Bitcoin Wallet Comparison: Everything You Need to Know About Bitcoin Wallets

What is Bitcoin Wallet?

Even though investing in Bitcoins is becoming easier and easier these days, there is still some important information to know. For example, as a future investor, you should know what a Bitcoin wallet is, what different types there are, how you can create a Bitcoin wallet and which providers are best suited. The following article clarifies these and other open points, gives helpful recommendations and step-by-step instructions on how to create your first Bitcoin wallet.

If you want to invest your money in Bitcoins or other cryptocurrencies, there are two basic forms of investment available. When trading with the help of a Bitcoin exchange, the Bitcoins are traded on an exchange, similar to shares and funds. This means that the investor does not own the Bitcoins himself, but trades in share options.

The Bitcoins are held in custody and traded by the respective exchange platform, and the profits and losses thus achieved are passed on to the investor according to the Bitcoin shares acquired. This model is considered comparable to trading currency certificates, where the investor does not physically own the money but has the acquired currency assets managed by a broker.

With a Bitcoin wallet, on the other hand, the investor acquires Bitcoins (or Bitcoin shares) himself. In a sense, he stores them himself, like cash that is kept in his own account or in a wallet. The wallet is therefore also called a digital wallet. Bitcoins can be held, received and transferred with a Bitcoin wallet.

The best Bitcoin Wallets

In order to get a good overview of the various functions of the different Bitcoin wallets, we compare the eToro Bitcoin Wallet, the hardware wallets from Trezor and Ledger and also the crypto wallets from Coinbase, Exodus and Bitaddress below.

Etoro Bitcoin Wallet

Etoro Bitcoin Wallet

Etoro Logo TransparentThe Bitcoin Wallet from eToro is a so-called web and mobile wallet. This means it can be used on the internet and on smartphones, for example, and does not require any separate hardware. EToro is also an online broker at the same time, which makes it possible to trade cryptocurrencies against other cryptocurrencies very cheaply (partly with 0% fee).

In addition, it is of course possible to use the classic functions of a broker. With eToro you can bring all your assets together in one platform and always have all stocks, ETFs and cryptos together in view. EToro has the advantage of good and simple handling. One disadvantage of the platform, however, would be that the Bitcoins are possibly less securely stored than in a real hardware wallet. On the other hand, you don't have to spend money on dedicated hardware, but get the wallet completely free of charge.

Pros

  • Integrated trading function (shares, crypto, foreign exchange)
  • Can be used online from any internet-enabled device
  • Excellent customer service
  • Wallet completely free of charge

Cons

  • Lower security than hardware wallet
  • Partly incompatible with exotic coins

Trezor Wallet

Trezor Wallet

Trezor LogoThe Trezor Wallet is a so-called hardware wallet from the Czech Republic. With the Trezor ONE, the manufacturer developed one of the first popular hardware wallets and has been on the market since 2013. The Trezor wallet offers the possibility of storing over 1000 different cryptocurrencies, although certain currencies are only supported in the more expensive Trezor Model T variant or not at all. A hardware wallet like Tresor has the advantage that you are the owner of the private key and it never leaves the device. This means that your own Bitcoins are particularly well protected against attacks from the internet. In return, however, you have to accept compromises in terms of user-friendliness.

A hardware wallet like the Trezor must always be connected to a computer or smartphone via USB cable in order to carry out transactions. Of course, you also have to buy such a hardware wallet first. A hardware wallet from Tresor must always be connected to a computer or smartphone via a USB cable in order to carry out transactions. If you lose your wallet and recovery key, all cryptos are lost forever with this type of wallet. The manufacturer has no way to recover the coins.

Pros

  • over 1000 supported coins & tokens
  • high security
  • Open source software

Cons

  • Wallet must be purchased
  • Limited customer service
  • Can only be used with additional device
  • No trading function

Ledger Wallet

Ledger Wallet

The Ledger Wallet is a hardware wallet similar to Trezor. This time the manufacturer is based in France, in Paris to be precise, and together with Trezor is one of the two big players in the market for hardware wallets. The premium version of the Ledger Wallet offers a fingerprint sensor for increased security and, like the smaller version, is also very small so that it fits on a key ring. However, this means that all versions of the Ledger Wallet have a very small display. The support for cryptocurrencies is similar to Trezor, but perhaps a little more extensive, as Ledger produces the world's most popular hardware wallet.

In addition, the premium version of the Ledger Wallet offers the option of displaying the current holdings of various cryptocurrencies on one's smartphone without a cable connection, but rather via Bluetooth.

The biggest negative point is that the firmware of the Ledger Wallets, unlike the Trezor Wallets, is not open source but secret, which means that the security cannot be checked by everyone. Of course, Ledger wallets also cost money: the price is similar to that of Tresor.

Pros

  • Very large selection of supported coins & tokens
  • high security
  • fingerprint sensor
  • small format (key fob)

Cons

  • Wallet must be purchased
  • Limited customer service
  • Software is not open source
  • Can only be used with additional device
  • No trading function

Coinbase

Coinbase

Coinbase is a very user-friendly online platform that, like eToro, is actually a trading platform for cryptos, but also offers its own wallet. As with eToro, this is a so-called hot wallet. This means that the wallet is in the hands of the provider and is constantly connected to the internet, which increases the risk of hacker attacks. In return, however, Coinbase offers very good user-friendliness, a fast-responding customer service and a large selection of different cryptocurrencies. Coinbase checks every coin before it is listed on their platform to protect users from dubious offers.

It is also worth mentioning that Coinbase is one of the largest crypto exchanges in the world, which enables them to offer good trading conditions. However, EToro has the big advantage over Coinbase that you can also trade shares, ETFs, fiat currencies and many other investment products, whereas Coinbase is only limited to cryptocurrencies.

Pros

  • Integrated trading function for cryptocurrencies
  • Can be used online from any internet-enabled device
  • Wallet is free of charge

Cons

  • Lower security than hardware wallet
  • Trading fees usually higher than with eToro

Exodus

exodus wallet

The Exodus Wallet is a very popular mobile wallet. This means that you download an app on your Android or iOS smartphone and then generate a wallet locally on your device. This means that the private key is not in the hands of a provider such as eToro or coinbase, but only directly on your own device. When creating such a wallet, the recovery key is displayed at the beginning, which you should keep very safe and external in case you ever need to restore your wallet, for example if your smartphone breaks.

The usability of a wallet like Exodus is very good, you can view the cryptocurrency holdings directly on your device and receive and send coins with just a few clicks. Exodus also supports a very large selection of coins and tokens. For some time now, Exodus has also offered a desktop wallet.

In terms of trading options, however, the Exodus wallet offers less choice, poorer conditions and no easy way to buy cryptos with euros and your own bank account.

Pros

  • Always with you on your smartphone
  • Wallet is free of charge
  • Private keys stored locally on device
  • User-friendly interface

Cons

  • Less secure than hardware wallet
  • Vulnerable if the smartphone is hacked

Best Bitcoin Wallet: Comparison of the different types of wallets

There are countless different ways to store your cryptocurrencies. They can be roughly divided into software, hardware and paper wallets.

Bitcoin Online Wallet

eToro Wallet BitcoinWith web-based wallets, the user's private key is managed by an external provider. A download of the blockchain is therefore not necessary, as the computing power is provided by the respective provider, who makes the Bitcoin wallet available online. Online wallets therefore score points with their uncomplicated availability.

However, the user must entrust his data to an external administrator. This is a disadvantage in terms of the security of personal data, as the user can no longer check how well the personal data is protected.

Online wallets are therefore comparable in practice to bitcoin trading on stock exchanges. However, they are actual wallets, as they manage the user's personal Bitcoin keys. The world's largest online wallet provider is the platform Coinbase, which offers both an exchange and a wallet.

Pros

  • Quick and easy creation
  • Can be used anywhere in the world with e-mail and password
  • Simple handling

Cons

  • Easy to use
  • Holds your private keys

Bitcoin Software Wallets

A software wallet is an app / programme which is located on your computer or mobile phone like a virtual wallet. No purchase of special hardware is necessary here. Since there are at least 2 different versions of software wallets, we will explain the differences between desktop and mobile wallets here:

Mobile Wallet (Smartphone)

Bitcoin Wallet - SmartphoneA lot of so-called mobile wallets can be found in the Android and iOS app stores. Some well-known examples are Trust Wallet, Exodus or eToro (which can also be used as an online wallet). Since everything runs directly on the smartphone, they are perfectly suited for everyday payment transactions with Bitcoin.

By the way: Technically, most mobile "wallets" are not real crypto wallets. Because then they would also have to manage the constantly growing blockchain, which will exceed the storage capacity of many smartphones as well as the data volume of the users. Therefore, with the help of the so-called "Simplified Payment Verification" (SPV), they only manage a part of the database that is necessary to guarantee the security of the transactions.

Pros

  • No costs for creation and use
  • Bitcoins can be taken anywhere

Cons

  • Vulnerable environment
  • Reliant on developers (updates, security, etc.)

Desktop Wallet

Amory Bitcoin Wallet - DesktopFor the use of Bitcoins locally on the PC, a separate Bitcoin client must be installed on the Windows or MacOS. It allows you to generate Bitcoin addresses and manage transactions on the network. When using a desktop wallet, it strongly depends on the environment, i.e. whether the computer is free of malware that could steal important data.

In addition to the sometimes very compact clients, there are also more comprehensive software packages:. Depending on the provider, different priorities are set, such as the security of the wallet (e.g. "Amory") or the anonymity of the user (e.g. "DarkWallet").

However, desktop wallets have a decisive disadvantage: they are extremely impractical for everyday trading with Bitcoins and are therefore only suitable for users who want to use Bitcoins primarily for asset accumulation.

Pros

  • No costs for the creation
  • Active use of the Bitcoins possible

Cons

  • Vulnerable environment
  • Reliant on developers (updates, security, etc.)

Bitcoin Hardware Wallet

Bitcoin Wallet - HardwareA hardware wallet is a small device specially developed for this purpose, on which the private keys are stored locally. Thus, in contrast to the online wallet, the private key does not pass into the possession of an external company and thus this form of wallet probably offers the best security of all.


It is therefore not surprising that the hardware wallet manufacturers place a great deal of focus on the issue of security: Bitcoin and other cryptocurrencies can only be sent with access to the hardware and all transactions must be confirmed separately on the device. In addition, some hardware wallets have a fingerprint sensor or other special security features. The two major providers, Tresor and Ledger, also support a large number of cryptocurrencies, over 1000 in each case, but the support here is not as extensive as with desktop wallets, for example.

In the event of a hardware defect, the keys can be restored with almost all current models with the help of a recovery phrase.


A small disadvantage: New token models or further developments in the blockchain software must first be integrated into the wallet systems by the manufacturers, so there may be delays before users of hardware wallets can participate in the technical innovations.

Pros

  • Secure storage of the Bitcoins
  • Active use of the Bitcoins possible
  • Other digital currencies can be stored

Cons

  • (Higher) costs are incurred

Why do I need a crypto wallet?

need a crypto wallet

Unlike classic currencies, Bitcoin (BTC) as a cryptographic currency cannot be traded directly. So there is no direct physical object that reflects the value "in real terms" like a bank note. Rather, bitcoins are created as a digital currency in a decentralised computer network.

At the heart of this network is the so-called blockchain. A database, now several gigabytes in size, in which all Bitcoin transactions are listed. To gain access to this system and use Bitcoin, investors must have a Bitcoin wallet, a digital wallet that connects them to the currency network and holds their Bitcoins. It is similar to a unique very long string of characters that can be used to identify and assign the individual "wallet".

Technically, investors do not store the Bitcoins themselves in their wallet, but their digital keys, which can be used to access a Bitcoin address.

Bitcoin wallet functions and features

Enter your text here...Depending on the type of Bitcoin wallet, different functions and features are offered. In our detailed Bitcoin wallet test, we show what you should look for when choosing a wallet.

Security


Hardware wallets and paper wallets offer the highest security.  In both cases, the sensitive private key does not leave the paper or device during use. This makes it virtually impossible for an attacker to steal this key from the servers of an online provider or the data storage of your own smartphone.

With an online wallet, it is therefore very important that the chosen provider is reputable, secure, licensed and, if possible, has been on the market for many years. This way, the platform risk can be reduced to a minimum.

PC and mobile wallets are only as secure as the device used. If spyware infects the computer, the private key of some desktop wallets could easily be stolen and misused.

In any case, it is always advisable to keep backups of the wallets or recovery keys (e.g. in the form of long word sequences) in a safe place, as the provider can only help with recovery if the wallet is online.

User-friendliness

In terms of user-friendliness of the different types of Bitcoin wallet, the online wallets are the most straightforward to use. The coins are stored directly on the platform, as is the private key. This allows you to access your wallet from multiple devices.

Desktop wallets and mobile wallets are also very user-friendly in terms of general ease of use. However, you cannot benefit from the low-cost exchange options offered by some online wallets such as the one from eToro.

With hardware wallets, the wallet always has to be connected to the internet via another device and usually with a USB cable before you can transfer bitcoins, which can be a bit inconvenient.

The paper wallet is even worse in terms of user-friendliness: every transaction here is enormously cumbersome.

Compatibility

All of the Bitcoin wallets presented here (exception: paper wallet) can be used with Bitcoin and many other cryptocurrencies. Before choosing one of the Bitcoin wallets, however, you should take a look at the details or the website to check the compatibility with the coins in question. Mobile or online wallets are generally not restricted in terms of their compatibility with various coins; only with some hardware wallets can individual coins not be used due to hardware limitations.

Customer support

In terms of customer support, online wallets clearly take first place on the winner's podium. Large companies like eToro have the resources to offer fast live chat and good phone support in addition to excellent email support.

However, if you use a hardware wallet, desktop wallet or mobile wallet, it can be very difficult to find good answers to urgent questions and problems in a timely manner.

With paper wallets, there is even no customer support at all. You have to find all the information yourself and have no contact person.

Major Advantages and disadvantages of Bitcoin Wallet

Wallet Type

Advantages

User-friendliness

Security

Best provider

Software Wallet

Easy to use, security

high

high

eToro Wallet

Hardware Wallet

High security

medium

very high

Ledger Blue

Mobile Wallet

Easy to use

high

medium

eToro Wallet

Online Wallet

Easy to use, cloud-based

high

medium

eToro Wallet

Main Features of Bitcoin Wallet

The world of Bitcoins sometimes sounds abstract and confusing to inexperienced investors. Basically, however, trading with cryptocurrencies is very similar to trading with conventional currencies. Nevertheless, the digital currency system has one outstanding feature:

Open Source

The Bitcoin software is 100% open source. This means that basically anyone can act as a so-called "miner" in the Bitcoin network at no cost. But beware: the trading system, which is free in itself, must of course not be confused with the bitcoins created from it.

Different currencies

Even though in the field of cryptocurrencies people almost always only talk about bitcoins, most wallets also allow trading with other digital currencies such as Ethereum or Litecoin. In their fundamentals, however, all currencies work the same.

Wallet management

In principle, investors can acquire as many wallets as they wish. It is therefore not necessary to trade all bitcoins via a single wallet. In addition, wallets can be saved similar to a file and can therefore also be backed up offline.

Pseudonymous addresses

When trading (and also paying) with Bitcoins, pseudoynms are generated for each participant. This means that the trading partners are not identified. Although this has great advantages in terms of protecting the personal data of the participating users, it makes it easier for black sheep to disappear in the Bitcoin system.

  • Tip: To increase security in Bitcoin trading, it is advisable to invest money in several wallets. In doing so, you should consider above all the purpose for which you want to trade with bitcoin. In any case, separate the wallet with which you want to build up assets from an "everyday wallet" that you manage on your smartphone, for example, to make payments.
  • But be careful: Keep a good overview of the number of your wallets. Because your Bitcoins are only as secure as your personal handling of the Bitcoin wallets.
Bitcoin Wallet

Public Keys and Private Keys

A wallet is a piece of software or hardware that manages all Bitcoin addresses and your own public keys and private keys.

What is a public key?

A public key is a public address, also called a receiving address, to which bitcoins are sent. This receiving address can be used to receive Bitcoins. To do this, you give the public address to an exchange or a third party.

A bitcoin receiving address usually starts with a 1, 3 or bc1q and looks like this, for example:

1MSjTh6r1AEbqGhrH5KsamAHxc8WK1VSVE

The receiving address is a kind of account number for one's own Bitcoin account. And for every public address there is an associated private key.

What is a private key?


A private key is a kind of password or PIN that you need to send bitcoins in a wallet. Therefore, you should never give this private key to third parties and keep it very secure.

A private key for Bitcoin consists of 64 letters and numbers and looks like this, for example:

E9873D79C6D87DC0FB6A5778633389

Of course, it would be costly to store each private key individually if hundreds of receiving addresses are used. For this reason, there are more convenient solutions, such as:

    Wallets, for example, offer backups that can store several private keys at once.
    Another possibility is a so-called seed, which is used for HD Wallets.

This private key is the access code for the upper bitcoin receiving address. If bitcoins were stored on the receiving address, anyone could steal the bitcoins with this private key.

Conclusion: Bitcoins are not "stored" on the PC or the smartphone. If the PC is destroyed, for example, you could still access the Bitcoins if you have the private keys. You only own your Bitcoins when you have the private keys to them and keep them safe.

Start Trading with eToro Wallet

Before you can really get started with the eToro Wallet, you have to create an account with the broker. Therefore, first the step-by-step instructions for registering with eToro.

Step 1 - Account Registration

Registration is usually very easy. Either you use a Facebook or Google account or you register with your name and some additional information. A strong password is important, as the connected crypto wallet will also be protected with this password later.

Step 2 - Completing the data and verification

If you want to deposit and withdraw more than 2000€ and to activate all functions of the broker, it is necessary to verify yourself. This requires proof of address, e.g. a current utility bill, and additionally photos of both sides of the identity card or passport.

Normally, the verification of the data is done very quickly and is completed after about 24 hours and the account is fully activated.

Step 3 - Download the eToro Wallet App

Now that registration and verification are complete, you can download the eToro Wallet app from the Google Playstore or Apple App Store. Here you can then log in with the normal eToro access data that you have previously set.

Step 4 - Using the eToro Wallet

In the app you can directly view your available crypto funds and your last crypto trades. The eToro wallet app is easy to use and enables easy buying, selling and exchanging between cryptocurrencies.

Receive and send bitcoin with eToro Wallet

with eToro Wallet

To receive Bitcoin, you need to press the "Create new Wallet" button and then correctly select Bitcoin by tapping "Add".

Then the new wallet appears in the overview and with another tap on "Receive", you get the address and a corroborating QR code as shown in the picture above on the right.

All you have to do now is share this address and you will immediately be able to receive bitcoins.

Sending cryptocurrency with the eToro Wallet

In order to send Bitcoins, you first need a certain amount of credit, which you can purchase cheaply from the eToro web trading platform or you can send it from another account to the Bitcoin Wallet at eToro.

If funds are available, sending Bitcoin is very easy: you tap on BTC to select the currency and then select "Send" and now you only have to enter the amount and the recipient's address and confirm the process with another click on "Send".

Bitcoin Wallet Fees

When trading and transferring Bitcoins, the fees are certainly not entirely unimportant.

The creation of a wallet rarely costs fees, only with hardware wallets do you have to pay something for the hardware itself, of course.

However, there are very big differences in the fees for trading and conversion: the two mobile wallets Exodus and Trust Wallet both charge very high fees of 2% and 5% when buying Bitcoin. With the online wallets eToro or Coinbase it is much cheaper. Overall, eToro is the best choice for trading or converting cryptocurrencies at low cost.

providers

One-time costs

Fees (trading fees or spreads)

eToro

0 €

Conversion 0.1%
Trading 0%
Spread 0.75%

Ledger

Nano S = 60 €
Nano X = 120 €

no trading

Trezor

One = 60 €
Model T = 160 €

no trading

Coinbase

20$

Conversion 0.5%
Trading 1.49%
Spread 0.5%

Exodus

0 €

Apple Pay fees approx. 2%

Trust wallet

0 €

Simplex fee 5%

Which is the best Bitcoin wallet for which type of investor?

When asking yourself which Bitcoin wallet is best for your investment type, you first have to make clear whether you want to trade with cryptocurrency frequently or whether you want to hold it for the long term according to the motto "buy-and-hold".

When investing for the long term, user-friendliness is secondary and security is very important. However, if you want to send or trade cryptocurrency amounts back and forth on a daily, weekly or monthly basis, the requirements for the crypto wallet are completely different:

  • If you are a long-term investor and do not plan to access the cryptos you have bought until years later, even a paper wallet could meet your requirements. Nevertheless, we recommend a hardware wallet in this case, as you are also well protected against hacker attacks, but at the same time you don't have to give up all user-friendliness. For example, it is still very easy to display the current amounts of various cryptocurrencies and carry out transactions directly from the device.
  • However, if you plan to carry out crypto transactions on a regular basis, the user-friendliness and trading functions of a wallet are more important. The eToro platform is particularly suitable in this case, as it combines a wallet and a trading platform. Cryptocurrency can be traded against each other with very low fees and you can also trade shares, ETFs and fiat currency with the same account.

Another advantage is that, unlike a paper wallet, which usually only supports one cryptocurrency, more than 120 different cryptocurrencies are supported. This means that all assets can be stored and organised in one place.

Bitcoin: What speaks in favour of the cryptocurrency? What speaks against it?

In order to be able to assess Bitcoin in general and clearly, here is a summary of what speaks in favour of the currency and what speaks against it.

For this                                       

  • No. 1 cryptocurrency by market capitalisation
  • World-famous as "the cryptocurrency
  • Very good performance in recent years
  • Highest acceptance as a means of payment

Against it

  • High transaction fees                                                                             
  • Only a maximum of 7 transactions per second possible
  • Bitcoin blockchain is less flexible & versatile than Ethereum

Conclusion of the Bitcoin wallet test and comparison

For Bitcoin as the most popular cryptocurrency, there is a huge selection of wallets and we have looked at some important ones in more detail in this article. Different wallets offer different advantages and disadvantages, so there is an optimally suited wallet depending on the type of investor. In general, it can be said that a paper wallet is rather unsuitable for today's crypto world and current fields of application and one should concentrate on online or mobile wallets or hardware wallets.

Here again, there are some differences in terms of security, acquisition costs, trading fees and user-friendliness:

In general, we come to the conclusion that for the average investor who wants to keep the option open to trade cryptos at favourable conditions and to exchange them quickly, the eToro broker with integrated wallet is the best choice. Here you get a very good mix of user-friendliness, security and almost completely fee-free trading options, and the whole thing is free of charge to boot.

FAQ

How does Bitcoin work?

Once you have installed a wallet on your computer or smartphone that generates the first Bitcoin address, you can then create more as needed.

What is a blockchain wallet?

In blockchain banking, a wallet is part of the basic equipment, especially for the digital currency Bitcoin. It is a software programme in which Bitcoins are stored and managed.

What is a Bitcoin wallet address?

You need a Bitcoin address to be able to receive Bitcoins. This can be understood as a kind of account number, which consists of a long series of numbers and letters.

How does the transaction with Bitcoins work?

Bitcoin transactions are secured by digital signatures and Bitcoins are sent back and forth between Bitcoin wallets. A transaction is hereby the transfer of an amount between Bitcoin wallets.

Which wallet for Bitcoin?

The easiest and fastest solution to your wallet is probably the software wallet. Simply register with a provider, buy Bitcoins there or transfer them to it and then use them to make purchases and much more.

About the author

Hi there, my name is Zalman Weinberg. I'm enthusiast with over 7 years of experience in cryptocurrencies and blockchain. Professional Trader providing Blockchain solutions to Startups and Enterprises. Expert in all cryptocurrency exchange APIs (BitMEX, Bittrex, Binance, Bitfinex, Kraken, Poloniex, Gdax etc.). I have also worked with multiple Forex broker APIs.