Cryptocurrency wallets are software programs or physical devices that allow you to store your crypto, send and receive them. There are two key pairs that make up a crypto wallet: private and public key pairs. In order to transmit cryptocurrency to a wallet, you need to know the wallet’s public key.
How do crypto wallets work?
Cryptocurrency wallets generate wallet addresses that can be used to receive or send cryptocurrencies and digital assets. One person sends crypto to another by using the wallet address of another person. The second individual must know the wallet address’s private keys.
The keys and addresses are linked cryptographically and securely to keep hackers at bay. While the user’s identity remains secret, both the seller and the buyer can see the balances remaining on their wallets after every transaction.
How do you cash out of your wallet?
It is necessary to convert the crypto asset in your wallet for a fiat currency or the cryptocurrency you want in order to cash out your wallet. If the wallet is hosted on an exchange or platform that does not permit the switching, you may need to transfer the coin to a crypto-to-fiat exchange.
Most exchanges support the trading of cryptocurrencies for fiat currency. Fiat payments are linked to your bank account, and you can use your card to withdraw them. Additionally, you can trade using local fiat exchanges to buy and sell cryptocurrency directly from peers.
What is safer: a hardware wallet or a software wallet?
If you’re looking for the most secure way to keep your cryptocurrencies, a cold wallet (hardware) is the way to go. Cold wallets are recommended for the long-term storage of significant amounts of cryptocurrency.
Hardware wallets
With these wallets, the users only connect to a computer when they need to transact. In this case, the keys are held in a thumb drive for safety. The goal is to find a middle ground between security and convenience.
Typically, the hardware wallet is plugged into a USB port. Hard wallets are considered safer because all of the signings take place outside of a computer’s control. This results in a “cold” storage” for private keys.
Pros
- Offline storage is extremely difficult to hack.
- All of your cryptos are within your control.
- Large crypto balances can be stored for a long period of time.
- There are no KYC requirements.
- There are a number of hardware wallets that are compatible with hot wallets.
Cons
- It takes a bit of time to set up the equipment and initiate a transaction. As a result of this, you can’t trade cryptocurrencies as quickly with hardware wallets.
- They are relatively expensive hardware wallets.
- Beginners may find it challenging.
- Convenient for occasional transactions but inconvenient for frequent use.
- On average, transactions involving hard wallets are more time-consuming.
- If you don’t have a copy of your digital keys, it’s quite impossible to get your money back.
Software wallets
Software wallets can be in the form of either web-based wallets or app-based ones. Web-based wallets are known as custodial wallets, and as such, they do not provide total security for digital currency holdings and transactions. If they come in the form of mobile applications, they can be installed on smartphones and laptops. In that case, the user stores the private keys locally.
Usually, they also come with an app or other program that uses two-step encryption. This enhances the safety of your assets.
Pros
- They are quite convenient, as they can be accessed from any computer or mobile device with access to the internet.
- If you lose your private key, it’s far easier to reclaim access to your cryptocurrency than using a cold wallet.
Cons
- They’re more exposed to a wider range of threats than hardware wallets.
- Since the private key is held in an exchange’s servers, the exchange is technically in control of your cryptos.
- If your wallet is hosted by an exchange, for example, you have no direct control over your crypto.
How to choose a suitable crypto wallet?
How often do you trade?
When it comes to crypto storage, it’s important to consider your risk tolerance and goals, as well as how much you know about the platform. You should consider cold storage if you intend to keep your coins for a long time and will not be trading in them. With that said, beginners and those who don’t have much money to invest may prefer the convenience of being able to buy and hold their coins on an exchange.
What currencies would you like to trade?
Many cryptocurrency hodlers hold a variety of cryptocurrencies on various blockchains, necessitating the use of multiple wallets. Confusion can arise if you keep one wallet for each form of currency you deal with on a regular basis.
There are many wallets and exchanges that allow users to operate with a wide variety of cryptocurrencies at the same time. You should familiarize yourself with the supported cryptocurrencies before signing up with an exchange or buying a hardware wallet.
Some exchanges will only deal with more mainstream altcoins, while other wallets are developed just for a single cryptocurrency.
How much are you willing to spend?
Hardware wallets are the way to go if you’re going to be storing a lot of cryptocurrency in the future. In contrast to free or low-cost hot wallets, a one-time fee is often required to hold a cold wallet. Even while some hot wallets charge a higher cost for cryptocurrency trading, they provide faster transactions or more features.
What functionality are you expecting from crypto wallets?
Determine if you intend to use crypto for something other than trade purposes. As an example, if you’re looking for a wallet that allows you to lend, stake, and deposit cryptocurrency, you should look for one that supports such functionalities.
How to choose the best crypto wallet?
A wide variety of crypto wallets are available, from basic apps to more advanced and secure ones. There are trade-offs for each type. When making a decision, you should take into account the traits below.
Safety
Knowing the track record of the company you are entrusting with your crypto assets is of utmost importance. Some of the factors that you should consider include its previous security record, its security layers, and how the private keys are stored.
In this era of frequent security breaches, it is also paramount that you establish whether the platform has a prior record of hacking attempts. A platform that has insured its users against losses has an added advantage. Two-factor authentication is an excellent way to protect your assets on a digital wallet.
Features
A wallet’s features have to do with its overall functionality. In general, it is preferable to go for wallets with more tradable assets, live trading, charting, allowing staking, and are compatible with hardware wallets.
Currencies supported
When it comes to currencies supported, you should go for the wallet that supports more currencies. Some exchanges will only deal with more mainstream altcoins, while other wallets are developed just for a single cryptocurrency. Without compromising on the efficiency of services and safety, you should opt for the wallet with some of the most popular cryptocurrencies.
Cost
Costs vary depending on the sort of crypto wallet you choose. Once you identify a couple of wallets with good security features, you should narrow it down to the one that charges reasonable fees for transactions. You can also find cold wallets that are reasonably priced but equally secure.
Customer support
Having customer assistance available around the clock is always a good thing, even if you’re an experienced trader. For wallets that receive frequent upgrades and may experience issues or visual abnormalities, this is especially important to keep in mind.
Do you need a crypto wallet to buy Bitcoin?
Your coins need not be stored in a cold wallet or on your computer’s hard drive. It’s possible to store your crypto in an exchange wallet, and some people do just that.
In order to maintain complete ownership and management of your funds, it’s likely that you’ll require a non-custodial wallet. Instead of relying on an exchange to store your crypto assets, you can use a standalone wallet to keep all of your assets safe.
Best Crypto Wallets of 2022
Electrum – Best Bitcoin Wallet
| Wallet Type: | Software storage |
| Price: | Free |
| Supported cryptos: | Bitcoin |
| Supported platforms : | Linux, Windows, Mac OS, Android |
| Incorporated exchange: | Yes |
Highlights of Electrum
- When it comes to cryptocurrency wallets, Electrum stands out as one of the few remaining Bitcoin-only wallets on the market.
- In addition, the wallet has a number of powerful safeguards that other wallets don’t have, and users can change their fees based on how long they’re prepared to wait for the completion of a transaction. Paying higher fees results in faster transaction processing.
- There are many advantages to using a wallet with a lightweight client. A light wallet client may be configured in minutes and takes up significantly less storage on your computer than typical wallet clients do.
Pros
- Quick and simple to set up.
- More secure than other popular hot wallets.
- Transaction fees can be customized.
- Server setups ensure that wallets are always available.
Cons
- It accepts only Bitcoin transactions.
- It doesn’t offer the best experience for new users.
- There is no live chat, email, or phone assistance for customers.
Coinbase – Best Crypto Wallet for Beginners
| Wallet Type: | Software storage |
| Price: | Free |
| Supported cryptos: | 500+ |
| Supported platforms : | Windows, iOS, Android |
| Incorporated exchange: | Yes |
Highlights of Coinbase
- For those who are new to cryptocurrency, the Coinbase wallet is a fantastic option. Once you download the Android or iOS software, you will realize just how simple the interface is. Furthermore, it integrates the Coinbase exchange, which makes buying and selling crypto and other digital tokens relatively easier.
- Unlike many other exchange wallets, the Coinbase wallet is non-custodial. You get the recovery phrase on first-time signup, and it serves as the key to your private key.
- You should be aware of the fact that Coinbase’s exchange is custodial while the wallet is non-custodial. However, the connection between the two makes it pretty easy to transfer funds between them.
Pros
- An interface that is simple to use and browse through
- It provides support for more than 500 cryptocurrencies.
- Support for multi-signature and two-factor authentication.
- It is backed by an established exchange that is capable of reclaiming lost or stolen funds.
Cons
- As with other hot storage options, there are security concerns and weaknesses.
- It can only be used on mobile devices and tablets. Otherwise, you can use it on a desktop with a Chrome extension.
Mycelium – Best Crypto Wallet for Mobile Experience
| Wallet Type: | Software storage |
| Price: | Free |
| Supported cryptos: | 22+ |
| Supported platforms : | iOS, Android |
| Incorporated exchange: | Yes |
Highlights for Mycelium
- For now, this is a mobile-only wallet; there is no desktop version available.
- It’s non-custodial, so you’ll have full control over your private key and PIN using the Mycelium wallet.
- In addition, this wallet is totally open-source.
- Mycelium enables you to buy Bitcoin using fiat currency, and you can trade your assets straight in the app.
Pros
- Suitable for a wide range of popular cold storage systems.
- Cryptocurrency trading and educational content come with the app.
- Offline transactions are possible with this option.
Cons
- For one thing, they’re less secure than hardware wallets.
- For first-time users, it may be a bit of a challenge.
- Only offers support for Bitcoin, Ethereum, and ERC-20 tokens.
Ledger Nano X – Best Offline Crypto Wallet
| Wallet Type: | Hardware storage |
| Price: | $119 |
| Supported cryptos: | 1800+ |
| Supported platforms : | Windows, Mac OS, iOS, Android |
| Incorporated exchange: | Yes |
Highlights of Ledger Nano X
- Ledger is among the most popular hardware wallets on the market today.
- The Ledger Nano S, a feature-rich and extremely secure cold wallet, was the original catalyst for its adoption.
- Built-in battery and features like Bluetooth connectivity have been added to Ledger Nano S in order to capitalize on its success.
- The Ledger Live app may also be used to lend and stake crypto in order to make income.
Pros
- Allows for a vast number of digital materials to be supported.
- It is constructed with specific hardware that is intended to keep your private keys safe.
- You can trade on the Ledger Live mobile app via Bluetooth.
- An integrated battery provides up to eight hours of runtime.
Cons
- Expensive compared to other cold wallets.
- Some people may be concerned about the privacy implications of Bluetooth technology.
Exodus – Best Desktop Crypto Wallet
| Wallet Type: | Software storage |
| Price: | Free |
| Supported cryptos: | 130+ |
| Supported platforms : | Windows, Mac OS, Linux, iOS, Android |
| Incorporated exchange: | Yes |
Highlights of Exodus
- As a hot wallet, Exodus stores your crypto assets on the internet, but it is noncustodial, meaning that only you can obtain your private key, which is a 12-word passphrase.
- Exodus wallet is meant to run on Windows OS, Linux, and Mac PCs, while there is also an Android and iOS companion app accessible for download.
- In addition, the desktop UI is elegant and easy to navigate. The Exodus exchange is connected with your wallet, making it simple to conduct transactions.
- The Exodus exchange only supports crypto-to-crypto transactions and has no room for fiat transactions.
- It provides support for over 130 cryptocurrencies.
Pros
- It supports more than 100 cryptocurrencies.
- Exodus works on desktops and mobile devices. It’s compatible with both iOS and Android devices.
- One can purchase and sell supported cryptocurrencies through the app without needing to withdraw or use a central exchange.
Cons
- Currently, the Exodus exchange does not support transactions involving cryptocurrency and fiat currency.
Trezor Model T – Best for your security
| Wallet Type: | Hardware storage |
| Price: | $195 |
| Supported cryptos: | 1500+ |
| Supported platforms : | Windows, Mac OS, Linux |
| Incorporated exchange: | Yes |
Highlights of Trezor Model T
- In terms of security and popularity, Trezor is a wonderful hardware wallet that matches the Ledger Nano X perfectly.
- It boasts an integrated color touchscreen with a large display, which provides consumers with an improved user experience.
- It is possible to utilize Bitcoin-only software on the Trezor Model T, which has been specifically built to deal with Bitcoin operations. The Trezor Model T can store over 1800 coins and tokens. However, it has in-built capabilities that allow users to switch seamlessly to Bitcoin-only functions.
- To connect with the device, the Trezor Model T makes use of the Trezor Suite software, which can be accessed via the desktop version and/or the web version.
Pros
- Highly secure offline storage.
- It supports over 1,500 currencies.
- The Model T’s touchscreen is easy to use.
Cons
- Difficult setup for non-technical users
Gemini – Best Software Crypto Wallet
| Wallet Type: | Hardware and software storage |
| Price: | 0.4% fee per year for cold storage on Gemini Custody and free online storage |
| Supported cryptos: | 40+ |
| Supported platforms : | Windows, Mac OS, Linux |
| Incorporated exchange: | Yes |
Highlights of Gemini
- As a popular exchange platform for mobile and desktop users, the Gemini app is an excellent choice.
- A $200 million insurance policy is included in the Gemini Custody package. Investors’ assets are cushioned against losses by the insurance cover.
- It also guarantees immediate liquidity and same-day withdrawal.
- Gemini’s customer service is available around the clock.
Pros
- Insurance coverage is included with hot wallets, which protect you against theft and hacker attempts.
- It offers an option for institutional cold storage.
- Investors can still access their investments in cold storage at any time.
- It offers 24/7 customer support.
Cons
- It is relatively pricey.
Opolo – Best for Android users
| Wallet Type: | Hardware storage |
| Price: | $230 |
| Supported cryptos: | 120+ |
| Supported platforms : | Android, Windows, Linux, and Mac OS |
| Incorporated exchange: | Yes |
Highlights of Opolo
- Opolo comes with a 3.2 inch wide TFT screen, which enhances the user experience.
- It offers support for more than 120 cryptocurrencies and about 200,000 tokens.
- Opolo comes with a 3.2 inch wide TFT screen, which enhances the user experience.
- In addition, Opolo claims to offer virus-free use, USB encryption, and anti-theft protection.
Pros
- With a seed phrase, you can easily backup and restore your data.
- It offers support for trading cryptocurrencies via its mobile app.
- It has an integrated currency exchange, allowing users to trade crypto for fiat currencies.
- It has support for more than 120 cryptos and over 200,000 tokens.
- Compatible with desktop computers running Mac OS X, Windows, and Linux, as well as Android.
Cons
- Untested and unproven in the market.
- Relatively costly.
Robinhood – Best for free buying and selling
| Wallet Type: | Software storage |
| Price: | Free |
| Supported cryptos: | 7 |
| Supported platforms : | Android, Windows, Linux, and Mac OS |
| Incorporated exchange: | Yes |
Highlights of Robinhood
- Despite the fact that Robinhood is primarily a smartphone platform, it also features a desktop version that is accessible via the internet.
- Robinhood stands apart since it’s absolutely free to use. Selling or buying your crypto assets is completely free!
- There are presently seven cryptocurrencies available to Robinhood consumers for trading, selling, and holding.
- Due to the fact that Robinhood has suffered occasional downtime in the past, it is not as dependable as some other wallet services.
Pros
- No transaction charges.
- It’s easy to get going with it due to its simple setup.
- It has charts that enhance the trading experience of users.
Cons
- There is a poor record of downtime occurrences.
- There are just a few currencies to choose from.
Final verdict: what is the best crypto wallet?
With cryptocurrency investments, you need to have at least one (or more, depending on your demands) crypto wallet. While software wallets are designed to be easy to use, hardware wallets are designed to protect your assets but with slightly advanced technical features.
In terms of crypto wallet security, hardware wallets that support offline transaction signatures are the most trustworthy. However, they’re pricey. In addition, mobile wallets are also preferable since they make it possible for people to manage their digital currency while on the go.
The first step is to figure out which wallet type is suitable for your needs. Beginners may need more time to master these techniques, but the extra security that some wallets provide could make an effort worthwhile.