A crypto wallet is essential for trading, buying and selling cryptocurrency. They are essential for traders to securely store and verify transaction information. Custom crypto wallets, which can be either hardware or software and are also known as hot and cold storage, offer traders unique solutions that rival those offered by crypto exchanges.
Continue reading to find out about the various types of cryptocurrency wallets and how they work. And which one should you choose?
What is a Crypto Wallet?
Cryptocurrency wallets or simply crypto wallets are places where traders store secure digital codes that allow them to interact with a Blockchain. They do not store your cryptocurrencies actively, contrary to what their names may suggest.
The blockchain must be able to find the crypto associated with your address. Crypto wallets will need to interact with the blockchain. Crypto wallets are actually less wallets than ledgers. They act as owner’s identities and accounts on a blockchain network, and allow access to transaction history.
The Best Crypto Wallet? – Ledger Nano X
It is easy to see why Ledger NanoX is often cited as the best Bitcoin wallet by the cryptocurrency community. The Nano S, Ledger’s original crypto wallet, was already one the most popular wallets ever. However, the Nano X makes it even better.
The Nano X’s most significant upgrade is Bluetooth functionality with a built-in battery. Bluetooth allows crypto users to access mobile support, which opens up new possibilities. This means that you can use your smartphone to check your balance and make transactions.
Ledger also upgraded the internal hard disk so that you can store over 100 different cryptocurrencies, including Bitcoin, Ethereum and Litecoin. It also features an upgraded screen with improved security and usability.
The only problem with the Nano X is its price. The Nano X is usually priced at over $100. This is prohibitive for new crypto users. It’s still a reasonable price for one of the best hardware wallets on the planet.
Best Budget Crypto Wallet – Ledger Nano S Plus
Although the original Ledger NanoS was a great recommendation, it did have one major flaw: its storage capacity. It was limited in storage space and could only hold three crypto apps.
The Ledger Nano Plus is a huge improvement, with a larger hard drive and a superior screen. It is still considerably cheaper than the Ledger nano X, although it does not have bluetooth.
We would go as far to say that the Ledger Nano S Plus crypto wallet is the best for most people.
Ledger Nano S
Ledger’s original crypto wallet, the Ledger Nano S, is still an excellent choice for beginners to Bitcoin and one of the best hardware wallets.
The Nano S is a budget-friendly device that costs less than $60. It has many of the same features as the Nano S Plus, Nano X and Nano X plus a very limited hard drive. The Nano S is limited in terms of storage space, with only one or two cryptocurrencies. We believe the upgrade to Nano S Plus at $20 is worth it.
Ledger also announced that they will soon cease production of the Nano S so that you won’t be able to purchase it any longer.
Best Crypto Wallet for Beginners – Coinbase Wallet
Coinbase Wallet is a great wallet for beginners with little or no experience in crypto. It can connect to all major banks and features a welcoming interface with three tabs and clearly identified functions. Coinbase Wallet supports 44,000 coins and tokens. It can also store digital collectibles and non-fungible tokens.
It is important to distinguish between Coinbase the cryptocurrency exchange and Coinbase’s wallet. You can use the Coinbase wallet without having to open an account on one of the biggest cryptocurrency exchanges. It is also non-custodial. This means that your private key is stored on your device and not in Coinbase’s servers. You don’t have to worry about having your coins locked or being exposed to cyberattacks.
Additional highlights include:
- Secure Enclave is a chip that can be used to provide biometric authentication on Android, iOS, iPad and Mac devices. FaceID, TouchID)
- Access to decentralized exchanges within-app that allow token conversions without intermediaries
- Cloud backups are available to protect your digital keys
Trezor Model T
Experts agree that cold storage hardware devices are the best choice if security is your main concern. Campbell says that anyone who isn’t concerned about security should move their assets to a cold storage device. He also added that he had some assets in a bank vault and stored them on hardware devices.
Charlie Brooks, Chris’ son and CPO, and cofounder of Crypto Asset Recovery LLC, believes Trezor is one of the best cold wallet options. “A cold storage solution will keep your funds safe.”
Experts recommend a physical wallet from Trezor such as the Trezor T for crypto investors who are concerned about security. It’s expensive at $280. It’s not cheap, however, the Model T offers many unique features, including a large touchscreen display and add-ons such as Shamir Backup. This Trezor-designed security system allows you to create 16 recovery phrases that can be used as backups. You can also use the recovery seed to retrieve your entire wallet in case it is stolen or destroyed.
Trezor products, like Ledger wallets, are very secure. However, they may be a little different from other Trezor products. It all comes down to the user’s preference. Some people may also prefer the Model T’s physical strength and toughness, at least in its appearance. It’s intuitive and user-friendly, as well as easy to set up.
It is a great hardware wallet and compares well to the Ledger Nano S. However, we prefer the Nano S’s form factor. Some users might find the Trezor One more appealing. It’s still one of the most reliable and secure bitcoin wallets available.
Best Offline Crypto Wallet – Ledger Nano X
One of the most popular brands of hardware wallets is Ledger. The Ledger NanoS, its first wallet, was a highly secure and feature-packed cold wallet that gained its initial popularity. Ledger Nano S’ success is continued by the Ledger Nano S, which has a built-in battery as well as additional features like Bluetooth connectivity and asset management.
The Ledger NanoX is available at $158.22 and comes in a matte-black finish. It also has a 128×64-pixel screen that can be used to cycle through apps. The wallet can hold over 5,500 coins and tokens, making it one of our most popular choices. It can also manage up to 100 accounts simultaneously using the app on the device. The Nano X’s Bluetooth Low Energy connectivity can be disabled at any time. This allows the Nano X and Ledger Live apps on Android and iOS to exchange crypto while on the move.
Additional highlights include:
- Secure Element Chip from Ledger, which is a specialized chip that can also be used for high-end security solutions such as passports and credit cards. It protects against various types of attack
- Ledger Live can be used to buy and sell crypto. It also allows you to lend and stake crypto in order to generate revenue.
Best Desktop Crypto Wallet – Exodus
Exodus Wallet is a great crypto wallet. Exodus is a popular cryptocurrency wallet that offers a user-friendly interface and an integrated exchange.
It displays all of your cryptocurrency in an illustrated format, similar to a stock portfolio. This wallet is a great way to store multiple cryptocurrency and see how they are performing. Exodus is a great investment tool.
Exodus recently added support for iOS and Android so that you can use it on both mobile and desktop.
Keepkey Hardware Wallet
KeepKey, a hardware wallet that is often overlooked, has a large LED display and was introduced much later than Trezor and Ledger. The large screen makes it easy to use and is one of the most affordable wallets. It is believed to be the best cryptocurrency wallet because of its large screen. It’s also not as portable due to its size and company reputation.
Best For Mobile – Mycelium
Mycelium, another established crypto wallet, focuses primarily on Bitcoin. It was introduced to the market in 2008 and has been a mobile-only wallet for years.
Two of Mycelium’s greatest strengths are its security and transaction options. It is completely reproducible. This means that the code can be copied and compared to its original to identify security issues. There are also several levels of pin protection. The wallet app offers custom transaction fees at four levels: low, normal, economic, and priority. It also supports multiple types of user accounts.
Additional highlights include:
- A detailed transaction history, which includes information such as block height, which refers to a particular location on the blockchain, and miner fees which are paid by miners in the blockchain network. Inputs/outputs indicate addresses in transactions.
- Inter-wallet operability via the FIO network. This network includes leading cryptocurrency wallets, exchanges, and payment processors.
- Watch-only mode allows users to disable outgoing transactions and keep track of their stocks, trades, and other information.
Best for Ethereum – MetaMask
If you are looking to buy and keep your crypto, a cold wallet can be a great asset. A hot wallet is essential if you plan to trade crypto. MetaMask is a popular choice for crypto traders due to its ability to open up new opportunities in the Web3 world.
MetaMask is the best hot wallet to ethereum. Campbell says that MetaMask is based on the ethereum Blockchain, which is the largest blockchain that can talk to OpenSea’s [NFT exchange] OpenSea. “MetaMask allows you to have the best access to the blockchain.”
MetaMask is able to connect to multiple ethereum blockchain networks, such as Binance, NFTs and all ethereum tokens. It is a popular and easy-to-use wallet, that works with any ethereum-based token. This is a large percentage of the Web3 community. These factors combined give it an advantage over other wallets.
Web2 users can also easily bridge to Web3 by downloading the mobile app to both iOS or Android phones. You can also use the web extension to most major browsers.
It can be used to store NFTs or other collectibles, and it can also be used in conjunction with Trezor and Ledger hardware wallets. You can use it to buy or exchange tokens/cryptos. MetaMask is a great choice if you want to explore NFTs or the metaverse.
Best DeFi Wallet – Crypto.com
For those who want to start their journey into decentralized finance, the Crypto.com DeFi Wallet can be a great choice. Users have full control of their digital assets and private keys, which they are responsible for safekeeping. Defi wallets allow them to do this. You can also swap cryptos 1-to-1 and have access to a variety of tools to make passive income from the crypto you already own. These features are not available to regular custodial wallets.
It is important to distinguish between custodial and noncustodial wallets, as there are other exchanges. You can download the Crypto.com DeFi Wallet and use it for your day-to-day crypto activities, even without creating an account on Crypto.com.
We remind consumers that services and products that use decentralized finance can be very risky and should not be used without caution.
Additional highlights include:
- There are several layers of security available, including 2-factor authentication and biometric authentication.
- You can create multiple digital wallets, and import other wallets.
- Connect to other decentralized apps using the WalletConnect tool
How to Choose a Crypto Wallet
You will need to determine whether the crypto wallet is custodial (or noncustodial), whether it’s hot/cold, and what coins/tokens it can hold before you make your decision.
Keep in mind the price. Some wallets can be purchased outright for a small fee. Others charge fees to move assets in and out.
Campbell suggests that you could begin narrowing down your options by looking at how long wallets have been in the marketplace. Look at the length of time each wallet has been in existence. He says that they are battle-tested. Also, check to see if the wallet can handle the crypto you wish to buy. He says that not all wallets have the ability to purchase every token.
These factors will help you narrow down your choices, taking into consideration your security preferences as well as trading/investing activities.
- Custodial vs. non custodial (self-custody)
- Type of storage: Cold vs. hot
- Number of supported tokens and coins
- Cost of purchase or fees
Types of Crypto Wallet
There are two types of crypto wallets: cold wallets or hot wallets. They are different in that hot wallets can be connected to the internet, while cold wallets must remain offline.
Hot wallets are digital tools that cannot be disconnected from the internet. These are software pieces that can be accessed via your smartphone or desktop computer. They allow you to track your currencies and trade them. You can also access some hot wallets from your browser. This means you can use them across a variety of devices.
Hot wallets have the greatest advantage: they are convenient. Hot wallets have the greatest advantage of being easy to access. Your private and public keys are encrypted and stored on your wallet’s website or app. They are ideal for people who trade frequently and those who plan to spend bitcoins.
Hot wallets can be accessed online 24/7, which means they are more vulnerable to cyberattacks. Hackers could exploit vulnerabilities in your wallet’s software or use malware to hack into it. This is especially dangerous for web wallets hosted on crypto exchanges. These are more common targets for thieves.
Cold wallets are used to store digital keys offline on a piece or sheet of paper or hardware. Hardware wallets are usually in the form of a USB drive that allows you to trade, buy and sell crypto while connected to a computer. Your keys can be accessed via QR codes printed on paper or engraved on another material such as metal.
Cold storage wallets are intentionally difficult to hack. Hackers cannot remotely access the keys of the wallet owner unless the owner is victim to a phishing attack. A thief could steal your hardware wallet by first obtaining the USB drive that allows you to access your crypto, and then cracking its password.
The high security level may allow for mistakes by wallet owners. You have lost your USB drive, sheet of paper or private key and you don’t have it backed up somewhere. A cold wallet, unlike hot wallets that allow you to recover access by using a seed phrase or other means, is almost impossible to access due to its two-key security system.