Crypto wallets are essential for buying, trading, and selling cryptocurrencies. Merchants need them to store crypto and protect and validate transaction information securely. Whether hardware or software, also called hot and cold storage, the best crypto wallets offer traders dedicated solutions compared to crypto exchanges.
Read on to learn more about the different types of cryptocurrency wallets, how they work, and which ones you should choose.
Crypto wallet guide
Blockchain technology has made digital currency transactions increasingly practical, convenient, and accessible. However, as the number of crypto users has increased, has the rate of cryptocurrency-related cyber theft also increased? Because of this, it is more important than ever to have a highly secure crypto wallet, whether digital or physical.
What is a crypto wallet?
Cryptocurrency wallets, or simply best crypto wallets, are where traders store the secure digital codes needed to interact with a blockchain. They do not actively store your cryptocurrencies, despite what their name might suggest.
Crypto wallets need to find the crypto associated with your address on the blockchain, so they need to interact with it. Crypto wallets are fewer wallets than ledgers: they act as an owner’s identity and account on a blockchain network, providing access to transaction history.
How do the best crypto wallets work?
When someone sends bitcoin, ether, Dogecoin, or any other type of digital currency to your crypto wallet, you are not transferring any coins. They sign ownership of your wallet address, confirming that the crypto on the blockchain no longer belongs to their address but yours. This requires two digital keys: a public key and a private key.
A public key is a string of letters and numbers automatically generated by the crypto wallet provider. For example, a public key could look like this: B1fpARq39i7L822ywJ55xgV614.
A private key is another string of numbers and letters that only the wallet owner should know.
Think of a crypto wallet as an email account. To receive an email, you must give the people your email address. This would be your public key with the best crypto wallets, and you must share it with others to participate in a blockchain transaction. However, you would never give anyone the password to access your email account. This password is your private key for crypto wallets, which should be shared with anyone else under no circumstances.
By using these two keys, the best crypto wallet users can participate in transactions without compromising the integrity of the currency being traded or the transaction itself. The public key assigned to your digital wallet must match your private key to authenticate any funds sent or received by it. Once both keys are verified, the balance in your crypto wallet will increase or decrease accordingly.
Types of best crypto wallets
Crypto wallets can be roughly divided into hot wallets and cold wallets. The main difference between them is that the hot wallets are always connected to the internet while cold wallets are kept offline.
Hot wallets are digital tools that cannot be disconnected from the internet. You can access software from your phone or desktop computer to monitor and trade your currencies. Some hot wallets can also be accessed through your browser, meaning you can use them on various devices.
The most significant advantage of hot wallets is their convenience. Your public and private keys are stored and encrypted on your wallet’s app or website, so you can access them anywhere with an online connection unless they’re limited to a specific device. This easy access makes them ideal for those who trade more frequently and are thinking of spending bitcoins.
Because hot wallets are always accessible online, they are also at greater risk of cyberattacks. Hackers can exploit hidden vulnerabilities in the software that powers your purse or use malware to infiltrate the system. This is especially dangerous for wallets hosted by crypto exchanges, bigger targets for crypto thieves.
- Extremely convenient, it can be accessed from anywhere with an internet connection.
- It’s easier to regain access if you lose the private key than cold wallets.
- Less secure than cold wallets, vulnerable to a wider variety of attacks
- With depot wallets, your keys are stored on the exchange’s servers
Cold wallets store your digital keys offline on a piece of hardware or paper. Hardware wallets usually take the form of a USB drive that allows you to buy, sell, and trade crypto while plugged into a computer. With “paper” wallets, your keys may be accessible via printed QR codes, written on a piece of paper, or engraved into another material such as metal.
Cold storage wallets are deliberately designed to be challenging to hack. Unless the wallet owner falls for some phishing attack, hackers have no way of obtaining the owner’s keys remotely. For something like a hardware wallet, a thief would first have to accept the USB drive used to access your crypto and then somehow crack its password.
This high level of security can lead to errors on the part of wallet owners. If you lose your USB drive or piece of paper and haven’t backed up your private key somewhere, you’ve effectively lost access to your crypto. Compared to hot wallets, which allow regaining access via a seed phrase, recovering access to a cold wallet is impossible in most cases due to the two-key security system.
- More secure than hot storage wallets due to offline storage
- Hot storage wallets support many hardware wallets
- Transactions take longer on average
- It’s almost impossible to recover currencies without a backup of your digital keys.
Our top picks for the best crypto wallets of 2022
- Coinbase Wallet – Best for beginners
- Electrum – Best for Bitcoin
- Mycelium – Best for mobile
- Ledger Nano X – Best Offline Crypto Wallet
- Exodus – Best for desktop
- com – Best for DeFi wallet
Best Crypto Wallet Reviews
- User-friendly interface that is easy to navigate
- Supports 500+ cryptocurrency assets
- Support for multi-signature and 2-factor authentication
- Backed by a reputable exchange capable of recovering lost or stolen assets
- Similar security issues and vulnerabilities as other hot storage alternatives
- Available on mobile and tablet devices only (excluding Chrome extension)
Why we chose it: We decided Coinbase Wallet is the best crypto wallet for beginners because it is an intuitive and highly secure wallet backed by a well-known exchange.
Coinbase wallet is an excellent wallet for beginners who have little to no experience with crypto. The app can connect to most major bank accounts and has a welcoming and easy-to-navigate interface consisting of a simple three-tab layout and identifiable features. Coinbase Wallet can store non-fungible tokens (NFTs) and digital collectibles and supports over 500 crypto assets — the most significant number among the hot wallets on this list.
It is essential to distinguish between the Coinbase exchange and the Coinbase wallet. Coinbase wallet can be used without opening an account with any major cryptocurrency exchanges. It’s also non-custodial, which means its private key is stored on your device — not on Coinbase’s servers — so you don’t have to worry about your currencies being frozen or exposed to a cyberattack on the site reason.
- Quick and easy to set up
- Greater security than other hot wallets
- Customizable transaction fees
- Wallets do not experience downtime thanks to server configurations
- Only supports bitcoin trading
- Setup and interface not ideal for beginners
- No customer support via chat, email, or phone
Why We Chose It: We picked Electrum as the best bitcoin wallet for its extensive security features and high level of customizability.
Founded in 2011, Electrum is one of the oldest and most well-known crypto wallets today. It’s also one of the few remaining crypto wallets that trade only Bitcoin, and a currency Electrum is uniquely equipped to support. The wallet houses a host of solid security features that others lack, and users can also adjust their fees based on how long they’re willing to wait for a transaction to complete: pay more fees, and your transaction will complete faster.
One of the wallet’s greatest assets is that it uses a lightweight client. Light clients can be set up in minutes and take up less space on your computer than traditional wallet clients. Using Simple Payment Verification (SPV), the wallet only downloads parts of the blockchain, speeding up transactions without compromising security.
- Compatible with standard cold storage solutions (Ledger, Trezor, KeepKey)
- HD spending accounts and single address savings accounts are available
- In-app crypto exchange and educational material
- Offers offline transactions
- Not inherently as secure as hardware wallets
- It can be not very clear for first-time users
- Only supports Bitcoin, Ether, and ERC-20 tokens
Why We Chose It: We selected Mycelium as the best crypto wallet for mobile devices due to its strong focus on security and advanced transaction history information.
Mycelium is another established crypto wallet with a big focus on Bitcoin. Launched back in 2008, it has long been a mobile-only software wallet and remains one of the best options for Android and iOS users.
Mycelium’s security and transaction options are two of the key highlights of the wallet. The app is fully reproducible, meaning its code can be duplicated and compared to the original to find potential security issues, and it has multiple layers of PIN protection. The wallet app offers custom transaction fees with four recommended tiers – low priority, normal, economic, and focus – and several different types of user accounts.
Ledger Nano X
- Supports a vast number of digital assets
- Built with special hardware to protect your private keys
- Bluetooth enables trading with the Ledger Live mobile app
- Built-in rechargeable battery with 8 hours of battery life
- Much more expensive than other cold wallets
- Using Bluetooth technology may pose a privacy issue for some
- No touch screen
Why we chose it: We selected Ledger Nano X as the best offline crypto wallet due to its number of supported currencies, high-security standards, and mobile trading opportunities.
Ledger is one of the most well-known brands of hardware wallets available today. Its initial popularity sparked with its first wallet, the Ledger Nano S, a feature-rich and highly secure cold wallet. The Ledger Nano X expands on the success of the Nano S by adding a built-in battery and features like Bluetooth connectivity and more excellent asset management capabilities.
The Ledger Nano X is currently priced at $119, comes in a matte black finish, and has a 128 x 64-pixel screen for scrolling through apps. The wallet supports over 1,800 coins and tokens – the most significant number on our list – and can manage up to 100 of them simultaneously via the apps on the device. Bluetooth Low Energy connectivity can be disabled and allows the Nano X to be used with the Ledger Live app on Android or iOS devices to exchange crypto on the go.
- Supports 145+ crypto assets
- Compatible with Trezor One and Trezor T hardware wallets
- Allows users to buy bitcoin with Apple Pay
- 7/24 customer support
- High transaction fees on the in-wallet crypto exchange
- The lack of native 2-factor authentication may bother some users
- No multi-signature support
Why We Chose It: We picked Exodus as the best desktop crypto wallet for the speed of its transactions, the ease of use, and the rich functionality of its client.
Exodus is one of the most visually appealing and intuitive wallets out there. Initially a desktop-only wallet, Exodus now has apps for iOS and Android and is also compatible with Trezor wallets, a famous hardware wallet brand. Nonetheless, the desktop wallet application is still the core offering of the wallet and is updated every two weeks.
One of the main attractions of Exodus is the number of currencies it supports. The wallet keeps more than 145 cryptocurrency assets, a more significant number than many other hot wallets. These include established altcoins like Ether, Litecoin, Tether, and Dash and popular meme coins like Dogecoin and Shiba Inu.
- Choose your preferred trading fee and confirmation speed
- +100 coins, including BTC, ETH, CRO, ATOM, DOT, and LTC
- Earn interest on more than 35 tokens
- Funds cannot be accessed if you lose your private key and recovery phrase
- The built-in token swap has some geographic restrictions
Why We Chose It: We selected Crypto.com as the best defi crypto wallet for its variety of decentralized finance tools, excellent onboarding process, and robust security framework.
The Crypto.com DeFi wallet is an excellent choice for users starting their journey into decentralized finance. Defi wallets give users complete control over their digital assets and private keys, which they are responsible for keeping safe. They also allow users to exchange cryptos 1-to-1 and access a wide range of Cryof tools to earn passive income from their cryptos – features unavailable for regular depository wallets.
As with other exchanges with both a depot and non-depot wallet, it’s important to distinguish between them. The Crypto.com DeFi wallet can be downloaded and used for users’ daily crypto activities without opening an account with the Crypto.com exchange. We would also like to remind consumers that decentralized financial products and services carry significant risks and should be used with caution.
Other Crypto Wallets We Considered
- Choose between the cheaper Trezor One and Trezor Model T
- Intuitive and convenient user interface
- More expensive than other hardware wallets with similar functionality
- No support for iOS devices
Trezor is a well-known brand in the crypto world that released the very first hardware crypto wallets. Both current models have excellent security measures and support numerous assets. It didn’t make our top list because the models offered by Ledger surpassed Trezors in terms of their build and the number of currencies supported. Nonetheless, we recommend Trezor to anyone using Exodus as their main crypto wallet due to its streamlined integration with Trezor models.
- Cheap hardware wallet
- The device display supports QR codes
- It supports a limited number of coins
- Heavier than comparable competitors
Another hardware wallet, KeepKey, is an excellent solution for those looking for an affordable hardware wallet, currently priced at $49.00. The attractive display and user interface are beginner-friendly than the Trezor and Ledger wallets. The wallet also follows top-notch security standards. However, like the Trezor models, KeepKey fell short in some regions of being the best offline wallet.
- It supports over 300 coins and tokens
- Supports credit card purchases and in-wallet exchanges and conversions
- No hardware wallet integration
- Not many coins are available for the Atomic Swap feature.
Atomic Wallet is a hot storage case with a lot going for it. Users don’t need to open an account to use it; customer support is available 24/7 and supports many assets. A highlight is the Atomic Swap feature, which uses a decentralized crypto exchange housed in the wallet to swap currencies without third parties. It didn’t make our list of the best cryptocurrency wallets as other wallets offered better versions of most of its features.
What to look for in the best crypto wallet?
When looking for the best crypto wallet, it is imperative to ask yourself first:
How often do I trade? Will you trade cryptocurrency daily or occasionally? Hot wallets are more suitable for active traders due to their speed and practicality. However, active traders can also benefit from a cold wallet by using it as a savings account and storing most of their currencies there.
What do I want to trade? Do you want to buy and store bitcoin, or do you have an interest in different types of cryptocurrencies like altcoins and stablecoins? So the crypto wallet you choose should support the currencies you plan to trade and will ideally accommodate any other coins you plan to change in the future.
How much am I willing to spend? Are you planning to accumulate large amounts of crypto at some point in the future? Hardware wallets are ideal for this activity, but unlike hot wallets (mostly free), they require an upfront payment to own the wallet itself. Some hot wallets have higher crypto trading fees but offer faster transactions or greater functionality.
What features do I need in a wallet? Are you planning to do anything specific with crypto other than trade it? For example, traders looking to monetize their crypto passively should look out for wallets that allow for crypto lending, staking, and deposits.
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