A Comparison of Popular Bitcoin Wallets

In this post we profile a few popular and widely covered wallets for Bitcoin. The previous post on bitcoin wallets explained wallet features and terminology which will not be repeated here unless necessary.

Apart from the original Bitcoin-qt, wallet solutions for bitcoins are about five years old and in a state of continuous evolution. Google search brings up maybe a hundred or more wallet options, many of them open source projects and start-ups less than a year old. 

There is limited information on the wallet landscape, wallet user statistics or providers market share. Also, while some wallets are designed exclusively for bitcoins, others support multiple crypto-currencies.

Wallet Users and Use Cases

Because wallets hold private keys, all wallets are heavily focused on the security use case, followed by storage (hot vs cold) and choice of platform (mobile, desktop, hardware). Other competitive features include ease of use and speed of transactions.

Leading wallets routinely highlight (or are known) for following specific design philosophies than a target market demographic or user segment. For example, some wallets remain aligned to the broader objectives of Bitcoin (anonymity, peer to peer transactions) while others focus on bringing in mainstream users or institutions (cross platform mobile interfaces, bank like security and compliance). 

From a bitcoin user perspective, there is not really one perfect wallet out there and the choice of wallet is determined by their use for bitcoins. 

For example, merchants who accept bitcoins may treat them as pass through and convert to fiat on settlement. This group would be focused on transaction security and ease of settlement and not be concerned about long term storage such as a padlocked, multi-sig, cold storage vault.

The larger group of bitcoin owners/investors/speculators do use it for transactions and remittances, as well as an asset class. Serious investors who are want preserve their bitcoins when fiat doomsday occurs will require offline wallets in deep cold storage vaults that use the security methods employed at Gringotts.

A common strategy for users is to use more than one wallet (not unlike having wallets and safes for cash) with a mobile wallet for shopping and store transactions, a web wallet (linked to an exchange) for conversions and trading and cold storage vaults or hardware wallets for high value/long term secure storage.

This list profiles some of the more widely known/discussed wallets in these categories and some strategic innovations that have attracted attention.

Electrum (A lightweight desktop wallet) 

Desktop wallets serve as client interfaces to the blockchain are designed to give users complete control (and responsibility) of their wallets. Electrum is a client server wallet of this category; the desktop client is a lightweight wallet interfaces that connects directly to a blockchain server node. 

Electrum is one of the earliest bitcoin wallets, and is available under GPL open source license. Thomas Voegtlin released Electrum in November 2011 and founded Electrum Technologies in 2013, which continues to offer Electrum for free and provides services around it. 

Above: Electrum's website featuring SPV.

Electrum is a lightweight desktop client for novice and experienced users. Electrum wallet offers features such as encryption, offline signing and support for hardware wallets such as Trezor. Sending and receiving bitcoins is a straightforward process as explained in this thorough walkthrough of Electrum set-up and user interface.

Multibit and Hive are other examples of lightweight desktop wallets. Electrum’s more heavyweight counterparts are Armory and Bitcoin Core, resource intensive, but allowing users full control of their wallets and verification against the full blockchain. Armory is one of the most secure desktop clients offering strong features such as encryption, online watching wallets and offline wallet to sign transaction. Armory requires technical skills and careful set-up and is for bitcoin users prepared to invest time and care to achieve results without losing bitcoins in the process.  

Note: Armory’s website was not accessible throughout the time of writing this article.

For users who want to wet their feet and start with fewer bitcoins than pocket change, a hosted or web wallet may be a better option.

Blockchain (Hosted Hybrid Wallet)

Blockchain.info is well known block explorer service also runs one of the most popular hosted bitcoin wallets today (their published stats at the time of writing show a staggering 6 million users). Blockchain.info was founded in August 2011 and is headquartered in Luxembourg.

Block.info's MyWallet can be downloaded from their website (above). Users can try a demo account as well.

Blockchain wallet users can sign-up for the free service and can carry out transactions through a web browser or mobile app. Blockchain’s wallet is known as hybrid wallet – the host provides the wallet service but only users can access their bitcoins. Wallet addresses are encrypted in user browser and stored in blockchain cloud in encrypted form. Users can access their wallet balances with blockchain APIs without having to download the blockchain, explained quite simply on their website.

Blockchain wallet piles on other security features such as two factor authentication, ability to generate offline transactions and multiple backup options. Blockchain also offers hidden wallet service over the TOR anonymity network. 

Coinbase is another well known provider of hosted wallets which link to the Coinbase exchange. Coinbase's dominant focus is on their exchange platform and becoming the first regulated bitcoin exchange.

Trezor – Zero Trust Hardware Wallet

Trezor calls themselves the Bitcoin safe, which is an apt description of a hardware wallet function – to serve as an offline cache of bitcoins safe from hackers without having to rely on third party custody. Trezor was launched in late 2013 by Prague based Satoshi Labs and is one of the most popular hardware wallets today. 

Trezor, the first hardware wallet, featured on the website.

Users can authorize send transactions via an online wallet only by entering a confirmation through the Trezor device.  A Trezor device has a display for confirming transaction address and value, while PIN and other information is configured through a computer keypad interface for security from key loggers. Trezor’s makers have built the platform on zero trust principle. To minimize device compromising, the hardware wallet does not support any other installation, nor an internal battery (it is charged through a micro USB port when connected).

Trezor wallet devices are secured with a user generated PIN and support passphrase encryption. A recovery seed is generated at set-up to recover and transfer wallet contents if the device is lost or stolen. Trezor’s website has a nice comparison page highlighting security advantages of their hardware wallet over using software or paper wallets alone.

Ledger Nano and Keep Key are other options in the hardware wallet category.

Xapo – Bitcoin Fort Knox

Although this post has light hearted reference to Gringotts security, Xapo appears to personify it. 

Xapo was founded in 2014 by an Argentine entrepreneur, Wenses Casares and the company operates in Zurich, Switzerland. 

Xapo website describes it as a Bitcoin wallet and vault. Xapo wallets can be used on mobile device or with the Xapo debit card as featured on their website.

Xapo’s philosophy is based on security and they take security to new heights (low orbiting satellites) and lengths (globally distributed servers). 

Xapo wallets are available in mobile app, online and debit card form. Xapo has introduced a debit card similar to the banking card debit card model most people are familiar with. The debit card usage creates a seamless and familiar transaction experience, although it comes with the even more familiar fees. 

As described on their website, Xapo offers deep cold storage vault services. User bitcoins are stored offline on encrypted physically secure servers across the globe. Xapo’s physical vault facility is located on a military bunker in the Swiss alps and vault deposits are insured.  

Of course maintaining all this is very expensive, and the company is relatively new but it highlights the magnitude of serious investments in the future of Bitcoin.

CoinBase also have an insured vault offering for their wallet service. 

Note: While insurance is an additional layer of managing bitcoin security risks, bitcoin insurance is an emerging field and comprehensive insurance coverages are yet to emerge. However that is the subject of another article.

MyCelium - Mobile Wallet and Payment Ecosystem

As bitcoin payments become mainstream, mobile wallets are becoming increasingly important. Most of the wallet solutions are now available as apps on different mobile platform.

MyCelium, one of the first in this category is a popular mobile wallet and has won awards as well. The wallet was launched by Vienna, Austria based Megion Research and Development in 2013. 

Above: From MyCelium website. MyCelium's mobile app includes an integrated decentralized exchange. 

MyCelium was launched as an android app but is now supported on other platforms as well.

The MyCelium wallet offers users complete control and provides a wide range of payment features such as NFC, QR reader, BIPS 70 payment protocol support and integration with exchange services. MyCelium also includes an integrated in-person decentralized exchange Local Trader, a solution from Megion, that is designed to support peer to peer transactions without a third party. 

Copay from Bitpay is another example of a mobile wallet that includes several add on features (compared to other wallet categories) to facilitate payment processing. 

Dark Wallet – Anonymity Anywhere

Bitcoin transactions are pseudonymous which means user addresses are used instead of personal identification. Dark Wallet and its up and coming challengers such as Samourai have made it their mission to uphold the anonymity of bitcoin transactions. Dark Wallet is open source project which has received wide coverage but still is in alpha version. Available as a Chrome browser extension with a symbolic black on grey interface , Dark Wallet provides transaction anonymity using CoinJoin for coin mixing.

The Future of Bitcoin Wallets

This article is a glimpse of the broad and still evolving bitcoin wallet landscape. 

Players from individual developers, crowdfunded projects to institutional investments are all involved in shaping the future of wallets.

Wallet offerings continue to evolve with the growing adoption of bitcoins and technologies. As increasing numbers of users sign up for wallets, makers are trying to balance security and ease of use in their offerings.

For those getting into the world of bitcoins, Bitcoin Wiki, Bitcoin Talk , product websites and bitcoin publications continue to provide a wealth of user education/information on the underlying technology, user interface and management of bitcoins.