Bitcoin wallets are secured computer programs developed to store bitcoin. Some bitcoin wallets allow for the storage of several other cryptocurrencies.
Along the coronavirus, another news that dominated the world news over the last year is the astronomic rise of Bitcoin.
Asides from being an easier faster and secure means of payment, Bitcoin has shown up on our radar as a viable investment opportunity. Although there is still some doubt around its stability.
As the Covid 19 effects hit economies worldwide, factories shut down, economies ground to a halt. Virtually all fiat currencies of the world took a hit as Governments sought to fight back by dropping interest rates and fractionally devaluing their currencies.
Inflation rates reached record highs, Oil prices hit record lows, and people responded by seeking to preserve their wealth through alternative means. Some investors invested in traditional conservative assets such as Gold which was quite evident in the steady rise in Gold stocks in 2020.
Another unorthodox means people that people have sought to preserve and grow their wealth during the pandemic is cryptocurrency.
What is Cryptocurrency?
Succinctly put, it is the use of computer codes and networks, and virtual ledgers to generate currency, and facilitate trade. Just as we have different real-world legal tenders, otherwise called fiat currency, such as the USD, CAD, British Pounds, Euro, Dinar etc.
We similarly have different issues with cryptocurrencies. The most prominent ones are Bitcoin, Ether, Dogecoin, Litecoin among others.
Cryptocurrency has arrived in our digital space to disrupt the way we conduct business all over the world. It proffers seamless solutions to the many snags and weaknesses in the current world business order.
The fiat system is riddled with many flaws such as snail speed in the verification of transactions, security loopholes incessant cyberattacks, phishing, excessive transaction fees, exchange rate imbalances in international trade among others.
Basically, Crypto coins are here to save us from the banks, or so we think.
What is Bitcoin?
Bitcoin is a cryptocoin (cryptocurrency) which is was originally built in 2009 by an engineer or a group of engineers under the pseudonym Satoshi Nakamoto.
Bitcoin is built on a Distributed Ledger Technology called Blockchain.
Think of Blockchain as your bank’s general ledger, where details of all transactions are kept. Whenever you request your bank statement, the details can then be called up from that ledger.
Except that Blockchain is a decentralized system that is stored on different computer networks in multiple locations. Making it impossible for the system to be targeted for hacking. For instance, to truncate the gold system, you would have to attack and destroy every single gold mine that exists on earth.
Blockchain technology is one of the reasons Bitcoin has quickly gained prominence over other cryptocurrencies.
How does Bitcoin work?
The first step is to open an account under your name. Your name can be a sequence of characters, numbers or a nickname. That’s all you need.
Public keys and Private Keys and Blockchain technology are what ensure the impregnable security of the crypto-economy.
When you open a bitcoin account and initiate your first transaction, a unique pair of public keys and a private key is encoded by the network and issued to you, think of this as your email address. Instead of letters and domain names, the Bitcoin keys and addresses are encoded in a cryptographic computer language called Hash.
You can then issue this Public key to others which will allow you receive funds (crypto-coins) into your account.
To gain access to your account you have to provide the private key which is only known to you. It is impossible to regenerate a private key once lost.
Bitcoin public keys are usually about 34 alphanumeric characters long, which further reinforces how impossible it is to hack the system. In comparison, your strongest bank account passwords are around 6-12 characters.
What is a Bitcoin Wallet?
Because crypto-keys (Public and Private Keys) are over 30 characters long, for most people, it is practically impossible to commit them to memory, hence the need to store them somewhere safe.
Bitcoin wallets primarily are computer programs developed to store bitcoin. It contains a collection of public and private keys which are unique to each user.
However, some software wallets also facilitate the sharing of Public keys which essentially facilitate payments, trade and transfer of coins between users.
Bitcoin wallets are designed for almost all internet-enabled devices such as desktops, mobile phones, tablets etc. There are also physical hardware wallets that can be used to store cryptocurrency offline.
Types of Bitcoin Wallets
Software Wallets – These are wallets that are hosted in the cloud, either as software programs or websites. They are accessible using any internet-enabled device.
Hardware Wallets – They are crypto-coin wallets that are designed in form of encoded physical drives. Such as USB drives.
Software Bitcoin Wallet VS Hardware Bitcoin Wallet
Some experts say that while Software wallets are less secure as they are only our individual devices, phones, laptops may be compromised. While Hardware wallets carry the risk of getting missing, stolen or damaged, some argue that they offer more security as they can always be touched and seen and access can be easily retrieved in the case of death or incapacity of a user.
Furthermore, Software wallets are free, which Hardware Wallets can cost hundreds of $CAD.
Also the fact that many software wallets also double as crypto-currency exchanges make them more widely used.
A crypto-currency exchange is similar to stock trading. You can think of crypto-exchanges as your brokerage account that you use to buy, sell or transfer stocks of different companies.
10 Best Bitcoin Wallets in Canada
To pick the right bitcoin, you have to access the qualities and distinct features of each one. For Software Wallets, the key features to look out for may include Fees, Simplicity, Versatility, Currencies supported. While Hardware wallets can be evaluated based on Security, Versatility Devices supported, & Durability
Best Hardware Wallets in Canada
- Nano X: Its main distinctive feature is that it is a blue-tooth-enabled hardware. It uses the Bluetooth mechanism to connect to other devices such as PC and Mobile phones. Another key feature is that it offers new updates frequently which makes it much more difficult to get attacked by hackers. You can get the Nano X here.
Versatility: Supports 1184 Crypto coins
- Nano S: It was also created by Ledger. However, it’s an older version compared to the Nano X. It only connects to the device through the use of a USB cable. Its relatively old-age offers an advantage and it’s regarded as tested and trusted, having sold over 1million units worldwide. It is regarded as a cheaper option compared to the Nano X. You can get the Nano S on Amazon.
Connectivity: Connects to computer devices using USB Cable
Versatility: Over 1000 coins supported
- Trezor Model T is Legder’s main competitor. The Model T features a multiple access system. You can connect with a USB connection or use the PIN/Passphrase unlocking mode.
Security: Although the price is quite high, it is regarded as highly secure.
Versatility: It supports over 700 coins.
- Trezor One is regarded as the low-budget Model T. It has many features of the Model T. Although it lacks the flashy look of the Model T, it retains the security features.
Cost: $70 CAD
Versatility: It supports over 700 coins.
- Keep Key is one of the most affordable bitcoin wallets in the market. Its key feature is that the device is built without an operating system and its creator’s claim that it makes it impregnable to viruses and other malware that usually have to be installed in operating systems. It also has its own crypto-exchange, which makes it possible to trade cryptocurrencies on the wallet.
Versatility: One of Keepkey’s main limitations is that it does not support as many crypto-coins as its competitors. However, it sure focuses on supporting the most prominent coins such as Bitcoin, Bitcoin Cash, Dogecoin, Ethereum, and Litecoin.
Best Software Wallets in Canada
- Coinomi is a software bitcoin wallet created in the UK but is available in Canada.
Fees: Outgoing transactions are charged a small fee. Depending on the number of currencies involved in the transaction. This fee is used to pay miners who verify these transactions on the blockchain. It is available on Mobile phones and has a wide coin support
- Armory – If you are someone who is only focused on buying Bitcoin and you just don’t care about other cryptocurrencies then Armory may just be the suitable option for you.
It is designed for long-term storage
Fees: Variable, depending on the volume of transactions.
- Exodus is another software that allows you to manage, secure and trade all the prominent cryptocurrencies like Bitcoin, Ethereum, and Ripple.
Its key feature is an attractive, sleek design. It also allows you to enable Touch ID and Face ID to unlock the app from your phone without spending time typing in your passcode. Although some experts argue that this makes it relatively unsafe but it sure makes it perfect for daily use online.
- Coinbase is one of the most prominent crypto-currency exchanges which features its own mobile-based crypto currency wallet.
Fees: Miner fees apply. You also pay a small fee when you use your crypto-coin for a fiat currency.
- Trust Wallet: is now regarded as one of the most secured software wallets after it was acquired by Binance in 2018. It essentially means that Trust Wallet has the backing of the largest crypto-currency exchange in the world.
Other key features: It is Decentralized and Supports Staking. Staking means putting up some of your coins at stake to be used to verify transactions in the Blockchain. This can serve as a way to generate passive income while retaining full ownership of your bitcoin.
Other Bitcoin Wallets Worth Considering
Paper wallet – As the name implies, it is neither software nor hardware. It is simply the process of printing and storing your private keys on a piece of paper. It is free from all risks of hacking or computer compromise.
However, losing this piece of paper means losing all your coins. For safekeeping, you can make copies and store them in different locations of your choice.
Trading Bitcoin in Canada
Two factors mainly determine the acceptance of cryptocurrency in any country. Government Policy and Public Perception.
Government Policy: At first, the Canadian government frowned at the use of the crypto-currency system. However, in recent times this has changed. Along with countries like Russia and China, Canada has now opened up to making the first steps towards embracing the system.
The Canadian government does not actively promote the use of crypto-currency as aggressively as Russia does. It does create an enabling environment for it to thrive. Although, from time to time it makes official statements to guide the public on its use especially in times of sudden rise in its value.
For instance, Canada’s Securities Administrators (CSA) have approved the first publicly traded Bitcoin ETF.
Public Perception: General public acceptance of Bitcoin is also on the rise. There are now multiple Bitcoin ATMs across the country. And the public apathy towards cryptocurrency is also gradually dissipating.
With public statements from finance influencers such as the richest man in the world Elon Musk, global trust in Bitcoin has never been better.
The general consensus is that when it comes to the security of your Bitcoin in cold storage, a Paper wallet is the safest. It completely protects you from all kinds of potential cyber-attacks. It is also widely agreed that Hardware wallets are much safer than Software wallets.
Bitcoin Wallet Tips to remember
- Exchanges are unreliable always ensure to keep your Bitcoin in a wallet.
- If you use Software wallets, be extra careful with your security information, passcodes and passwords. Never share them with anyone.
- Always keep your Hardware wallets within sight.
- Make spare copies of your paper wallets and keep them safely at different locations.
- Keep track of the market for relevant news about cryptocurrency.
- It is wise to have split your Bitcoin into different wallets.
- If you choose to use Bitcoin as a means of receiving payments and conducting your day to day business, you should have a holding wallet and another transactional wallet. (Just like you would have a savings and checking account with your traditional banks).
Lastly, always remember that Bitcoin and other cryptocurrencies are volatile. It is not a Ponzi scheme where profits are the only outcome.
Be mentally prepared for drops/losses, but stay patient and trust the process. If you must invest, play the long game and always consult a financial advisor before making any investment decisions.
Just like the stock market, invest only what you can afford to lose.