BitHedge

How to choose a Bitcoin wallet: nine questions

Every wallet says it is secure and private. These are the nine questions whose answers actually differ between them — with BitHedge’s own answers alongside, so you can hold this page to its own standard.

See what it doesGet supportComing to the App Store for iPhone.

  1. Does it show you a recovery phrase, and does that phrase work elsewhere?

    This is the single test that separates a wallet from an account. A standard BIP39 phrase with documented derivation (BIP84 for bc1q, BIP86 for bc1p) restores in any compatible wallet, which means you can leave. A proprietary backup format, or no phrase at all, means you cannot.

    BitHedge: 12-word BIP39 phrase, BIP84 or BIP86 derivation, restores in any wallet that supports them.

  2. Can support restore your access if you lose everything?

    If the answer is yes, someone other than you can move your coins, whatever the marketing says. That may be a trade you want — but you should make it knowingly rather than discover it later.

    BitHedge: No. We hold no keys and run no server for the app. If you lose the phrase, the coins are gone.

  3. Where is the key stored, and is it in your device backups?

    A key sitting in an ordinary iCloud or Google backup is only as safe as that account's password and recovery flow. Look for a wallet that uses secure hardware and a device-only storage class — and expect it to tell you that restoring your phone will not restore the wallet.

    BitHedge: Encrypted with a Secure Enclave key, stored as WhenUnlockedThisDeviceOnly, excluded from iCloud and iTunes backups.

  4. What servers does the app contact, and will it tell you?

    Every wallet talks to something to read balances and broadcast payments. Whoever it talks to sees your IP and your addresses. A wallet that publishes the list is one you can verify; a wallet that does not has answered the question anyway.

    BitHedge: mempool.space, with blockstream.info as failover, or your own node. That is the complete list.

  5. Can you point it at your own node?

    It is the only way to stop leaking your addresses and IP to a third party. Also worth asking the follow-up almost nobody asks: if your node is unreachable, does it silently fall back to a public server? A fallback quietly undoes the entire benefit.

    BitHedge: Yes, over your local network or a .onion address, and it never falls back to a public server.

  6. How does it handle fees, and can it rescue a stuck transaction?

    Fee estimation being wrong is normal; being unable to do anything about it afterwards is not. Replace-by-fee lets you re-broadcast the same payment at a higher fee instead of waiting indefinitely.

    BitHedge: Live network estimates or set your own, plus RBF bumping from the transaction screen.

  7. Does it reuse receiving addresses?

    Reusing one address publishes the fact that every payment to it belongs to the same party, permanently. A wallet should hand out a fresh address each time without being asked.

    BitHedge: A fresh receiving address every time.

  8. What does the App Store privacy label say?

    It is a declaration the developer signs, and it is easier to check than any claim on a marketing page. 'Data Not Collected' and a list of tracking SDKs are very different postures, and a wallet with an advertising identifier in it deserves an explanation.

    BitHedge: Data Not Collected. No analytics, no advertising, no crash reporting, no third-party SDKs.

  9. How does the company make money?

    Free wallets are not charities. Swap spreads, buy-crypto partnerships and paid token listings all shape what the app pushes you toward. Knowing the revenue model tells you which screen will be biggest.

    BitHedge: It does not. No fees, no swaps, no purchases, no ads — the network fee goes to miners, not to us.

Then check one more thing

Fund it with a small amount, send some of it back out, and restore the phrase into a second wallet to confirm the same balance appears. Ten minutes of that is worth more than any comparison table, this one included — including the part where you discover a word was written down wrong while it still costs you nothing.

Common questions

What is the most important thing to check in a Bitcoin wallet?

Whether it gives you a standard BIP39 recovery phrase that restores in a different wallet. If it does, you hold the keys and you can leave at any time, which puts a floor under every other risk. If it does not, you have an account with extra steps.

Should a beginner use a self-custody wallet or an exchange?

Start on an exchange if you are still learning, keep the amount small, and move to self-custody once writing down twelve words and storing them properly feels routine rather than daunting. There is no prize for doing it in the wrong order, and a lost phrase is permanent.

Is an open-source wallet always better?

Auditability is a genuine advantage, and for large amounts it is a reasonable requirement. But 'open source' on its own means the code is readable, not that anyone competent has read it. Ask whether it has been audited, by whom, and whether the published binary is reproducibly built from that code.

How much bitcoin is too much for a phone wallet?

There is no universal number, but the useful test is personal: an amount whose loss would be annoying rather than devastating. Above that, a hardware wallet with the phrase stored separately is the right tool, and no phone app should talk you out of it.

Does it matter which address type a wallet uses?

A little. Native SegWit (bc1q) and Taproot (bc1p) both cost less in fees than older formats, and Taproot has small privacy advantages. A few very old services still cannot pay bc1p addresses. Any wallet worth using supports at least Native SegWit and lets you choose.

Related reading

All guides

Recovery phrases, address types, nodes, stuck transactions.