To store Bitcoin, you need a "wallet". However, there are many different types of wallets, each with different characteristics and functions. One important difference is who manages your Bitcoin.
- Custodial wallets
If you search for keywords such as "Bitcoin," "wallet," and "recommended" on Google, you will find pages recommending wallets provided by exchanges. Wallets provided by exchanges are basically called "custodial wallets," which are wallets where your Bitcoin is "managed" by the exchange. When you buy Bitcoin, it is stored in a wallet managed by the exchange. This is the same as a bank depositing money. The safety depends on the exchange, but if the exchange is hacked, your Bitcoin is also at risk. As a practical matter, even exchanges can be hacked, as in the Mt. Gox and Coincheck incidents , so after buying Bitcoin, it is a rule of thumb to store it in a "non-custodial wallet" (a wallet where you do not deposit it but manage it yourself) as explained below.
The original idea of Bitcoin is that you should manage your own Bitcoin in your own wallet, so we do not recommend storing Bitcoin in a custodial wallet except in the following cases: 1) buying Bitcoin with yen or US dollars, 2) selling Bitcoin and receiving yen or US dollars, or 3) exchanging Bitcoin for other virtual currencies.
- Non-custodial wallets (wallets that you manage yourself without depositing funds)
In contrast, "A non-custodial wallet is a wallet where the Bitcoin holder manages the Bitcoins themselves. It is like a safe where you keep your own money, and only the person who manages the wallet can deposit and withdraw Bitcoins. However, at the same time, this means that the person who manages the wallet is also responsible for security measures. If you forget the password called the wallet seed phrase, or if someone knows the wallet's private key (like the PIN code for a safe), the wallet will no longer be secure.
There are two main types of non-custodial wallets: "hot wallets" and "cold wallets."
Hot Wallet: A hot wallet is a wallet that is always connected to the internet and is convenient for daily transactions and payments. However, because it is connected to the internet, it is at risk of being hacked.
For those who are holding Bitcoin for the first time, we recommend the following two wallets.
It supports Japanese and has a beautiful visual appearance. It is easy to use even for beginners, and has both PC and smartphone apps. It can also be connected to the cold wallet Tresor.
It is a mobile wallet developed by a Japanese company. It features an intuitive UI and high security. Since it was developed by a Japanese company, it can be used only in Japanese from the beginning. It is easy to use even for beginners.
Cold wallet: A wallet that is stored away from the Internet and is suitable for long-term storage of large amounts of Bitcoin. Since the private key is not stored on the Internet, it is considered to be very secure.
A device that looks like a USB memory stick (hardware wallet) is common. If someone steals this USB memory stick-like device, there is a risk that they may be able to access your wallet. If you lose this device, you will not be able to access your wallet.
Among cold wallets, there are also paper wallets that print private keys on paper. Paper is not connected to the Internet, so the risk of hacking is low, but if the paper is stolen, the wallet becomes insecure. Also, if the paper is torn or burned, you will not be able to access the wallet.
We recommend the following cold wallets:
Trezor is a hardware wallet that supports multiple cryptocurrencies, including Bitcoin. It is manufactured by a Czech company. It uses a highly secure chip, and the private key never leaves the device. This allows the private key to be stored without being connected to the network (cold storage).
Trezor is an open source project and its security is verified by the entire community.
Ledger is also a hardware wallet that supports multiple cryptocurrencies. It is manufactured by a French company. Like Trezor, the private key never leaves the device. Ledger is particularly unique in that it is the first in the industry to use a security chip that meets the high security standard of CC EAL5+. However, unlike Trezor, it is not open source, so detailed security verification is not possible. Ledger differs from Trezor in that the device has a built-in battery.
- Things to note when purchasing a cold wallet: Always buy from the official website
When purchasing a cold wallet to store Bitcoin, there is one important thing you should pay attention to: always purchase it from the official website.
If you search on major online stores like Amazon, you may find hardware wallets for sale. However, the products sold on those sites are not necessarily sourced directly from the manufacturer and may be sold by third parties.
In the past, many users have been victimized by Ledger wallets purchased from Amazon, because the wallets purchased by users on Amazon were previously tampered with, and the private keys were made known to criminals. As a result, these users had their Bitcoins stolen.
By purchasing from the official website, you can be sure that your product has the latest software, which helps prevent unauthorized tampering with your cold wallet software.