If you buy, trade, and sell cryptocurrencies, a cryptocurrency wallet is an essential addition to your arsenal. We’re not just talking about a Bitcoin wallet either – there are a growing number of cryptocurrencies you can invest in. (But just as a general warning: It’s a scam world in the crypto space. So be careful.)
As you might expect, we’re not talking about physical wallets in the conventional sense. Instead, a crypto wallet is a bit more modern, being either software installed on your computer or smartphone, or sometimes a piece of physical hardware. Some involve you trusting a company to hold your cryptocurrency while others offer offline storage. There is also the small matter of what kind of crypto they are for. Some focus only on Bitcoin, which remains the most well-known cryptocurrency, but others also work for Ethereum and other digital currencies.
Ultimately, the best wallet is one that you can use easily while being delicate enough that hackers cannot access it. If you’re new to the game, this might seem confusing, but don’t worry – we’ve compiled a list of great crypto wallets for you, no matter what your level of knowledge is right now.
Why do you need a crypto wallet?
Technically, you don’t need a crypto wallet, but just like a regular wallet keeps your money and cards safer than just carrying them around, a crypto wallet makes everything easier.
In addition to giving you a place to collect everything, in the form of a ledger, so you can see exactly what crypto assets you own, it’s also great for performing Bitcoin and other cryptocurrency transactions. Simply put, if you want to be organized with how you track and monitor your cryptocurrency, you need a crypto wallet.
What types of crypto wallets are there?
Not all crypto wallets are the same. There are different types of wallets and each serves different purposes.
In their simplest form, there are two types of wallets divided into subsections. A hot wallet is a wallet that is actively connected to the internet. This means that it is really easy to transact with one of them, but they are also more vulnerable to attacks from nefarious sources. These usually break down into a mobile wallet or a desktop wallet, the type depending on whether you’re using a smartphone app or a desktop app.
Another term you may see is an online wallet or cloud wallet. These are very easy to use as you can access them from anywhere; however, your private keys are stored on another server, which can be risky. Generally, it is not advisable to use them for large sums of money.
A cold wallet is a wallet that is not connected to the internet. This means there is no risk of being hacked, but you must physically store the items. An example is a paper wallet, which involves storing your Bitcoin or other cryptocurrency as a printed QR code.
Another form of cold storage wallet is a hardware wallet. It allows you to store your private keys in a secure physical device. The cryptocurrencies stored in the wallet are kept offline, which means there is no chance of them being hacked. A hardware crypto wallet is a great way to protect your currency without requiring complex technical knowledge to be sure. However, you run the risk of not being able to access your assets forever if you misplace the key.
Finally, there are custodial wallets. These are digital wallets where the private key(s) are held by the service provider. You access it and spend money on it, but you don’t have full control over it. The service provider might even block you from transferring funds.
What is the safest type of crypto wallet?
There really isn’t one type of truly secure crypto wallet. They all have different strengths and advantages, largely depending on how you take care of your currency.
At first glance, hot wallets appear to be the most risky. This is because you depend on the security of a provider. By leaving your cryptocurrency on an exchange, you trust that company. This problem also persists if you transfer the funds to a web wallet or app service because, again, you are confident that the source will not be hacked (and they have in the past).
Cold storage might seem like the best bet, with seemingly unbeatable crypto hardware wallets, right? Type of. These may not be vulnerable to hackers because they are offline, but they are susceptible to external damage, theft or simple loss of the hardware. The setup can also be a bit confusing for beginners, and you should always transfer funds online if you plan to transact.
Paper wallets are related to hardware wallets. These seem almost old-fashioned as they depend on storing pieces of paper. You create QR codes for your currency before printing them out and storing them in a secure place such as a safe or vault. It’s incredibly secure provided no one takes the paper from you and you don’t lose it. You are also very dependent on a good quality printer and the fact that no natural disasters can befall your storage location.
As we said, there is no perfect solution to protect your currency. You have to weigh what best suits your needs.
What is the most convenient way to store cryptocurrency?
Much like knowing which is the safest method, convenience depends on how you plan to use your cryptocurrency.
If you plan to dip into cryptocurrency only, an easily accessible bitcoin wallet, such as a wallet stored online, should suffice. This way, you can easily trade and transact with minimal hassle. However, if you are thinking long-term and want to store large sums of cash, a cold, offline method of storage is best, provided you have a safe place to store it. The latter is also only really handy if you don’t plan to trade frequently – otherwise you’ll have to switch between online and offline regularly.
Will your Bitcoin grow in your wallet?
For the most part, unfortunately not. Unlike a regular bank account which may have interest added to investments, a crypto wallet is purely a means of storage. Much like a regular wallet, it’s a place to keep your finances safe rather than watch them grow and expand.
There are a few exceptions though, like Coinbase Wallet which allows you to earn interest, but there is some risk involved with fluctuating rates.
What is the best crypto wallet?
The good news is that there are plenty of crypto wallets out there, so you have plenty to choose from. The bad news is that this makes it difficult to select the right service for you. This is where we can help you. We’ve lined up a selection of the best crypto wallets, with something for everyone.
These are the best crypto wallets in 2022.