written by @veriphibtc
Long term Bitcoin holdings are safest in cold storage. With that said, many use Bitcoin day-to-day and need quicker access to small amounts. This article outlines what one should look for in a mobile Bitcoin wallet.
Bitcoiners are often taught to keep their Bitcoin like a dragon would hoard its gold. There is a high emphasis on security in general and it’s completely understandable as a lot of people invest considerable sums of money in Bitcoin.
For larger investments meant to be held for a long time period, it is better to consider a cold storage solution for your Bitcoin. Bitcoins are considered to be cold when their corresponding private keys are generated on a device that will never be connected to the Internet.
Some companies develop specialized devices called hardware wallets to facilitate the process of securing your Bitcoin and are already well known in the Bitcoin community. On their own, they have a whole set of differences and functionalities you will need to take into account when choosing one.
Other tools, such as multisignature schemes, bring even more advanced operational security for your Bitcoin holdings and are highly valued by those who want to have their own digital fortress.
The Perfect Onboarding and Learning Tool
What about newcomers that want to get initiated to Bitcoin without going through the hassle of buying additional hardware and having to learn about complex security considerations? Forcing them through that process isn’t optimal and can actually deter quite a few of them.
The perfect solution comes in the form of mobile wallets. Most of them are super easy to use and offer great flexibility since your Bitcoin funds are easily accessible. They are also perfect to learn about the basics of Bitcoin and its inner functioning.
Don’t get us wrong, mobile wallets aren’t necessarily just for newcomers, a lot of bitcoiners use them for small purchases and testing purposes. They are also great to onboard neophytes quickly and smoothly.
What can possibly be cooler than onboarding a pre-coiner through the Bitcoin rabbit hole than to make them download an application in a few minutes (on a phone that they already own) and sending them a few sats?
However, no matter how convenient they are, mobile wallets often have varying features between them that should be considered when one decides to keep their Bitcoin on that kind of medium.
User Interface & User Experience
One of the most sought out features in a mobile wallet is certainly its interface and user experience. A confusing wallet is a dangerous wallet, as it can lead its users inadvertently to bad security practices and the loss of their Bitcoin. This is why a person should never use a wallet that goes beyond their capabilities and current knowledge. It can be quite hard to quantify that measure given the variations in learning capabilities and available wallet software.
One of the user experience features that divide the opinion of many is the forced backup of the seed. For those who don’t know, your private keys are represented either in a 12 or 24 word form and are the most crucial information to be kept safely in order to recuperate your funds if you lose or break your phone.
Some applications force users to write these words down during the initialization phase of the mobile wallet. This can be a really good feature for neophytes as it emphasizes the importance of that step, but it comes at the cost of convenience. For those who just want to test new mobile wallets before using them, it can be quite annoying.
One user experience aspect can be interpreted in different ways and is a matter of personnel preference and expertise level. Nobody can be a better judge of your own taste than yourself, so get out there and test many mobiles to choose the one you prefer.
Current Realities Of Mobile Wallet Usage
It’s hard to know how many Bitcoin holders there are around the world, but some estimates put it in the tens of millions, with on-chain analysis by Glassnode determining there are over 23 million Bitcoin holders in January 2020.
How are most users behaving and in this specific case, which mobile wallet are they using? Given that Google Play (Android App Store) makes publicly available the number of downloads each App has, we can determine with high accuracy, the usage of mobile wallets.
It turns out that the most popular Bitcoin Wallets on Android are :
Are these wallets the most used because they offer the best product? Many would argue not. The reality is that big marketing budgets have allowed these companies to capture emerging users and most have chosen them due to visibility and a low understanding of Bitcoin good practices.
However, there are better options out there that don’t operate in obscurity, open-sourcing their wallet’s code unlike the wallets above. Furthermore, many market alternatives opt out of enabling more cryptocurrencies into a wallet and going the route of Bitcoin-only. With multiple coins, security risks are higher and the user experience can deteriorate due to many moving parts as opposed to maintaining a laser focus on securing/enabling the latest features.
There are particular features to look for that we will present in the following section. Some are crucial in our opinion, while others assist with security, user control and reducing fees paid. Mobile experiences need not lack in these areas.
Features To Consider
There are some things you should never budge on that are crucial to have minimal security, user control and a good user experience. First off, your wallet should be open-source, which means that the code is fully available (usually on Github) and preferably that experienced developers can verify that the code on Github is really what will be running in your App. Here’s a website that evaluates this for Bitcoin wallets.
Custodial wallets are obviously not in the running if your aim is to hold your Bitcoin yourself - as it should be unless you are utilizing your coins for a specific service at the time. It is also important to note that a good Bitcoin wallet should require no personal information from you - including your email address.
One core user priority is to save on transactional fees. You don’t want to get stuck with a wallet that hasn’t implemented the latest fee savings technology. You will want Segwit, RBF (Replace-By-Fee), Transaction Batching and manual fee control (even if you don't understand what those are yet).
Segwit is a type of script/address that won’t make your transactions lighter, but will give them a data format that costs less to publish on the blockchain. RBF is about publishing a transaction with a low fee and if it hasn’t been confirmed after a while, you can republish it with a higher fee. Transaction Batching allows you to send many payments to different addresses all in the same transaction, instead of making many payments. Manual fee control allows you to customize the fee you will be paying instead of being offered a minimum that might be too high because of bad estimation.
When it comes to security and user control, you might want a mobile wallet to connect to your own Node to fully verify the reception of Bitcoin funds into your wallet. Some mobile wallets also offer hardware wallet integration which allows you to hold your funds in a more secure way but still make them easily accessible on the go.
Finally, privacy features are also important such as Tor, Coin Control and CoinJoin. Tor allows you to connect your wallet to the server or your Node in an anonymous way, so that you don’t disclose your I.P. address to the wallet provider, which can easily be turned into your geographical location.
Coin Control allows you to select the precise coins you will be spending, instead of them being algorithmically chosen by the wallet and making you an easier target for blockchain analysis. Finally, CoinJoin is also available on Mobile now, thanks to Samourai Wallet and Sifir, which allows you to make it almost impossible for blockchain spies to follow the path of your coins.
You now have a high level overview of the things to consider when choosing a mobile Bitcoin wallet. Personally we recommend checking out the following wallets: Blue, Green and Samourai. They have a great mix of advanced features and an appealing interface and user experience.
You will only know which one you prefer if you try many of them. For a more detailed analysis of individual wallets check out this analysis by Veriphi, as well as the following video tutorials from BTC Sessions.
If you have any feedback on this or any other topic, please feel free to reach out to us at any time at email@example.com or @BTSEcom on Twitter. We always love to hear from our amazing BTSE community.