Millions of people around the world have heard and are curious about Bitcoin. Many are already using the digital currency and many more are planning to start using it in the near future. But the question everybody asks is:
What Bitcoin wallet should I use?
There are several solutions in the market, but currently there are two leading the way with value added services on top of the base Bitcoin protocol.
Coinbase is a private company based in San Francisco, California, that provides web and mobile Bitcoin services. Their mission is to provide Bitcoin value added products for consumers and merchants. Coinbase is recognized as “the PayPal” of the Bitcoin Network.
Blockchain.Info is also a private company, but based in York, United Kingdom. The company provides full Bitcoin market and block chain exploring information and wallet services. It is recognized as one of the first information and wallet services in the Bitcoin network and very well respected in the community.
How do they compare?
As shown in the comparison chart above there are several things to take into account when deciding what solution to use. It all boils down to your personal needs and your security preferences. These are the descriptions for each feature:
Send and Receive: The first thing you do when you get a Bitcoin wallet is to acquire your first bitcoins by selling products and services or by buying them. After that you need to be able to transfer them to pay for things or sell them. For this the features of Send and Receive are needed and the two solutions mentioned above provide this. They also have the Address Book functionality that lets you store names and Bitcoin addresses so it’s easier to manage your transfers.
Buy and Sell: If you need to buy and sell bitcoins as an investment or for payment purposes you can use Bitcoin exchanges. For this you need to transfer back and forth bitcoins to and from your exchange accounts. In the case of Coinbase it has this service integrated into its wallet and merchant products. On Coinbase you can easily buy and sell bitcoins directly from your account without having to move them elsewhere. Blockchain doesn’t offer this service, but they do provide links to their partner exchanges.
Link Bank Account: When you link your US dollar bank account with your Bitcoin account you can easily move money between them. Coinbase provides this feature. In the case of the Blockchain Wallet you need to handle the dollar transfers and payments separately from your bitcoin movements.
Pay by Email: PayPal pioneered the ability to send and receive money using your email account. Coinbase is emulating this by providing the same functionality but with your Bitcoin account. By entering an email address you can send Bitcoins to anyone and anyone can send Bitcoins to you using your email address. On the Blockchain Wallet you need to use the 30 character Bitcoin address instead.
Merchant Services: If you use the Blockchain Wallet you can get paid when you sell products and services by providing your Bitcoin address. This is a 30 character code that anyone can use to transfer the digital currency to your account. In the case of Coinbase they have taken this further by providing “Buy”, “Subscribe”, and “Donate” buttons that are linked to your account. These buttons can be installed in your website so your clients can pay just like they would by clicking your PayPal or other payment buttons.
Web: Both services have web based services. This means you can open your Bitcoin wallet and fully manage it and use all their services on their website.
Mobile: Both Coinbase and Blockchain have full service mobile apps that work on Android and iPhone and synchronize with their web services.
Wallet Backup: Only Blockchain lets you download, store on your DropBox or Google Drive, send by email, or print on paper your Bitcoin wallet private and public keys. In the case of Coinbase they host your keys in their servers.
Block Chain Explorer: This is the reason Blockchain.Info gave itself this name. They provide a full view of all the transactions and analytic data of what is happening in the Bitcoin network.
You Control Private Key: To be able to transfer bitcoins in the network you need your public Bitcoin address and your private key which is secret. On Blockchain.Info they generate and keep an encrypted copy of your keys on their servers, but as mentioned above, you also have full access to download or back them up therefore you have control of your keys.
They Control Private Key: In the case of Coinbase they control your private keys. This is because it is the only way they can serve as a gateway to the Bitcoin ecosystem and provide their value added services. It is more or less like a bank account: When you have dollar bills in your wallet you have full control of your money, but when you deposit them in the bank they have control of your money.
Since storing and holding Bitcoins in the network is done through 2 security keys, one public and one private for each wallet, then the question of who holds the keys becomes the main safety issue.
Blockchain.Info: They generate this pair of keys when you open your wallet, but they keep the “custody” of the keys. The advantage they provide though is that you can download, export, or print your keys if you wish to back them up in an external place outside of their servers. This provides an additional level of security because if the company disappears you still have access to your Bitcoins by having your public and private keys. You just need to download or go to another wallet service and import your existing keys there to access your money again.
Coinbase: As mentioned before, because they provide additional services for users and merchants, on Coinbase your wallet is as secure as the company and its technology are. Because users interact with Coinbase and thus indirectly with the network, they need to entrust their security keys to the company just like they would their money with PayPal or with a bank. Because Coinbase is compliant with federal and state regulations and counts with the support of important investors it is considered to be a safe Bitcoin service provider.
For a simple and full service experience Coinbase offers the best alternative. If you want to easily open a Bitcoin account, use it on the web and on your mobile device, and maybe even sell your products and get paid in Bitcoins then the Coinbase Wallet is the best way to start.
For more advanced users who wish more control and flexibility then Blockchain.Info is the best option. Although it doesn’t offer merchant or trading services, its open model permits the Blockchain Wallet to easily interact with third party providers like Bitcoin exchanges and other services.