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What is a Bitcoin wallet?

To buy Bitcoin or other cryptocurrencies, you first need a suitable wallet. The wallet works in a similar way to a real wallet. Unlike a real wallet, however, no coins are placed in the wallet, because Bitcoin is a digital currency. It is a purely digital wallet. Wallets are also known outside the world of Bitcoin & Co. and are sometimes called cyberwallets or e-wallets. They can be used to pay for digital goods on various electronic platforms. It is the same with the wallet for cryptocurrencies. Anyone who wants to buy something with Bitcoin pays from their wallet.

However, the analogy already ends at this point. It is not true that the coins themselves are stored in the wallet. The user only stores the key, or the private keys required for issuing coins. The cryptocurrency (e.g. Bitcoin) is still stored in the blockchain and not in the wallet. In this sense, the wallet is a digital key ring to which all the keys for the transactions are attached. Colloquially, however, it can be said that coins are stored in the wallet.

Richard Bradley
Verified writer

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Updated Sep 13, 2021.
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(729 User Reviews)
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Richard Bradley
Verified writer

Richard Bradley is a writer and editor who has published in several online publications specialising in cryptocurrencies and stock trading. He focuses on topics that include investing, price analysis and blockchain developments. He is passionate about the promise of blockchain technology to democratise the global financial system and its potential to become a driving force for social and political change around the world.

Best Crypto Exchange Brokers 2021

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8.5 Nexo review
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Special features A list of features that provide a given broker with a competitive edge.
No deposit fees for all payment methodsCheap method to buy Bitcoin instantly.One of the few providers that offer PayPalVery user-friendly trading for beginners
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8.9 Nexo review
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the largest range of functions of all brokers (savings plan, crypto index)very clear, easy to understand, modern designthe provider (support, payment methods)many coins, also metals, shares, and ETFs
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many cryptocurrencies, also smaller coinsDirect payment to own wallet possibleUp to 500 euros without verification with IDIntuitive operation
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How does a Bitcoin wallet work?

With Bitcoin, factors such as transparency and traceability of transactions play an important role. Each wallet is therefore assigned a specific character string, or the wallet consists of only one such character string. Each string is unique. This means that no two wallets exist with the same character string. This makes it possible to clearly distinguish between the different wallets at any time. The credit is then stored in the wallet.

Everyone can see how much credit is stored in a wallet. So if someone knows the character string of a wallet, they can see its balance. However, the wallets are anonymous. It is therefore not apparent which person owns the wallet. Personal data is not stored in connection with the wallet, and it is protected with a password. Thus, it is not enough to know the character string to access a wallet and its credit.

What is the difference between a public key and a private key?


The public key is the receiving address of an account. This key must be public so that, for example, payments can be received from other users. For this, they must know the public key. However, it is only possible to spend the Bitcoin stored on the public key with the private key. The private key is therefore the one stored in the wallet. The private key mustn’t be lost under any circumstances. If the legitimate owner loses his private key, he no longer controls the money in the wallet.

Paper wallet as an alternative

A paper wallet is also a cold wallet. Since the private keys are stored on a paper wallet, there is no connection to the digital wallet – except when the keys are created. This is also where the biggest security gap lies: While the keys are being generated, the website code should be running offline. It is also advisable to set up a new operating system beforehand to reduce the misuse of spyware.

Step by step to the Paper Wallet

Step 1
  • On sites such as Walletgenerator.net, it is possible to create a public key and a private key to store the Bitcoin there. The website can be downloaded to run offline.
Step 2
  • To generate the keys, move the mouse back and forth. The private key consists of a random combination of letters and numbers, which is generated from a pool of 2 to the power of 256 possibilities.
Step 3
  • You can then print out the keys and their corresponding QR codes. Alternatively, you can simply write them on a separate sheet of paper.
Step 4
  • To ensure the long-term protection of a paper wallet, it should be laminated or at least stored in a transparent film.

Both hardware and paper wallets are considered very secure. In contrast to hardware wallets, paper wallets come without additional costs – but the effort is somewhat higher. Although paper can suffer no technical defects, it can be found, stolen, or destroyed.

How to keep your cryptocurrency safe

Similar to a physical wallet, you should protect your Bitcoin wallet. If you do not protect your wallet well,  hackers might gain access to it. Fortunately, there are many methods to secure your wallet well. Take your time and go through these tips:

Never store your wallet details digitally

Write the following information of your wallet provider on a piece of paper: login name, password, recovery seed. Keep the written information safe. Do not take photos of it with your mobile phone. A mobile device permanently connects to the internet. This makes it easier for hackers to access your wallet.

If possible, use Two Factor Authentication (2-FA)

This may sound complicated, but 2-FA simply means you log in with two devices. Why is this useful? This way, hackers cannot take over your wallet with just your password. To access your wallet, another code is needed. This code can be sent to you via SMS or through apps like Google Authenticator. We recommend you use both for maximum security.


If you have selected 2-FA by SMS, you will receive an SMS with a unique code to your mobile phone every time you want to open your wallet. To activate 2-FA by SMS, you will need to enter your phone number in your wallet’s security settings. This means you need both your mobile phone and your password to open the wallet.

Google Authenticator

You can find the Google Authenticator app in the App Store (iOS) or Google Play Store (Android). To connect your wallet to the Authenticator, you need to scan a QR code with the app. You can find the code in the security settings. Print out the QR code in case you lose your phone. To access your wallet, you will need to type in this code.

To activate this extra security for your wallet, go to your security settings. Here, select 2-FA via Google Authenticator. You will see a QR code you need to scan. After scanning, the app is connected to your Wallet. You will now also see the code of your Wallet in the overview of Google Authenticator.

Note: The QR code is also a backup in case you lose your phone. Therefore, print the code after use and keep the printed paper safe.

Types of UK Crypto Wallets

Hardware and software wallets

Wallets can be divided into software and hardware variants. A software wallet can take on very different forms. The web wallet, for example, is popular. Here, the user of an exchange of cryptocurrencies receives an address linked to his account, which can execute trading orders. However, this form of wallet can be problematic if an exchange is hacked. Unauthorised persons could then gain access to one’s own coins. Mobile wallets are also popular and widespread. These exist in the form of an app on the smartphone. The advantage here is that the wallet can be carried everywhere. The desktop wallet works similarly, but the software is installed on the PC. The advantage of the desktop wallet is the greater range of functions of the software compared to an app.

Things we didn’t like:
possibly insufficient security for larger bitcoin amounts
Internet connection necessary

Those who want a particularly secure wallet should look at hardware wallets. These wallets are stored on a USB stick or another portable storage medium. The private keys are then stored on the stick and all transactions carried out via the wallet are saved. The decisive advantage of this variant is offline storage. As long as the stick is not connected to an internet-enabled computer device, no one can access it.

Things we didn’t like:
not free of charge
Difficult handling for inexperienced users

Online wallets

Web-based wallets store the private keys on a server managed by an external party. A major advantage of online wallets is their availability. All that is needed is internet access on a mobile device. A disadvantage of online wallets, on the other hand, is that the keys are managed by external companies. Users cannot check for themselves whether the provider’s servers are sufficiently secure. In addition, the external provider theoretically has full control over the users’ Bitcoin holdings. Availability, therefore, costs security: large amounts should not be stored on an online wallet.

Simultaneously, Coinbase is a worldwide Bitcoin exchange and a Bitcoin wallet. Users from the USA and Europe can buy and store Bitcoin here. Circle also offers its users the possibility to buy and store Bitcoin worldwide. In the US, users can connect their bank account directly to the platform to buy Bitcoin. Users from Europe can purchase Bitcoin with a credit card. In other words, every exchange is already an online wallet.

Things we didn’t like:
Lack of security, as third parties control the private keys.
Strictly speaking, you do not own the BTC if they are stored on an online wallet.
Richard Bradley
Verified writer

Richard Bradley is a writer and editor who has published in several online publications specialising in cryptocurrencies and stock trading. He focuses on topics that include investing, price analysis and blockchain developments. He is passionate about the promise of blockchain technology to democratise the global financial system and its potential to become a driving force for social and political change around the world.

Best Bitcoin Wallets UK

(729 User Reviews)

The newly launched eToro Wallet is a new addition to this popular social trading platform.

The wallet can be used by any existing and verified member of eToro as it is synchronised with the site’s accounts.

With this wallet app, users can buy or sell assets, transfer assets between wallets, or exchange one crypto for another.

They can also use the wallet as an easy place to keep their digital coins safe. The biggest advantage of the eToro Wallet is its ease of use and security. You need not worry about security as the wallet is managed by the eToro servers. eToro is known for its industry-leading security standards.

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• Easy to set up
• Supports the German language, just like the eToro platform.
• High level of security
• Direct buying and selling of cryptocurrencies in the wallet.
• It is synced with the user’s existing eToro account for easy access.
• 120+ supported coins


• Custodial Wallet – you do not own your private keys

(729 User Reviews)

The hardware wallet Ledger Nano X supports 1300 crypto coins and tokens, so you can store almost any cryptocurrency you can think of in the wallet. Ledger

Ledger offers extensive technical support, and you will be provided with physical instructions, online instructions, and troubleshooting on the website.

The Bluetooth function is secure and makes the wallet even easier to use than the Nano S.

The screen is also larger and therefore more readable. Most Ledger Nano X reviews also mention the large storage capacity for up to 100 applications, allowing you to store most (if not all) crypto coins on one device. Thus, it is also extremely practical.

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• Supports over 1300 cryptocurrencies and tokens

• Bluetooth functionality

• Supports all major desktop and mobile operating systems

• Private keys are stored in the wallet’s chip

• Space for up to 100 applications, including Bitcoin, Ethereum, and Bitcoin Cash


• Quite pricey

• Storage space for up to 100 applications

• Bluetooth only works with the mobile app, not with desktop

• You can’t buy coins or tokens with Ledger Nano X

(729 User Reviews)

The Ledger Nano S-wallet is a good choice for beginners and fairly easy to set up.

It offers comprehensive instructions, both in the box and online.

Once set up, you can use the Ledger Nano S to send and receive crypto via the Ledger Live app.

Clear, step-by-step instructions are also provided when using the Ledger Live app. Confirming a transaction on the Ledger device is done with one press of a button. The Nano S is attractively priced, making this wallet worth the investment and also a safer alternative to an online software wallet.

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• Fantastic price

• Simple to use

• Certified by ANSSI

• Supports 1100+ cryptocurrencies


• No Bluetooth support for mobile phones

• No touch screens

• Micro-USB cable required for connection

• Can only store a few different cryptos at a time

Trezor is one of the pioneers in the field of wallets for crypto money.

It allows you to securely store your tokens, regardless of whether you plan to use the tokens as currency or for trading.

Trezor was the first cryptocurrency hardware wallet and proponents of the wallet claim it is one of the most secure.

In this review about Trezor, we will discuss the qualities and features of this wallet.

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• 100% cold storage
• Two-factor authentication is built-in
• Each crypto transaction is linked to a unique address
• The open-source code is verifiable and transparent
• Affordable
• Light and compact
• Well secured


• Is not hierarchically deterministic
• Simple design
• Bad accessories

Coinbase is one of the largest and most popular crypto exchanges in the world.

The wallet is also one of the most common Bitcoin web wallets.

Coinbase knows how to spoil its customers – this Bitcoin web wallet is often hailed as the best web wallet ever.

You can connect your bank account to the Coinbase wallet and easily deposit and withdraw your money. The Coinbase wallet doesn’t support many cryptocurrencies, but it does support the biggest ones, such as Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. The ease of use, efficiency, and constant availability are the biggest strengths.


• One of the most secure Bitcoin web wallets.
• Runs on a reputable platform
• Very user friendly
• Offers simple and advanced accounts to meet all user needs


• Supports only a handful of cryptos other than Bitcoin
• Online, so vulnerable to hacking

Exodus has been around since 2016.

Since then, Exodus has been one of the best and most popular crypto wallets for the desktop.

Exodus also supports many currencies and even has a built-in crypto exchange function.

This function is based on ShapeShift. Exodus is user-friendly, but more importantly, works well. The wallet works quickly, there are no delays or error transfers of any kind. It is a simple but functional Bitcoin wallet. But the developers have spent a lot of time and paid great attention to detail – and the result is something to be proud of.


• An excellent desktop wallet that doesn’t suffer from constant glitches
• Supports multiple cryptocurrencies
• Available on all desktop platforms and even mobile
• Strong development team
• Offers integrated exchange functions
• Very intuitive, secure, and flexible


• High transfer fees
• 2FA missing
• Reuses the same addresses

Coinomi is another very popular Bitcoin desktop wallet that has been on the market since 2015.

It was created by two programmers, one specialised in mobile apps and the other experienced in developing mobile and PC programs.

By combining their experience and knowledge, they created a secure and user-friendly Bitcoin wallet we know today as Coinomi.

The wallet’s team is still relatively small today, albeit extremely competent. The team has developed Coinomi as a desktop Bitcoin wallet that also supports dozens of other cryptocurrencies. Coinomi also has a mobile version, and it is very easy to use. Furthermore, Coinomi scores high on security.


• High-security features
• Supports numerous cryptocurrencies
• Integration with Changelly and ShapeShift
• No fees


• Code is not open source
• Not regulated
• Third-party trading platforms don’t offer the best value

No wonder the Electrum Wallet is our first choice for a desktop wallet.

The Electrum Wallet is available on all three systems (Windows, Mac, Linux) and is one of the most popular and secure wallets for Bitcoin.

Electrum Bitcoin Wallet is user-friendly but can be more difficult for beginners to understand.

Unlike most user-friendly wallets, Electrum offers no real hints or tips on features and usage. The Electrum Bitcoin Wallet only supports BTC. So, the Electrum Bitcoin Wallet is not the perfect choice to diversify your portfolio.


• Very secure
• Fast


• Same third-party servers compromise privacy
• Only supports Bitcoin
• Not intuitive to use

Finally, we have an iOS Bitcoin wallet called Green Address, which is the best choice for Apple devices.

The Green Address iOS Bitcoin Wallet is one of the most secure Bitcoin wallets and reaches this level of quality almost effortlessly.

The providers claim you are safe from theft, cloning, and similar threats here.

However, some users do not necessarily describe the iOS Bitcoin wallet called Green Address as intuitively usable and user-friendly. Due to its many add-ons, it is one of the fancier Bitcoin wallets out there. Accordingly, the iOS Bitcoin wallet called Green Address is well received by experienced users. Green Address is also open source, so the code was made available for detailed review. Errors would certainly have already been noticed by the community. One problem regarding the iOS Bitcoin wallet called Green Address is the fees. Installation and use are free, as are account balance maintenance and account creation. Transactions, however, come at a cost, and the problem is that the fee is not constant. Instead, it depends on demand within the network, causing it to fluctuate constantly.


• Very strong security features that ensure privacy and security.
• Easy integration with mobile environments and hard wallets
• Users control their private keys


• Only supports Bitcoin
• Not very intuitive
• The passphrase and PIN are generated by the server and not by the user

Then there is a blockchain web wallet, which takes its name from the underlying technology of cryptos, the blockchain.

This is one of the most popular Bitcoin wallets and it is known for being intuitive and easy to use.

However, this Blockchain Bitcoin Wallet is stored on the company’s servers, which already poses a risk to third parties.

. On the other hand, the company is reputable, rich in features, and user-friendly. Blockchain Bitcoin Wallet is among the best examples of secure web wallets for Bitcoin in the entire crypto industry. This is due to advanced security features introduced a few years ago, such as not using the same address twice.


• A very popular, well-known web wallet
• Easy to use
• Open source
• Multiple signatures
• Has two-factor authentication


• Some users have complained about customer support
• Available online also means being vulnerable to hackers

How do I create a Bitcoin wallet?

Which Bitcoin wallet suits you best? This depends, among other things, on what you use Bitcoins for and what you want to do with them. Have you just started buying Bitcoins? Then an online wallet is the most user-friendly way to manage your Bitcoins. A commonly used and free wallet is the Coinomi wallet. This wallet also offers support for managing other coins.

Below you can see how to create a Coinomi wallet:

• Go to the App Store (iOS) or Google Play (Android).
• Search for and download Coinomi.
• Open the app and write down your 24-word recovery phrase. Very important, this is to secure your wallet!
• Set a secure password
• Add bitcoin to your wallet
• Use your receiving address to receive Bitcoin

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How do I receive or send Bitcoins?

To send or receive, you need your recipient’s address. We can’t say it often enough but copy this address! The recipient address is nothing more than an account number where you receive your coins. But where can you find this address?

The recipient addresses

Open your wallet. In almost every type of wallet, you will find the recipient address under “Receive” or “Receive”. Some wallets create a new bitcoin address for you when you receive coins. They do this for privacy reasons. However, don’t worry, your old recipient address also remains valid.

You can also find your Bitcoin address in your transaction history when you log in to your BTC Direct account.


Copy the recipient address from your wallet or transaction history. You paste this address into the BTC Direct order form. This way we know which wallet to send the coins to.

Send (Dispatch)

Do you want to send or even sell Coins to a third party? This is easy. To do this, you need the recipient’s address.

Navigate to “Send” or “Send” in your wallet. Specify how many coins you want to send and enter the recipient’s address. Then click on “Send” or “Send”.

Create a Bitcoin Wallet Back Up

When creating a wallet, it is also important to create a backup of the information. This will ensure that you can always access your wallet and therefore your Bitcoin.

You should also write down the recovery seed on paper and keep it safe. What is a Recovery Seed? The recovery seed is a sequence of 12 or 24 words that act as a recovery password. By writing it down instead of storing it digitally, you avoid the risk of being hacked and losing your coins.


Every Bitcoin wallet has something to offer. That’s why it’s not so easy to decide which Bitcoin wallet is right for you. Of course, you can also use different Bitcoin wallets to cover your needs perfectly. Your options are virtually endless. So take your time to study the different Bitcoin wallets carefully and find the ideal storage option for you.


What are bitcoin wallets?

A bitcoin wallet allows you to send, receive and store bitcoin.
Wallets secure assets by guarding private keys. These private keys are proof you are the owner of the bitcoin. So basically, a bitcoin wallet is a vault for bitcoin.

What is a private key?

If a bitcoin wallet is a vault for your bitcoin, then the private key is the key to the vault. The only difference is that a real safe can be broken open without a key. But without a key, there is no way to break open a bitcoin wallet. This is simply impossible.
Therefore, keeping your private key secret is the most important thing to keep your bitcoin safe.

What is a bitcoin address?

A bitcoin address is similar to a bank account number but better. The address indicates the wallet to which the coins should be sent. This works the same as a bank account number, but the difference is that wallets have multiple addresses. These addresses can be customized by adding specific information about payment requests, such as an amount and an expiration date.

What are steel bitcoin wallets?

Steel wallets store your seed (mnemonic) for backups. If you write down your seed, the paper can be lost during a fire or by water damage. Steel wallets protect you from all these threats by creating an indestructible backup for your seed.

How can I add coins to a bitcoin wallet?

To start, you need to purchase bitcoin. Go to an exchange in your country, ask an acquaintance to share, or use Buybitcoinworldwide.com for the most user-friendly experience. You can then send the purchased coins to your wallet by entering one of the addresses.

Some wallets (especially online wallets) also allow you to buy coins. But because of the larger price margins, it’s best not to use these wallets to buy cryptocurrency.

How do I open a bitcoin account?

Possibly some readers will find this an odd question. But people with a financial or business background probably expect bitcoin to be a direct alternative to the current financial system. Yet this is not the case.

You don’t need a bitcoin account. There is no such thing. All you need is a wallet. The only accounts you may encounter are online wallets divided into different accounts through a user system.

Are there common mistakes you should watch out for?

First, you should not store your assets in an exchange’s wallet. Instead, store your coins in an environment where you have full control.

Second, you should not store all your coins in one place. If you do, you could lose all your assets if you can no longer access your wallet.

Third, check the destination address carefully. Bitcoin transactions cannot be reversed. Therefore, you need to make sure you don’t send your coins to someone you don’t know!

How many backups of my seed should I make?

We recommend that you keep at least two backups of your seed in different locations.

If you write down your seed, you can also laminate the paper and protect it from water damage or other damage.

Keeping your seed in a fireproof safe can protect the document if the storage location burns down.

Another option is to store your seed in a homemade metal enclosure or using Billfodl.

What happens if someone finds my seed of 24 words?

Unless you use the 25th word, someone who finds your seed of 24 words can empty your entire wallet.

Should I take a picture of the seed with my phone and use this picture as a backup?

NO, NO, and NO!

The seeds generated by hardware wallets are only meant to be written down. It is a big risk if you take a picture of your seed with an internet-enabled phone. In that case, the access code for your entire wallet is on a device connected to the Internet and can be more easily attacked by hackers. Therefore, you should not do this!

Is it safe to buy hardware wallets on eBay or Amazon?

We always recommend ordering hardware wallets directly from the manufacturer or an authorized reseller. This is because someone can buy a hardware wallet, tamper with it, and sell the used device. The hardware wallet may have been sabotaged to steal bitcoin or a backdoor for access may have been added.

Most hardware wallet vendors use a special type of tape for packaging, so it is more noticeable if the package has been tampered with. This is another reason we recommend only ordering hardware wallets directly from the manufacturer or an authorized reseller and not from a website like eBay.

What happens if the hardware wallet manufacturer goes out of business?

If Sony went bankrupt tomorrow, you could still game on your PlayStation almost with no problems. The same applies to hardware wallets. If the manufacturer went bankrupt, you could continue to use your hardware wallet as normal. However, in that case, you’d have to use your node (node) to send and receive transactions.

Suppose you are using TREZOR with the myTREZOR wallet. TREZOR closes and no longer supports the myTREZOR wallet because the company is ceasing operations.

You can download Electrum onto your computer within a few minutes. Once the installation is complete, you can set up TREZOR. This ensures that your entire transaction history and balances remain the same. Electrum uses the same seed of 24 words that you generated while setting up TREZOR.

Do these hardware wallets work for Ethereum?

Yes, all these wallets work with Ethereum, Litecoin, and many other coins.

Do these hardware wallets work with Coinbase?

We often get asked how Coinbase works with hardware wallets.

But this question is not correct!

Coinbase does not work directly with hardware wallets. But if you bought bitcoin on Coinbase, you should send the coins directly to your hardware wallet. You should never store your bitcoin on Coinbase or any other exchange for an extended period.

Richard Bradley
Verified writer

Richard Bradley is a writer and editor who has published in several online publications specialising in cryptocurrencies and stock trading. He focuses on topics that include investing, price analysis and blockchain developments. He is passionate about the promise of blockchain technology to democratise the global financial system and its potential to become a driving force for social and political change around the world.

Best Crypto Exchanges
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(729 User Reviews)

Cryptoasset investing is unregulated in most EU countries and the UK. No consumer protection. Your capital is at risk. CFD crypto trading is unavailable for clients residing in the UK and US. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.