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Bitcoin Wallets: 12 Pros & Cons Worth Knowing Before Owning One

If you read our previous article about neobanks and the ideas behind them, you probably already got an opinion on them. This article will reveal additional information for crypto community newcomers interested in e-wallets.

Just thinking about our daily schedules filled with different meetings, tasks, and surprises while working on-the-go gives us anxiety. Sometimes, we become so lost in the plans we forget about our most valuable belongings, such as our wallets.

Does it sound familiar to you?

It has happened to us as well. Our human brain can process only so much, and sometimes we simply forget. Thanks to the Internet, smartphones, and blockchain, there are a million back-up options for your most precious assets, including your wallet.

The (pre)history of Bitcoin wallets

To understand what a Bitcoin wallet is, we have to go a bit back in the time. 

The modern concept of e-wallets was born together with the first mobile payments in 1997. Shortly before the Millenium, Coca-Cola launched vending machines in Helsinki, Finland, where customers could pay for a can of the sweet drink via SMS. Coca-Cola used a straightforward principle: the customer sends a text message to pay, and the machine vends it. Nowadays, Coca-Cola has made it even easier to pay for their drinks by enabling contactless near-field communication (NFC) payments.

Still, a mobile payment wallet is not the same as an e-wallet (also known as a digital wallet). Although often used as synonyms, a mobile wallet is accessible only through an app on a particular smartphone. An e-wallet, in contrast, is available on any smart device that has an Internet connection. 

A Bitcoin wallet (or any alternative cryptocurrency wallet), is a software installed on your smart device. With this wallet, you can send, receive, and exchange crypto-to-fiat, fiat-to-crypto, and crypto-to-crypto assets.

Bankomia also provides a cryptocurrency e-wallet. At the moment, we support seven cryptocurrencies with functional deposits and withdrawals:

  • Bitcoin (BTC);
  • Ethereum (ETH);
  • Litecoin (LTC);
  • DASH;
  • Molecular Future (MOF);
  • USD Coin (USDC);
  • Tether (USDT).

With time, our e-wallet will provide secure storage and transmission of 50+ cryptocurrencies.

The pros and cons of owning a Bitcoin wallet

Now that we have cleared what a Bitcoin wallet is let’s move forward with investigating the actual Pros and Cons of owning one. 

Security

When compared to fiat money, Bitcoin is still a new tender. We all know the classic proverb that mastery comes with knowledge. So does security, wealth, wisdom, and probably everything else these days.

Pro: 
Cryptocurrency wallets, in general, are more secure than mobile wallets. Mobile payment applications allow us to recover passwords through smartphones. However, your Bitcoin wallet generates a unique mnemonic phrase upon registration. The code is practically uncrackable due to its complexity and length. Also, it is the only way to recover the wallet, so we suggest you write it down and hide somewhere only you have access.

Pro: 
Nowadays, cryptocurrency transactions are subject to tight regulations in most countries. For example, the European Union has implemented The Fifth Anti-money Laundering Directive (AMLD5) that limits the anonymity related to any virtual currencies and wallet providers. 

According to studies, only 1% of all Bitcoin transactions included illicit coins. When compared to conventional banks, an estimated 2%-5% of global GDP is laundered annually in US Dollars worldwide. A practical and transparent AML program will beat suspicious cryptocurrency transactions to the very minimum. 

Con: 
With the value of cryptocurrencies rising, so does the number of viruses trying to steal them. To rephrase what Peter Parker once said, with a great Bitcoin wallet, comes great responsibility. 

We advise you to do frequent back-ups of your cryptocurrency wallet to protect your coins against theft or human error. Do not store the back-up online without secure encryption protecting it.

Bank transactions

With traditional bank transactions, we are used to spending a lot of time and nerves going to the bank branch, picking a number, then waiting in line, filling 15 different forms before actually sending the money. 

Lucky, there is a solution – neobanking platforms with an e-wallet feature.

Pro: 
Neobanks work on constant innovations to modernize their clients’ banking experience. For now, bricks and mortar banks still enjoy the dominance in financial services provision and user base. However, neobanks might soon surpass them with significant user base growth.

Pro: 
Without a centralized 3rd party, the transactional fees cut to a minimum. For comparison, Bankomia per-transaction fees do not exceed 1.5%, whereas, at conventional banks, merchants end up paying from 0.5% to 5% of the transaction amount.

Con: 
For now, Bitcoin’s theoretical transaction speed is 27 transactions per second. The average processing capacity of the Bitcoin network is highly limited – 10 minutes per block

However, there are other cryptocurrency networks, even 45 times faster. For example, Ethereum network block time is somewhere between 13-14 seconds. Something to look forward to for Bitcoiners.

Con: 
A crypto wallet requires you to be comfortable with technologies. Like any cryptocurrency, Bitcoin is virtual, so there is no convenient way for you to hold them. There are also no physical banks where to bank face-to-face your coins.

Valuable investment

When looking for ways to invest your money into the future, you might want to take a look at the cryptocurrency market overview. 

Just this week, the Bitcoin market price rose above USD 10,000 for the first time since its third halving in May 2020. With crypto community members calling it a possible start for a sustainable rally, we suggest following the trend yourself for better market insights.

Pro: 
Now, imagine your Bitcoin wallet holds two coins – a sad amount if measured in fiat money. In reality, 1 Bitcoin is worth more than a decent running car. Amazing, right? At this moment, owning less than BTC 100 would mean you being already a millionaire. 

Pro: 
If we are used to fiat money appearing out of thin air, in the case of Bitcoins, the blockchain protocol entirely determines the creation. No government can manipulate the blockchain. It also means that regular inflation rates do not determine your Bitcoin wallet worth because cryptocurrencies have different issuance rates that change differently.

Con: 
Physical commodities do not back cryptocurrencies. Still, around 100 cryptocurrencies claim to be backed by gold. However, many have failed in the past

In this regard, we recommend you to watch the trends and based on that decide which coin might be your future investment.

Con: 
For those crypto owners who intend to pay in Bitcoin already now, we have both good and bad news. 

Let’s start with the bad first. To this date, only around 20,000 merchants worldwide exclusively accept Bitcoin payments. 

The good news is that the number of venues increases fast, and we expect that in around five years, we will witness a considerable increase in Bitcoin payments, and not only.

Final words

Like with most crypto-related things, Bitcoin wallets ask for more profound research once you decide to make the shift from traditional to digital. 

Just be ready; it might take time getting familiar with all the information loads and alternatives out there. In the meantime, if you want to read more crypto hacks and tips from us, follow Bankomia on Facebook and Twitter for frequent updates.

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