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What's the best wallet to store my Bitcoin? Cold Wallet vs Hot Wallet vs Exchange

Bitcoin wallet icon, a leather wallet holding a Bitcoin coin.

Bitcoin wallet, from flaticon.com.

First things first, you need to know that...

You are your own bank

Bitcoin's technology brought us a new paradigm where you take on the job of custodying (holding and protecting) your own money, in whatever way feels safest and most comfortable to you. So, unless you don't care about your money at all, any security measure is worth it.

But what are you actually custodying?

You've probably got a leather wallet with a few hundred-dollar bills inside, right? Okay, some tens? Come on, not even a single crumpled one-dollar bill? The point is, you can physically put some cash inside it. That does not happen with Bitcoin.

In other words, bitcoins are not "inside" the wallet or on the websites. These are just clients (software) that let you use a pair of public and private keys.

Sticking with the bank analogy, the public key would be your "account number" (on the blockchain). I just need to know it to send you something. The private key would be the "password". I just need to know it to drain the money.

Okay, got it... How do I get access to my bitcoins?

Exchanges and wallet websites

The elders of this digital-money world are tired of repeating it... AN EXCHANGE IS NOT A WALLET. And unless I'm going crazy, we were making an analogy with a bank, right? So, when you leave your money at the bank, it isn't yours anymore, it's the bank's. If it goes bust or gets robbed, you can say goodbye to that hard-earned money and cry in the fetal position. With bitcoins, "it's the same thing". By leaving your coins in exchange addresses or on websites where someone else has access to your private key, you're handing your ownership over to a third party. And we already know the risks of that (see mtgox).

Hot Wallet vs Cold Wallet

hot wallets are connected to the internet while cold wallets are not. - Leah Stella Stephens

In short, Hot Wallets are meant to be your "everyday" wallet, while Cold Wallets are meant to be the "vaults" for your coins.

Wallets I recommend

Software (on-chain):

Hardware (on-chain, for signing transactions offline):

Metal wallets (for storing your seed):

Software (off-chain, lightning):

1 sovereign (you hold the keys)

2 custodial (you don't hold the keys, they're under a third party's custody)