Wallets are an essential part of being involved in buying, selling, investing, and trading cryptocurrency, as they are the place you will be storing all of your coins. They are an unavoidable part of the process, and there are a few different types of cryptocurrency wallets to choose from.
We have compiled a list of the best cryptocurrency wallets for you to try, but it’s important that you know the different types, their pros and cons, and how each type works before you choose.
Our recommendations have been compiled for their security, reputation, and usability, which are some of the most important things to consider when choosing a cryptocurrency wallet.
If you have never used a cryptocurrency wallet or have not yet broken into the cryptocurrency world, we have broken down each type of wallet, how it works, and its various pros and cons just for you. We emphasize the importance of your information and wallet content’s safety and some alternative ways to determine which wallet type will best suit your needs.
Doing a little extra reading and research will only be to your benefit, so we strongly encourage you to dig as deep as you can when making this important decision.
It’s best to think of a cryptocurrency wallet as a sort of bank account. Your reason for needing a wallet is really as simple as that you can’t store and save your coins without one because cryptocurrencies are not tangible and can’t be alternatively kept in a sock in your bottom drawer for safe keeping.
Most cryptocurrency wallets allow you to store more than one type of cryptocurrency in them, which is convenient for those that would like to diversify but don’t want to keep their different coins in separate wallets.
Having a cryptocurrency wallet allows you to keep track of your balances and means your coins are accessible for when you want to use them. There are some risks, though, as wallets can be susceptible to hacking and theft attempts.
That’s why it’s vital that you carefully choose which wallet(s) to use. A bad choice can lead to losing some or all of your precious cryptocurrency.
One of the first things you need to consider is which TYPE of wallet is best for you. Let’s take a look at your options.
There are a number of different types of cryptocurrency wallets to choose from. They range from exchange wallets, which are largely seen as risky but ultra-convenient, to paper wallets, which keep you in sole control of your passkeys and personal information but require the user to build the wallet themselves, which can be time-consuming and complex.
There is a wallet out there for everyone, and it’s a good idea to explore each of the different types before determining which is likely to be best suited for your requirements.
Is convenience your biggest concern? Or are you uncomfortable with your passkey information being stored on a third-party site? Would you prefer your wallet to be completely online, or would it make you feel better to be able to keep your coins stored offline?
The majority of the decision lies in your personal preferences, but the security of your information and wallet contents should always be in the front of your mind.
These are built into the exchange platform and allow for instant transfers to and from your wallet to the exchange.
Not all exchange sites host their own wallets, and they’re not always the best option for the user, although they are one of the most convenient types.
The biggest concern with wallets hosted by online exchange sites is security. There have been instances of exchange sites being hacked, and subsequently, some of the wallets connected to the exchange were corrupted and emptied.
Online wallets are hosted on a web server and are secured by a password that is stored within the server. To some, that is a major con because it requires not only a dependency on a third-party site, but it also means that your password and information are stored on that site.
The third-party server aspect means that if the site is infiltrated by hackers, your information would be susceptible to being compromised. For that reason, you may want to separate your funds between an online wallet and a hardware wallet to better secure your cryptocurrency from possible hacks.
If you currently use an online wallet that is hosted on your exchange site of choice, it is recommended that you first transfer a very small amount from your current wallet to your new wallet to ensure that the coins arrive safely before your transfer the lot.
This step is important because if for some reason your new wallet’s server is faulty and worst-case scenario your coins are lost in transit, you won’t risk losing your entire crypto stash.
Each wallet has its own account number, like a bank, and as long as you know your account and routing information, you will be able to easily transfer the funds from one wallet to another. But remember, cryptocurrency is not like the traditional currency.
When you transfer money to or from your bank account, there is assurance that it will make it there safely without a hitch, and if a hitch is encountered, your money is insured by the bank.
This is not the case with cryptocurrency, as it is a largely unregulated currency and not officially recognized as legal tender in most countries. Understand that having and maintaining your cryptocurrency fortune is inherently risky, so extra precautionary steps that you may not make when dealing with your bank account are recommended.
These are powered by an app on your phone that stores your passkeys for ready access to your account. This type of wallet should be backed up regularly on your desktop or laptop computer.
Just as you wouldn’t carry your entire life savings in cash in your back pocket, you should also only equip your mobile wallet with a small amount of your total crypto funds at a time.
Using another type of wallet in tandem with your mobile wallet is highly recommended.
Hardware wallets are essentially an external hard drive for your cryptocurrency. They allow the user to keep their private passkeys and other sensitive information relating to their cryptocurrency offline and in a physical device that can then be placed in a home safe.
These wallets connect to your computer using the USB port, and the password to enter your wallet is not stored in a server, so your risk of being a victim of a hack is much smaller.
Wallets of this type typically cost around $100 USD, and they provide unmatched control and security of your personal crypto financial information.
Hardware wallets are also the least liquid because they require a connection to your computer in order to use them. If you decide that a hardware wallet is what you want in terms of security and control, but the liquidity is an issue for you, you could consider opening up an online wallet and keeping a small amount of your coins in it.
This way, you can take advantage of both the top-notch security and the liquidity that is important to you.
If you want both the liquidity of an online wallet and the security of a hardware wallet, but you don’t want the risk of having to remember two different passwords for the wallets, you might consider a paper wallet.
The major catch with paper wallets is that they are only usable for those with intricate knowledge of cryptography and all of the other small technological details that go into the creation and maintenance of wallets.
Keys, passwords, and any other personal information that would usually be stored on a server for an online wallet is not stored or transmitted anywhere or to anyone, giving the user total control. And for those who want to further protect themselves, some platforms will even offer an offline option.
If the paper wallet option sounds like a slam dunk for your personal needs and priorities, don’t let the difficulty level get in your way. There are many websites where you can learn exactly how a paper wallet works and what the requirements are for maintaining and setting the wallet up.
There is really only one person that is impacted negatively or positively by your choice of cryptocurrency wallet, and that is you. Your choice will impact the way you buy, sell, trade, and invest your cryptocurrency, and it will impact the security of your information when doing so.
If you are a person that regularly makes cryptocurrency transactions, sometimes unplanned or not from your home or personal computer, choosing a hardware wallet as your primary wallet will change your ability to do that.
But when used in tandem with a mobile or online wallet that you maintain every day, you will be able to increase your usability while still making sure that the majority of your crypto funds are secure and offline.
That is why it’s important to reflect on your spending habits or what you would like your spending habits to be when deciding on which wallet is right for you.
If you are a person that spends often, but you’d like to curb your habits, a hardware wallet or a combination of your current wallet and a hardware wallet may be a good choice.
If you are not a current owner of cryptocurrency and have no spending habits in the market to reflect on, you can look at your spending habits with your traditional currency and credit cards.
Do you make a handful of purchases every day, whether in person or online? Or are you a frugal individual that spends only when necessary?
Within each type of wallet, there are specific servers or platforms that are safer and more reputable than others. It really goes without saying that especially in the cryptocurrency world, where theft and fraud typically mean a permanent loss without the possibility of reimbursement or criminal consequences, security and reputability are vital.
The best place to get a feel for a certain site or wallet is the internet. By searching the specific platform or server in question, you can get a feel for how its past or current users feel about it.
If an overwhelming number of people report thefts or missing coins from their wallets, take that as an immediate no, and move on to a different platform.
If the general consensus is that the server is safe, secure, and trustworthy, give it a go. Maybe begin by only buying a small amount of cryptocurrency to put into the wallet and going from there if you’re still wary.
Of course, no online server or platform is impervious to hacking. The only way you can get close to owning a wallet that is 100% safe is by choosing something offline, like a hardware wallet, though even those don’t come without some small safety concerns.
The wallet choice you make can impact your cryptocurrency experience for the better or for the worse, so be sure to keep in mind the importance of your personal preferences and the extreme importance of safety when you’re making your decision.
Depending on your personal criteria, there are a number of different things to look for when choosing your cryptocurrency wallet. We have highlighted 5 things that we think are important in your search, but it is possible that not all of them will apply to your personal preferences.
Regardless of your personal preferences, security should always be the first and most important part of your search. If a wallet is flimsy on their security practices, or their reputation from past users is anything less than excellent in terms of security, it should be a hard pass.
Security in the cryptocurrency wallet world refers to who is in control of or who has access to your private keys and information. On a third-party or exchange platform, private login keys are stored in their server. This doesn’t necessarily mean that you should automatically write it off, though.
Do some research on the platform’s history. If you find information, formal or informal, about hacks or coins being lost, that platform should not be the one you choose. Just because a server or an app stores your login information doesn’t mean you will inevitably be a hack victim and lose every penny you put in.
The server’s history will give you some insight on how strong their defense is against people trying to get in and steal the coins of those who use the platform.
Ease of use is an important factor for novice and beginner users. That being said, you should always expect a small learning curve when switching platforms, even if you are an advanced cryptocurrency user.
From platform to platform, the interface and layout will often be a little bit different, so getting used to how yours works may take a little bit of time.
If you have never used or owned a cryptocurrency wallet, you should look for something with easy to average usability in order to quickly get accustomed.
Ensuring that the cryptocurrencies you own or are interested in owning are supported in your wallet of choice is obviously of great importance.
Getting into the habit of making sure your coin is compatible with your wallet is a good one to get into, even if you are a user of the more popular coins like Bitcoin or Ethereum.
It’s always best not to just assume that your coin is supported just because it’s popular. You may find yourself in a frustrating situation later on when you find out it actually is incompatible.
Learning from other people’s mistakes and successes is a valuable part of choosing a cryptocurrency wallet. The internet is a place bursting at the seams with information, complaints, and praises about products you are thinking of buying or signing up for, and cryptocurrency wallets are no different.
You can use those experiences both good and bad to narrow down your decisions, but remember to take these reviews with a grain of salt. That’s not to say that you should completely write off complaints made by users, but make sure you are looking at both the big and small pictures of experiences.
Anonymity in the context of cryptocurrency wallets refers to how connected your information is to your wallet and funds. The higher the anonymity, the bigger separation there is from your personal information to your wallet.
This is an important part of your search but shouldn’t necessarily be a deal-breaker unless the anonymity is reported to be not very anonymous at all. But keep in mind that the nature of cryptocurrency is public because all transactions are kept on a public ledger.
So, you will never be able to get complete anonymity from any wallet that exists, even the hardware or paper wallets.
All of your transactions are put on the blockchain (public ledger), which is accessible to everyone.
There is no shortage of choices when it comes to selecting a cryptocurrency wallet to store your digital currency. This is a good thing, but the variety of options can also be a little overwhelming and make it difficult to make a decision.
It’s important to weigh the pros and cons of each option, keeping all the factors discussed above in mind. We do advise sticking to the wallets that we recommend, but we should make it clear that these are not the ONLY wallets worth considering.
One final point for us to finish on is that protecting your cryptocurrency doesn’t end with choosing the right wallet. Even after you’ve made your choice, and your funds are safely tucked away, you should still be taking any possible security measures to keep your cryptocurrency safe.