Best Bitcoin Wallets (December 2023)
Not Your Keys, Not Your Bitcoin!
Alright, so you’ve acquired some Bitcoin. Now, what’s the best way to store it in 2023? We are here to help take you through the process of finding the right Bitcoin wallet for you. Although it seems like a straightforward question, there is a surprising amount of nuance to consider.
How much Bitcoin do you have?
How often do you plan to spend it?
Are you confident your keys are more secure with you than with a regulated custodian’s cold storage?
Bitcoin is a bearer asset, meaning you can hold the keys to your Bitcoin yourself. When you maintain your own Bitcoin keys, you are in direct control of your money. It is not entrusted to any third party, like a bank. You should hold your own keys once you determine that the risk of holding your keys personally is lower than the risk of a custodian losing them. Making this decision relies primarily on your understanding and comfort level of how and why to hold your own Bitcoin keys.
In this article, we’ll help you understand both and explore: If you are short on time, you can instantly jump to any section below by clicking on the link! Alright, let’s begin.
In cryptography, a public key is used to encrypt messages, and a private key is used to decrypt them. If someone wanted to send you an encrypted message, they would encrypt it with your public key. Your private key is the only way to decrypt that message, so as long as you are the only person who holds the private key, you are the only person who can read the message.
Bitcoin uses public/private key cryptography to secure transactions. A private key is created when you make a Bitcoin wallet. The wallet creates public keys that are hashed and used as addresses for receiving Bitcoin. The private key is required to prove the ownership of the Bitcoin stored at that address so it can be spent.
If you personally don’t control the private keys associated with your Bitcoin, then you don’t actually hold your own Bitcoin. In other words, if an exchange or a bank is holding your Bitcoin on your behalf, you are not in direct control of your Bitcoin. You are outsourcing the security of your Bitcoin to another party.
It’s empowering to be able to hold your Bitcoin in your custody so that it cannot be seized or confiscated by banks or the hackers that target them. But choosing to hold your own keys does come with the responsibility for the security of your Bitcoin.
Our goal is to help you become comfortable with the prospect of holding your own keys. Until then, the Bitcoin in your Swan wallet is held by our U.S. custodial legal trust banking partners in an account in your name as the beneficial owner under state-of-the-art security practices.
Now, let’s look at your options for taking control of your own Bitcoin keys.
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The main tradeoff to consider when storing your Bitcoin is between security and convenience. Obviously, both security and convenience are desirable traits when storing your Bitcoin; however, they are directly opposed to each other.
Where do you sit on the security vs. convenience spectrum?
Ask yourself these questions to gain a better feel for what storage method makes the most sense for you:
Total value — Are you storing on the order of 0.1%, 1%, or 10+% of your net worth in Bitcoin? The answer would necessitate very different methods of storing your Bitcoin. Obviously, you would be willing to suffer more inconvenience if it meant protecting 50% of your net worth.
Timeframe/Accessibility — When and how often do you need to spend your Bitcoin? Is this more of a checking account, a medium-term savings account, or is your Bitcoin more similar to a long-term retirement account?
Word to the Wise: Don’t make your custody setup so complicated that even you forget how to access the funds. Bitcoiners tell cautionary tales of people losing Bitcoin due to overcomplicated custody setups resulting in the owner forgetting how to access their coins.
Now that you’ve decided to acquire some Bitcoin (smart move), it’s time to choose where to store your Bitcoin. This can feel overwhelming when you’re getting started. In this section, we’ll give you a quick overview of your options. Like most things in life, it’s all about tradeoffs.
What: Users store private keys on a purpose-built piece of hardware.
Pros: Private keys never touch the internet, which reduces the risk of losing them. Suitable for long-term storage. If you lose your hardware wallet, you can use the backup seed phrase to restore your wallet.
Cons: Users must secure a seed phrase backup, which requires a thoughtful strategy to protect it. It’s recommended to write down your seed phrase on metal and store backups in multiple locations. If your hardware wallet is stolen, your funds are at risk of being hacked. Note: protecting seed phrase backups is standard practice for wallets where the user controls the private keys.
What: Users store private keys on a mobile device.
Pros: Simple to use, suitable for beginners, works for small amounts, convenient for spending even though most people rarely spend their Bitcoin right now (too much upside to holding for the long term.)
Cons: Least secure option as private keys are on a device connected to the internet. If an attacker gains physical access to your phone, funds can be sent to their own wallets. Not suitable for long-term storage.
What: Users store private keys on their desktop computer
Pros: Good UX, Convenient for spending even though most people rarely spend their Bitcoin right now.
Cons: Not very secure as computers are connected to the internet and vulnerable to attacks. Not suitable for long-term storage.
What: User stores private keys in a unique wallet that requires multiple private keys to sign before your funds can be moved. For example, in a “2‑of‑3” multi-sig wallet, a user needs two out of three private keys to send funds.
Pros: One of the most secure ways to store your Bitcoin, reduces the effectiveness of physical attacks and is suitable for long-term storage.
Cons: Hard to set up on your own, but several services exist to make it easier. Not convenient for spending, but that’s the point.
Hot wallets are connected to the internet. This means your keys are easier to access than they are on a hardware wallet, but this also means your funds are more vulnerable to hackers. Hot wallets are ONLY recommended for small amounts.
Cold wallets are NOT connected to the internet. This means your funds are harder to access. Cold wallets are less convenient for users but much more challenging for hackers to access your funds. Cold wallets should be considered the only option for long-term storage.
Most wallets require users to write down a “backup seed phrase.” This is a safety precaution in case you lose access to your private keys/wallet. This also means users must be very cautious with their backups as they contain all the necessary information to access your funds. Treat your backups as securely as you would a pile of gold.
Another way to store your Bitcoin is with a seedless wallet. These are designed for multi-signature accounts where users don’t create backup seeds and instead rely on a service for backups. Casa is leading the charge with seedless wallets with their Keymaster multi-signature product.
Instead of requiring a single private key signature to move your funds, multi-sig wallets require multiple signatures to move your funds. There are many ways to architect a multi-sig wallet, but let’s use a 2‑of‑3 for our example.
As a user, this means you have 3 total private keys corresponding to a single Bitcoin wallet. To move your funds, you need at least 2 of your private keys to sign a transaction. Most users will physically separate the locations of each key to further minimize risks. Just don’t get too creative, or you might fool yourself and lose your funds (it’s happened many times).
As mentioned above, here are a few examples of Multisignature wallets:
Swan Vault (2-of-3)
Blocksteam Green Wallet (2‑of‑2)
Casa’s Keymaster (2‑of‑3 and 3‑of‑5)
Unchained Capital’s Vault (2‑of‑3)
Specter (Can design own setup)
Multi-sig offers some room for error. If you have only a single private key and lose it, your funds are lost forever. However, if you have a 2‑of‑3 setup, you can afford to lose one private key and still access your funds.
Multi-sig also mitigates physical attacks. Let’s say you were physically threatened and asked to give up your precious Bitcoin. If you had a standard wallet (not multi-sig), you could quickly transfer your Bitcoin to the attacker.
However, if you had a multi-sig setup, with one of your keys at your house and the other keys in a separate location (ex: your office and a safety deposit box). This geographic separation of keys significantly reduces the incentive for a physical attacker to target your Bitcoin.
Each set of private keys is capable of generating billions of public keys. These public keys are then transformed (through a mathematical process called hashing) to produce public addresses.
Every single one of those addresses can receive Bitcoin. So each set of private keys you own can produce its own unique, massive set of public addresses that you, and you alone, own. Anyone can send Bitcoin to those public addresses. Still, only the holder of the private keys can spend Bitcoin from those addresses.
Many people like to analogize private keys, public addresses, and Bitcoin wallets to email addresses. The private keys are your password, the public address is your email address, and the wallet is your email client (Gmail, Protonmail, Yahoo, etc.). Although useful, this analogy is slightly misleading because, with Bitcoin, each password (private key) you own gives you access to billions of potential email addresses (public addresses) to send Bitcoin from and receive Bitcoin to.
Don’t be concerned if your wallet consistently generates new Bitcoin addresses. That’s actually one of its features! Wallets generating and using new public addresses help protect your privacy from people snooping on the public Bitcoin blockchain. Just remember that so long as you still hold the private keys to your wallet, you alone are still on the present and future Bitcoin sent to any public address that your wallet generated.
Just make sure to keep your Bitcoin private keys safe, secure, and private.
The easiest way to approach Bitcoin custody is to focus on “How much money is at stake?” In other words, what percentage of your net worth is being secured.
Here’s our breakdown, but of course, each person’s situation is unique. Use this as a guideline rather than absolute truth.
Muun — It’s probably the easiest bitcoin wallet for iPhone and Android. It seemlessly integrates Bitcoin and Lightning.
Swan Vault — Best-in-class user experience for secure self-custody. Provides inheritance planning for Swan Private clients. Vault is Built on Bitcoin Core and Specter, a fully open-source stack backed by Blockstream Jade.
Casa Keymaster Multi-sig — Easy to use interface, can choose from 2‑of‑3 and 3‑of‑5 setups. They have a self-recovery tool. However, I have not personally used this and would like to do more research before a wholesale recommendation.
Unchained Capital’s Multi-sig — Easy to use interface, 2‑of‑3 setup, can access financial services based on your BTC in deposit.
Self-Hosted Multi-sig using Specter — This requires more technical proficiency than Unchained and Casa; however, you don’t sacrifice any privacy.
Pro Tip: Some users choose to diversify their long-term storage. They may store funds in multiple wallets. For example, keep a third of their Bitcoin with a Specter multi-sig, another third with Unchained Capital Vault, and a third on a Coldcard.
That’s our summary of the 2023 Bitcoin self-custody landscape. If you’re still pretty intimidated, no worries. We recommend taking control of your own Bitcoin keys only once you are comfortable with the logistics. In addition, you should check out our list of the best Bitcoin IRA and Crypto IRAs available.
Self-custody is growing easier all the time. Consider your unique situation, select a storage method that works best for you and stay up to date with the latests updates — like Swan Vault.
On October 5, Swan Bitcoin and Blockstream announced Swan Vault.
The Specter Labs team joined Swan in 2022 to lead the development of simple self-custody and collaborative-custody solutions for Swan clients. The Specter team will continue supporting and developing the open-source Specter apps. We are excited about the technological advancements we’ll bring to market over the next couple of years, with dramatic improvements in user experience to help exponentially more people become self-sovereign.
Sign up now to get on the list for early access to Swan Custody. It’s been said so many times: “Not your keys, not your coins.” We’ll help millions overcome the obstacles to getting there — easily, quickly, safely, and confidently.
We’re here to help; reach out with any questions.
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Brandon is an entrepreneur, writer, speaker, and passionate Bitcoiner. His articles have been read by more than 2 million people online. Most well known for exploring the parallels between bitcoin and mycelium.
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