create new addresses automatically for each transaction. Since all Bitcoin transactions are publicly visible, reusing addresses can link multiple transactions to a single identity, making it easier to trace your activities.

Use Different Wallets for Different Amounts

Think of your Bitcoin wallets like bank accounts: use secure wallets (like hardware wallets or paper wallets) for long-term storage or savings, and mobile, web, or desktop wallets for daily transactions or spending. This way, your savings remain secure while your spending wallet stays accessible.

Create Multiple Secure Backups

Always create multiple backups of your wallet, especially your private keys and recovery phrases. Store these backups in separate physical locations to protect them from loss due to fire, water damage, or theft. For extra protection, consider laminating paper wallets or writing them on metal for durability.

General Guidelines

Avoid web wallets or custodial wallets, especially those that require KYC (Know Your Customer).
Be cautious with wallets that have a shady reputation or whose names don’t seem trustworthy—always do your due diligence before using any wallet.
Never use discontinued wallets or services that could be obsolete.
Be wary of services like eToro or Revolut that make it seem like you control your Bitcoin, but in reality, you’re holding CFDs (Contracts for Difference) rather than actual Bitcoin.

By following these practices, you can ensure that your Bitcoin remains secure and your financial privacy is protected.

How to Store Bitcoins

As mentioned earlier, Bitcoin wallets come in four main types: online wallets, hardware wallets, software wallets, and paper wallets. Each of these categories can be further broken down into different methods of storage and security, offering varying levels of protection for your funds:

Hot Wallets

Hot wallets are Bitcoin wallets used on internet-connected devices like smartphones, computers, or tablets. Since hot wallets are online, they carry the inherent risk of being exposed to theft or hacking. These wallets are ideal for small amounts of Bitcoin, similar to how you wouldn’t carry your entire savings in cash. Hot wallets are convenient for daily Bitcoin transactions, but you should avoid storing large sums in them. For example, you might keep $200 worth of Bitcoin in a hot wallet for spending, while storing $10,000 in a more secure form of cold storage.

Custodial Services

Services like Coinbase and Circle offer “Bitcoin wallets,” but they’re not true wallets in the sense that you control the private keys. These third-party services hold your private keys, meaning you don’t have full control over your Bitcoin. As the saying goes: “If you don’t control the keys, you don’t control the coins.”
An infamous example is Mt. Gox, a Bitcoin exchange that was hacked in 2014, leading to the loss of over 800,000 Bitcoins. Although services like Coinbase and Circle may implement strong security measures, using a custodial wallet still exposes you to additional risks, as you’re depending on a third party to safeguard your funds.

Cold Storage

Cold storage refers to Bitcoin private keys being stored offline, away from the reach of online hackers or malware. Because cold storage doesn’t connect to the internet, it’s considered much more secure for long-term storage of Bitcoin. Cold storage methods include paper wallets, hardware wallets, and software wallets stored on offline computers. Think of cold storage like your savings account—it’s best used for Bitcoins you don’t plan to spend regularly.

Multisignature Wallets

Multisignature (multisig) wallets, such as Electrum, enable shared control over Bitcoin funds. These wallets require multiple parties to sign off on transactions before they can be completed. If set up offline, multisig wallets can also be used for more secure cold storage.

In a 2-2 multisig wallet, both parties must sign the transaction for the funds to be spent. In a 2-3 multisig wallet, two of three parties must sign off before funds can be moved. This setup adds a layer of security, as no single party can access the funds on their own.

Armory Multisig

Armory offers a Lockbox feature, allowing up to seven co-signers to approve shared transactions. One party can create a Lockbox by adding public keys from other co-signers. This approach provides flexibility and security for both personal use and organizations.
Armory also features fragmented backups, which break up a wallet’s backup into multiple parts, reducing the risk of theft. Instead of needing multiple signatures for every transaction, fragmented backups require signatures only for the backup process. By splitting backups across various locations, it ensures that physical theft is much harder to execute.

Use Cases for Multisig:

2-2 Wallet: Two business partners use a 2-2 multisig wallet, meaning both must approve any transactions. If one partner tries to send Bitcoin, the other must sign off to complete the transaction.
2-3 Wallet: A 2-3 multisig wallet could be used for securing offline Bitcoin storage with paper or hardware wallets. For example, a user might store their Bitcoin in three separate locations, ensuring that at least two of those locations need to be compromised for someone to access the funds. This setup can be scaled up to multiple signatures, such as a 5-9 wallet, which requires five of the nine signers to authorize a transaction.

By using the right combination of wallet types and security practices, you can significantly reduce the risk of losing your Bitcoin and ensure its safety for the long term.

Disclaimer: The information provided here is for general informational purposes only and reflects our personal opinion. Any use or reliance on this content is at your own risk. We strongly recommend conducting your own research before making any decisions based on the information provided. This content does not constitute financial advice, and we are not liable for any losses resulting from the use of malicious, unsafe, deceptive, or any other types of wallets.

Questions and Answers Overview (From real users)

Question: I was told that I need to buy a paper wallet, but the information provided in the original post doesn’t mention anything about that.

Answer: No, you don’t need to buy anything other than the paper itself. A paper wallet is simply a wallet printed on a piece of paper, and you can use any kind of paper, such as the one from your printer.

Question: If I understand correctly, to get a safe wallet code, I need to generate it using an offline computer?

Answer: Yes, that’s correct. You should download the software and generate the keys on an offline computer to ensure maximum security.

Question: If I have bitcoins in my desktop wallet and need to format my computer’s hard drive, will I lose the bitcoins after formatting the drive?

Answer: If you don’t have a backup of your wallet, then yes, you will most likely lose your coins after formatting the hard drive.

Question: If yes is the answer, how can I avoid losing my bitcoins when formatting?

Answer: It depends on the type of wallet you’re using. For Bitcoin Core, you need to locate and back up your ‘wallet.dat’ file, which is typically found in your data directory.

Question: I have a question about verifying the address. When using Bitcoin Core, you are given multiple addresses for receiving. Which address should I use to sign, and how do I receive payments and sign them? Feel free to move this post if needed. 🙂

Answer: It’s entirely up to you. Typically, people keep one address for their profile or share it on forums for identification purposes. They usually do most or all of the signing with this address, especially for things like account recovery if they’re locked out or hacked.

Question: Does there really need to be this much analysis? I feel like you can just choose the most popular one and you’ll be fine. I’m a beginner too though. 🙁

Answer: There are a lot of wallet options to choose from, depending on your specific needs, which is why we try to cover as many as possible. Ultimately, it comes down to security and privacy. If you go with something like Electrum, you should be fine.

Question: Hi. I would just like to know if you’ve heard of cases where people’s money has been stolen from their wallet. If so, how can you avoid this?

Answer: The only way money can be stolen is if the target machine or network is compromised. To avoid this, you should follow general security practices for computers and networks. For example, you could:

Keep most of your coins on an offline machine and only access it when necessary.
Split your coins across different devices (e.g., desktop wallets, mobile wallets) and ensure you use 2FA and encryption where possible. For more details, check out the thread: Beware of Malware: Think Before Acting!.

Question: Oh, it’s ok. I’m a newbie and didn’t know all of this about wallets before. But I found a wallet called “Coinbase,” and I’m kinda nervous why Coinbase isn’t recommended in this post? Is Coinbase good or bad? I’m using it…

Answer: Coinbase is a web wallet, and web wallets are generally discouraged because you, as the user, don’t truly control your Bitcoin; the wallet service does. If the service shuts down or locks you out of your account, you won’t be able to access your Bitcoin. There’s also the risk that the service could scam users and steal their Bitcoin. For these reasons, web wallets like Coinbase are not considered the best option for storing Bitcoin.

Additionally, Coinbase has been known to shut down accounts that they suspect are involved in gambling, so your funds could be at their mercy. It’s always safer to use a wallet where you have control over your private keys.

Question: And if I’m not, what is the right way to maintain a hardware wallet? I mean, on the hardware side, where you need backups, RAID, and so on. Is there any ultimate guide or something?

Answer: Most hardware wallets use a Hierarchical Deterministic (HD) wallet scheme, which means you only need to do a single backup when you set it up. After that, you don’t need to worry about additional backups unless you lose the recovery phrase or backup.

That backup, however, is crucial and must be kept secure. The security of your backup is just as important as the wallet itself because anyone who gains access to your backup could potentially access your funds.

For additional guidance, you can check out the following resources:

Also, it’s important to note that RAID setups or other advanced configurations aren’t typically necessary for hardware wallets. The focus should be on securely storing your backup phrase and making sure it’s not easily accessible to others.

Question: Do you recommend Electrum wallet for beginners, and what are the advantages and disadvantages of Electrum?

Answer: Even as a beginner, you should understand some basic concepts such as how to secure your wallet, how fees work, etc. That said, I do recommend Electrum for beginners.

Advantages of Electrum:

SPV (Simplified Payment Verification): Electrum is an SPV wallet, which means it doesn’t require you to download the full Bitcoin blockchain (which is over 100 GB). It only downloads about 30 MB of data, so syncing is fast and easy.
Lightweight: Since it doesn’t store the entire blockchain, it’s much quicker to set up and use compared to full node wallets.

Disadvantages of Electrum:

Lack of Full Node Privacy: Because it’s an SPV wallet, it doesn’t have the same level of privacy as a full node wallet. Full node wallets require downloading and syncing the entire blockchain, which takes a long time and uses significant storage.
Trusting Servers: Electrum relies on servers to check transaction status. While this is generally safe, there’s a risk that a compromised server could falsely confirm a transaction or even allow for double-spending.

In summary, Electrum is a solid wallet for beginners who want a lightweight and fast option, but it’s important to be aware of its limitations regarding privacy and potential trust in third-party servers.

Question: What happens if the Electrum service disappears? Will it still be possible to recover the coins with the private key?

Answer: Yes, it will still be possible to recover your coins using the private key.

You can test this yourself: turn off your internet, then go to Wallet > Private Keys > Export. This will allow you to access and export your private keys, which you can then use to recover your funds even if the Electrum service is no longer available. The private key is all you need to access and control your Bitcoin.

Question: Can a hardware wallet accept altcoins, in addition to Bitcoin, so that in a single wallet, I can have multiple accounts for different coins like Monero, Zcash, Bitcoin, and more?

Answer: Not unless the hardware wallet explicitly states that it supports altcoins. Some hardware wallets do support multiple cryptocurrencies, but you’ll need to check the specific wallet’s capabilities to ensure it supports the altcoins you want to store. For example, wallets like Ledger and Trezor support a variety of cryptocurrencies, but not all wallets are compatible with every coin. Always verify before using a wallet for different types of cryptocurrency.

Question: If you have created an account in an online wallet, can this account be used from another wallet, like a hardware wallet? Or do you have to have multiple wallet accounts and transfer your funds from one to another?

Answer: It depends on the service you are using. If the service allows you to import/export private keys, then you can transfer your funds from one wallet to another (for example, from an online wallet to a hardware wallet). However, this functionality is not common in many online wallets. In most cases, you will need to transfer your funds by sending them to a different address associated with your new wallet.

Question: But, my question is about Electrum BTC Wallet. How may I use sweep to recover BTC that were stolen? If this is possible with sweep, why hasn’t the wallet creator optimized this to be used as a safeguard from scamming or stealing others’ BTC? I’m not a programmer, so I’m unable to understand how it works.

Answer: Unfortunately, you cannot recover Bitcoin that has already been stolen and confirmed on the blockchain using a wallet. The process of sweeping in Electrum involves moving coins from one address to another, but it cannot reverse a theft that has already occurred. It seems like you may be misunderstanding how Bitcoin works. Once transactions are confirmed on the blockchain, they cannot be undone. If you meant something else, feel free to clarify your question.

Question: In my case, I have a Bread wallet with some mBTC, but I would like to change it. In the new wallet, will I use my first private key, or create a new one from scratch? Will the mBTC be transferred?

Answer: You should create a new wallet and transfer the bitcoins manually. To do this, simply send your entire balance from your Bread wallet to an address from your new wallet. The mBTC will be transferred to the new wallet during this process.

Question: Then I installed Electrum. It created 12 words, 1 password, and private keys for 10-15 addresses. Is it possible to change those 12 words, 1 password, and private keys regularly?

Answer: The 12 words (seed phrase) cannot be changed directly, but you can create a new wallet if you want to change them. However, as long as you keep your 12 words secure, changing them is not necessary. Each time you use a new address to receive Bitcoin, your wallet generates a new private key, so there’s no need to worry about changing those. You can, however, change the password for added security.

Question: If yes, changing those 3 types of password-like things will be enough to keep the Electrum wallet secure?

Answer: Changing those 3 things—your 12-word seed, password, and private keys—can enhance your security, but keep in mind that Electrum is still a hot wallet, meaning it’s connected to the internet. If your computer is not secure, your wallet won’t be secure either. So, it’s crucial to ensure that your computer is free from malware and other threats to maintain the safety of your wallet.

Bitcoin Core is a solid choice for a first wallet, especially if you’re concerned about security and control over your private keys. While it does require downloading and validating the entire blockchain.

Question: With mobile wallets, are they backed up online?

Answer: When it comes to mobile wallets like Mycelium, they aren’t backed up online in terms of storing your private keys or sensitive data. However, there is some centralization because Mycelium controls the full nodes your wallet connects to. While they don’t store your private keys, your addresses might be visible to them. Many users choose Mycelium because of its extra features and user-friendly interface. If you’re looking for alternatives, you could explore GreenBits or Breadwallet for simpler, more privacy-focused options.

Question: I’ve personally been using Coinomi on my Android as a mobile wallet. Would you say this one is ok, or is it better to stick with what’s been written up in the OP?

Answer: Coinomi wasn’t listed because it’s relatively new compared to other wallets and not as well-known. However, there’s no reason why you shouldn’t use it. From what I can see, it’s open-source, allows you to control your private keys, and provides an easy recovery option using a BIP44 passphrase. Ultimately, it’s up to you to decide, but it seems like a solid choice.

Question: Hi guys, I’d like to have a clarification about Electrum: what do I exactly need to restore a wallet, besides the seed? Because some people say I only need the seed, other people say also a backup and the private key… Huh

Answer: There are a few options to restore your wallet:

The seed: The entire wallet can be regenerated from the 12-word seed, including your addresses and the private keys associated with them.
The wallet file (.dat) + password: You can place the wallet file in the appropriate folder (e.g., AppData) and Electrum will read it. You’ll need the password and must keep the file secure at all times.
The private keys: If you export the private keys in plain text, you can restore them, but this method is less ideal because you’ll need to manage multiple private keys if you use different receiving addresses.

The recommended method is the first one (using the seed). The wallet file method poses a risk of compromise or corruption, and using private keys can get messy, especially if you use multiple receiving addresses. So, stick with the seed!

Question: Is Exodus 100% open source or not?

Answer: No, Exodus.io is not open source. However, this could change in the future.

Question: Hello. I just want to ask about the Electrum wallet. There are three options for Windows to download: The standalone, windows installer, and the portable version. What are the differences between these and which would be best to download?

Answer:

Standalone: Does not require installation. The data is typically stored in the AppData folder.
Windows Installer: Requires installation, and the data is stored in the AppData folder.
Portable Version: This is an executable file that stores the data within itself (inside the .exe), so you can move it around freely.

Which version to choose depends on your preference. If you prefer not to install anything and just run it directly, go with the standalone. If you want an easily portable option, the portable version is great. The Windows installer is the traditional installation method.

Question: I’m really interested in brain wallets. Could anyone explain how they work?

Answer:
Brain wallets are a type of wallet where the private key is derived from a passphrase and salt that you remember. The idea is that the critical information is stored in your brain, hence the name “brain wallet.” However, brain wallets are considered highly insecure. This is because the human mind isn’t great at creating passphrases with enough randomness to generate a secure private key. The passphrases that people tend to come up with are often predictable, making it easier for attackers to guess the key through brute-force or other techniques.

Question: Does a non-miner full node (Bitcoin Core) really help the BTC community in general, in terms of keeping it more decentralized and having more privacy for yourself?

Answer:
Yes, it does. Running a non-mining full node like Bitcoin Core helps the Bitcoin network by contributing to its decentralization. Full nodes verify transactions and blocks independently, ensuring that all transactions follow the rules of the network. This enhances security and prevents bad actors from manipulating the blockchain. It also improves your privacy, as you’re not relying on third-party services to interact with the Bitcoin network, meaning you’re not sharing your data with external servers.

Question: But at the same time, is it more prone to hacker attacks?

Answer:
No, it is quite the opposite. With Bitcoin Core and its robust code, you are actually less prone to being compromised. However, it’s important to note that while Bitcoin Core itself is secure, your overall system’s security still matters. If your computer or network is compromised in other ways, your wallet could still be at risk. The security of the wallet ultimately depends on how well your entire system is protected.

Question: If I have bitcoins in my desktop wallet and need to format the hard drive, will I lose the bitcoins after formatting the HD?

Answer:
You won’t lose your bitcoins in these three cases:

If your wallet provides a 12-word passphrase (e.g., Electrum), and you write it down somewhere safe, you can restore your wallet even after formatting your hard drive using that passphrase.
If you have exported and saved the private keys for the addresses that contain funds (e.g., printed them or saved them on a USB stick), you can import them back later.
If you have a backup of your wallet.dat file and know the password (if it’s encrypted), you can restore it.

Question: Is Electrum a good choice for a wallet application?

Answer:
Yes, Electrum is a solid choice. It works well on Android and is highly regarded as a SPV (Simplified Payment Verification) wallet for desktops.

Question: I’ve heard some bad reviews about Blockchain.info. Any comment?

Answer:
It’s generally not recommended to use web wallets, including Blockchain.info, as they put your private keys in the hands of a third party. This introduces security risks, so it’s better to use a wallet where you control your private keys directly.

Question: Can I use Electrum on an offline laptop?

Answer:
It depends on what you mean by “use.” You can receive Bitcoin, but you won’t see an updated balance since the wallet is offline. However, you can create a watch-only wallet on an online machine to monitor your transactions while keeping your private keys secure offline.

Question: If I use Electrum on an offline laptop, will the keys or coins I receive be secure? Can it still be considered a paper wallet, or does it become a hot wallet if used online?

Answer:
No, this is not a paper wallet. The coins should remain secure as long as the system itself isn’t compromised. If you bring the wallet online, it becomes a hot wallet, which introduces potential security risks.

Question: Can I receive other cryptocurrencies in Electrum?

Answer: No. Electrum only supports Bitcoin.

Question: Can Electrum be used without an internet connection?

Answer: Yes, Electrum can run without an internet connection. However, while you can access your wallet and create transactions, you won’t see any balance or transaction updates until you reconnect and synchronize.

Question: Can I receive Bitcoin in my paper wallet if I exchange more USD to BTC, or do I need to create a new wallet with Electrum?

Answer: Yes, you can receive Bitcoin in your paper wallet without needing to create a new wallet with Electrum.