Bitcoin wallet is the first thing one needs to own before getting started with bitcoin. Finding the right one is an art of balance between various factors. At CoinHako, we have researched these thoroughly and incorporated the best into our own wallet service. For the benefit of our current and potential new users, we present the top 10 key traits Bitcoin wallet (s) need to possess.
Security should be your foremost concern, especially with regard to a Bitcoin wallet. This factor should never be overlooked. Does the host use HTTP or HTTPS? If it has a secure protocol it needs to be HTTPS.
Check to see if the bitcoin wallet offers:
- Secure and strong login functionality (to ensure your password is good)
- Two Factor Authentication (2FA).
- Encryption of data
Multi-Signature (Multi-Sig) Bitcoin wallet
This relates to security, but is so important that it is worth highlighting separately. Even with a secure wallet platform, you should ascertain if the wallet provider offers a multi-signature option. These days, multi-sig is becoming the de-facto method in securing your Bitcoins from hackers and theft. Basically, to compromise your account, hackers would need multiple keys which are stored separately, causing the effort of stealing your money to become near impossible. CoinHako will be sharing more details on how we accomplish this real soon.
How is access to my private key handled?
If you have full access to private keys for Bitcoins in your wallet, you will have full control over your coins. However, you would also need to more vigilant in protecting your keys. At CoinHako, we abstract this responsibility into our service and have established secure processes, adopted from industry best practices, to guard your private keys. Hence, you can store your Bitcoins and transact with peace of mind.
HD wallet illustration
Does the wallet service promote address reuse or is it HD – Hierarchical Deterministic? If your wallet service is HD, you are benefiting from a huge advantage because having a HD wallet will facilitate use of a new Bitcoin address every time you receive funds, helping to protect user’s privacy in transactions.
Transparency in services provided
You should also ask if the wallet provider is transparent in how they operate and who they are. Even more importantly, is the wallet code open source? If not, it is hard to say for sure that the wallet provider is actually securing your Bitcoin. Open source code can be checked and reviewed for any vulnerabilities, as well as allow developers/technical users to be aware of whether the code base is being kept up to date.
Ask yourself if anonymity is important for you? Do you have to register in order to use the bitcoin wallet? Is there a user verification process or does it accept minimal registration information, such as only email, to use the wallet?
Do note that at CoinHako, we conduct Know Your Customer (KYC) and Anti-Money Laundering (AML) checks when on boarding our users and periodically thereafter. This is because we want to be compliant with authorities’ regulations as they become the norm in the cryptocurrency community and run our business sustainably over the long-term. Hence, we feel it’s important to get these right from the start. This would ensure that our user base possesses legitimacy. However, your transactions that occur over the Internet (i.e. after you have signed-up at CoinHako) will be anonymous.**** ****
User experience of Bitcoin wallet is key.
Think about the your experience using this bitcoin wallet. Will the wallet be easy to use or is it a bit confusing? A Bitcoin wallet should be user- friendly. Do you have time and space on your hard disk to download the whole block chain? There are some Bitcoin wallets that make this a requirement. If you are not inclined to such hassle, a hosted web wallet or even a thin client is your preference. Also, keep in mind how you plan to use your Bitcoin. There are wallets that are made specifically for mobile use on iOS and Android devices. If you prefer using your phone to transact, this would be a key consideration in your selection of wallet service. Also, there are other options such as hardware wallet devices that you can use in order to store your Bitcoin offline. While this may help with security, do you have to get the hardware device on your own? Or does the wallet service take care of offline-online storage for you?
Convenience for you lies in the wallet service that performs the latter in a secure manner, as explained next.
Does the bitcoin wallet allow back-ups?
If the wallet provides a way to back-up the wallet, how often is the back-up performed? Are these back-ups encrypted? In addition to these, you should determine if the back-up restoration process is easy to use and readily available.
Location of provider
Another key factor that is crucial for the sustainability of services you can enjoy is what country the wallet provider is located in. Learning where the wallet service is based is important due to the regulations and laws being unique in each country. A stable, prosperous country with a mature economy, high governance standards, established laws which encourage innovation as opposed to stiff regulation would be a great place for any business to operate – Bitcoin wallet services included.
Can you assess that the Bitcoin wallet service is reputable? This is one of the biggest questions you should ask. If you really want to be sure that the wallet service is of good repute, a simple Google or Reddit search for media coverage as well as reviews on their services and speaking to customer service personnel in the company will give you clear indicators.
We hope that you benefited from learning about the key factors to look out for in a wallet service. At CoinHako, we strive to be your best provider by incorporating the industry’s best practices in the account that you get when you sign up. Feel free to check us out further by signing up here, and also you may be happy to learn that we’re hiring!
If you have any clarifications, questions or suggestions, feel free to get in touch at firstname.lastname@example.org!