Now the fun part!
Storing your Bitcoin is a vast topic, and we will approach it step-by-step. For this discussion, let’s assume that you have never purchased Bitcoin before.
In Bitcoin Baby Steps - vol 3, we covered various platforms where you can purchase Bitcoin. If you haven’t read that yet, I recommend doing so before proceeding with this article.
Suppose you’ve perused the purchasing options from the previous article or found another resource for buying Bitcoin. To start, you need to set up an account with an exchange and fund it with money. This usually involves connecting to your bank, though some platforms also accept other payment methods, such as ApplePay, GooglePay, or a credit card.
With funds in your account, you’re ready to purchase Bitcoin. In most cases, you set a dollar amount to spend, and the exchange sends Bitcoin (minus any applicable fees) to your wallet. If you recall from Bitcoin Baby Steps - vol 3, what you receive for your money are Sats.
Most exchanges will allow you to store your Sats indefinitely. As a beginner, it’s probably fine to keep your Sats on the exchange. However, at some point—which varies for everyone—you might find that you have what you consider a substantial amount of money stored as Sats on the exchange. This amount is subjective; you need to define your comfort zone.
Security should be a primary concern at this stage. The Bitcoin Network has never been hacked, and the chances of it being compromised are minuscule. Any previous Bitcoin losses have occurred due to an exchange hack or individual error leaving their personal wallet vulnerable. While exchanges strive to maintain optimal security, they are not immune to potential attacks. Consequently, if an exchange does get hacked, you could lose all your Bitcoin. Hence, it’s advised not to keep more on an exchange than you can afford to lose.
There are numerous options for storing your Bitcoin, including many digital wallets. Remember, if you transfer your Bitcoin from an exchange to a personal digital wallet, you are responsible for its security. To emphasize, YOU are responsible for YOUR wallet’s security. It’s akin to storing money in a personal safe.
Wallets primarily fall under two categories: cold storage and hot wallets. Most beginners start with a hot wallet, a digital wallet that can be on your computer, mobile phone, or both, depending on your chosen wallet. In contrast, a cold storage wallet is a specific type of hardware used to store your Bitcoin’s private key. Your private key is a lengthy code that secures your Bitcoin and is highly unlikely to be hacked. Paper wallets are also an option, but they are less recommended due to their vulnerability.
Today, we’ll focus on hot wallets. While they have some drawbacks—like potential vulnerability to malware—they are convenient for sending Bitcoin to other wallets. For instance, if you want to gift some Bitcoin to a family member, it’s a simple process if you both have hot wallets. Note that while you and your friend don’t need the same type of wallet, you do need to transact in the same cryptocurrency, often represented as "BTC" for Bitcoin.
In actuality, a digital wallet doesn’t store your Bitcoin; it stores your Private Key, which signifies that you own the Bitcoin/Sats the wallet points to. The Bitcoin itself never leaves the Bitcoin Blockchain.
Here are a few desktop digital wallets I’ve tried:
Here are a few of the digital wallets for desktop that I have tried:
Blue Wallet - good for both desktop and mobile. It has some very nice features, and is the one that I use the most.
Electrum Bitcoin Wallet - powerful desktop only wallet, but really is not ideal for the beginner.
Wasabi Wallet - it too is powerful, but I would not recommend it to the beginner.
Exodus - a good choice for the beginner, and works on both desktop and mobile.
Blockstream Green - this wallet is easy to use, but it is what is called a multi-sig wallet, and that makes it a little more challenging to work with in certain situations. I would not recommend Green Wallet for the beginner.
Blue Wallet - suitable for both desktop and mobile. It has some excellent features, and I use it most frequently.
Electrum Bitcoin Wallet - a powerful desktop-only wallet, not ideal for beginners.
Wasabi Wallet - another powerful option, not recommended for beginners.
Exodus - a good choice for beginners, compatible with both desktop and mobile.
Blockstream Green - user-friendly but operates as a multi-sig wallet, which can make it a bit challenging to handle in specific situations. Not recommended for beginners.
Muun Wallet - easy to use and boasts a unique feature that allows sending and receiving BTC on the main blockchain and the Lightning Network, which we’ll cover later!
Sparrow Wallet – easy to use, but very powerful. I’m starting to move to Sparrow. BTC Sessions has some great tutorials for Sparrow.
There are numerous other hot wallets available, so I encourage you to conduct your own research. The good news is if you’re unhappy with a wallet, you can always move your Bitcoin to a different one.
If you’re just starting, I’d recommend either Blue Wallet or Exodus. Blue Wallet only supports Bitcoin, making it arguably more secure, while Exodus can handle multiple cryptocurrencies.
Let’s assume that you’ll only work with Bitcoin. This decision simplifies the process, enhances safety, and is the most likely path to building a substantial store of value.
This concludes "Storing Your Bitcoin - part 1." In part 2, we’ll delve into more detail with one of the wallets.
For additional Bitcoin learning resources on YouTube, consider:
1. BTC Sessions: My go-to resource for learning about Bitcoin. Ben does a fantastic job with his tutorials! Ben only covers Bitcoin.
2. The CryptoDad: Another great resource for crypto beginners. He has some excellent tutorials, covering more than just Bitcoin.
3. 99Bitcoins: Covers Bitcoin basics and much more.
That concludes this post. Stay safe out there!
Here are the other volumes of Bitcoin Baby Steps:
Thank you for reading Bitcoin Baby Steps!