Desktop Wallets Overview
Everybody knows about Bitcoin. From your old aunt to the postman, all the world knows about this financial revolution. And the best thing is, now more than ever millions are buying and using Bitcoin. But a lot of people are still confused about the functioning of this relatively new technology. More specifically, just where is it stored?
Well, Bitcoins are stored on a software program called a Bitcoin Wallet. It’s not a physical place like you probably already guessed, the wallet holds a private key (password) that corresponds to the Bitcoin address of that wallet. Bitcoin wallets allow for easier Bitcoin transactions, be it the sending and receiving, and give factual ownership of the Bitcoin in the wallet to the user. There are many types of Bitcoin wallets, the four main ones are desktop, mobile, web, and hardware.
Bitcoin wallets are also called digital wallets. As an example, a trader must open a Bitcoin wallet so he can start trading. A Bitcoin wallet is similar in concept to a physical one. The only difference is that instead of storing the physical currency we use every day it stores relevant information such as the private key we use to access a Bitcoin address and transact.
Wallets are a must if you are holding Bitcoin, not as a speculative asset but because you intend to use it as a currency. It provides more security and allows you to transact freely.
Today we will be looking more specifically at desktop wallets. They are installed on your computer and have the goal of functioning as an address you can send Bitcoin through. To steal a desktop wallet you would very probably have to steal the computer and that’s not exactly easy which makes them inherently more secure than a mobile wallet which is a lot easier to steal. But also less secure than a hardware wallet, which is your best option for storing a lot of Bitcoin.
Bitcoin investors need to know how to best use and store their coins. So without further ado let’s get into it, starting with the best Desktop wallets to check out.
Atomic Wallet excels at being extremely easy to use and a great way to store your Bitcoin. It’s a multi-currency wallet and allows you to store up to 500 different coins in one single interface.
The wallet also comes with a feature called Atomic Swap that allows you to exchange cryptocurrencies without having to use an exchange, which makes it very convenient. And for altcoins that do not support these features, Atomic Swaps provides third-party built-in services such as Changelly and ShapeShift to exchange your coins.
Exodus, a platform launched in July of 2016 is quickly growing in the crypto wallet space. And not surprisingly, it is the wallet most suited for beginners and easiest to use.
On the downside though it is not open source. And that’s potentially a big deal for a lot of crypto enthusiasts. It essentially means that the code is not available to the public, so the developer could insert code that hurts and takes advantage of the customer, without him knowing. And it’s pretty clear why transparency is vital when it comes to money. But like we said before if you are storing a lot of Bitcoin just use a more secure hardware wallet, never put what you’re not willing to risk on a desktop wallet.
The platform allows you to store a lot of coins other than Bitcoin like Ethereum, Litecoin, Dash, and more. And it’s available for Mac, Windows, and Linux
Electrum – The All-Around Winner
Electrum is probably the best desktop wallet out there. It’s open-source so the code has been reviewed by their users so to assure that nothing shady is going on and clients aren’t being taken advantage of with malicious intent.
A huge plus of Electrum is that when the Bitcoin network is crowded and the cost of transaction fees skyrockets Electrum allows users to replace the fee that has already accrued but has not yet been confirmed on a transaction. It also offers address tagging, fee adjustments, encrypting, and signing or verifying messages.
But one thing that could be considered a downside to some is Electrum has an ugly interface. It looks like it’s straight from the ’90s. And it could prove challenging for people new to Bitcoin to understand how it works, so it’s not ideal for beginners.
Bitcoin Core – A full Bitcoin node
Most of the Desktop wallets are known as SPV or lite wallets. What this means is that it does not fully copy the blockchain to verify a transaction, these types of wallets rely on computers that compose the network to provide them with the necessary information. Bitcoin Core works differently; it is something known as a “full node”. This just means that once the wallet is downloaded you also download all of the blockchains. This is as you may have already guessed very time-consuming considering the blockchain’s size is often hundreds of gigabytes. But once it’s downloaded you’ll be able to independently verify all transactions on the network without relying on anyone else, better safe than sorry.
Bitcoin Core is such a hassle to set up, so consider subscribing to it only if you think it’s worth giving up the convenience for some extra security.
Guarda offers multi-platform cryptocurrency wallets for the web, desktop, and mobile. It offers good security measures and is extremely easy to use. It can also be synched with a hardware wallet such as Ledger, which is like I said before the best option for storing huge amounts of cryptocurrencies.
It offers support for a high number of cryptocurrencies, more than 40 in fact, and also thousands of tokens. The only evident flaw I see with Guarda is that they charge relatively high fees. Free wallets need to make revenue somehow, that’s why they have to charge a crypto exchange fee or fee for transactions.
Copay – A Multisig Bitcoin Desktop Wallet
Copay is owned and was created by BitPay, a giant among the Bitcoin payment service providers. It’s a multisig wallet and it’s available for almost all major platforms, be it mobile and desktop. Multisig adds a layer of security and allows you to set a specific number of people to sign off on each transaction, to broadcast it to the whole network. The feature is great for extra security against theft and an affordable alternative to the more expensive hardware wallet. And yes, Codpay is indeed open-source and we all love to see that.
The GreenAddress Wallet is relatively easy to use and accessible to all traders from beginners to experts. It is open-source which is a great way to ensure that customers are not being taken advantage of with malicious code. It also has some solid security features such as Multisig, so your funds are in safe hands.
MultiBit HD is a desktop wallet that allows you to open multiple wallets at a time and synchronize with the network particularly quickly. It’s an open-source project which makes it extra safe.
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Security Tips for Desktop Wallets
Always set up a password to protect your funds
Set a password and make sure it’s secure. It is a proven fact that three-quarters of people use the same password for over ten different accounts. You may be one of them, but you don’t need me telling you why that’s a terrible idea, do you? Hackers are really smart at figuring them out.
Store your recovery phrase on something that is water and fireproof
On top of the password, you will be given by the crypto wallet provider a backup recovery phrase, typically of 14 words. You can use this phrase as the last measure when you forget your password or just want more security. You must write it down on a piece of paper and store it in a water and fireproof place, so it won’t get destroyed even in the worst-case scenario.
DO NOT store a lot of coins on your desktop wallet
Desktop wallets are not that secure. Your computer may get stolen and your account broken into or hacked. They offer more security than a mobile wallet but less than a hardware wallet which is what you should use if storing a lot of Bitcoin. Use a desktop wallet just for amounts you can afford to lose.
Use a VPN when transacting on a desktop wallet
Most desktop wallets are already secured with protocols such as the 2FA (two-factor authentication). But it is always a good idea to have some extra security, such as using a VPN to hide your IP address when you log into the wallet. If in the unlikely but possible eventuality you get hacked, believe me, you will wish you had used a VPN
When should I use a desktop Bitcoin wallet?
You should use a Bitcoin wallet when you need to store some coins away, that can be transacted in a quick and stressless way. If on the other side you need to store sizable amounts of Bitcoin that you do not intend to use for the time being, then you are better off with a hardware wallet. Desktop wallets are less secure than hardware wallets and you should not, under any circumstances keep a lot of coins on them,
Do desktop wallets work with hardware wallets?
Fortunately yes, a lot of desktop wallets do allow the user to use hardware wallets as a transaction signer. This essentially means that your private key is not on the computer your desktop wallet is, which makes it a lot more secure.
What’s the difference between a desktop wallet and a web wallet?
A desktop wallet stores your coins on a PC or a laptop. It offers control of your crypto funds without third-party interference. It’s more secure than a web wallet but it’s possible to get your key stolen, so security will be your responsibility.
Web wallets on the other hand are available to be accessed on any device connected to the internet and from any location. It’s a very convenient option, but the problem that your private keys will be in the hands of a third party, which makes it a lot more vulnerable to hacking or fraud.
Are desktop wallets free?
Yes, desktop wallets are free and earn their revenue by taking a small commission for every transaction or exchange you do. Hardware wallets on the other side are not.
If someone has access to my computer can they access my bitcoins?
No, fortunately, it is not that easy. If you store your Bitcoins on a desktop wallet they would first have to learn your security key or phrase.
How do I backup my desktop wallet?
Yes, there are several ways to backup your desktop wallet.
- Create a seed phrase. Most desktop wallets won’t let you recover your password if you lose it or forget. But they will give a 14 word randomly generated phrase that can be used to recover your account
- Text files. Some desktop wallets give you the option to export your security keys into a text file.
- Make a paper copy. It’s really easy to do, just disconnect your computer from the internet, print out the file with your security keys, and keep them somewhere safe.
Can I use more than one desktop wallet at a time?
Yes, you can have as many desktop wallets as you please on your device.
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com