Bitcoin and other cryptocurrencies have experienced a boost this week, with Bitcoin hitting $90k on what many think are headwinds from an incoming Trump administration. Whether you’re looking to invest in crypto or you’ve been HODLing since the beginning, you’ll need a good place to keep your digital currency.
Choosing to leave it on a crypto exchange would mean you’re trusting the company to hold it for you in a custodial wallet, which means you don’t fully own the asset.The better option is to move it to a non-custodial wallet of your own — which gives you complete ownership.
What is a crypto wallet?
A crypto wallet’s primary function is to keep your crypto safe and allow you to make trades. However, wallets also offer more control over your digital currency than you’ll get using a standard account at a crypto exchange or brokerage.
Crypto wallets can be external hardware devices — cold storage wallets — or software that runs on your mobile device or computer — hot storage wallets.
Cold storage wallets are physical storage units that are kept offline and can only be accessed using a dongle — a physical USB that has to be plugged into your computer. They are generally thought of to be more secure than hot wallets because they’re not connected to the internet, but hot wallets are typically more easily accessible for making trades. Hot wallets include:
- Mobile app wallets use software installed on your phone
- Desktop wallets use software installed on your computer
- Browser extension wallets can be noncustodial like Metamask, or custodial like Binance
Unless you’re making daily crypto trades or have only a modest amount of money invested in crypto, we recommend you don’t store your crypto in a custodial wallet.
Best practices for holding crypto include purchasing a cold wallet for offline storage. Your next best option is a “noncustodial” software wallet or app. We’ll look at both options here in an effort to help you find the best crypto wallet for your own situation.
The best crypto wallets for 2024
Coinbase, which went public in April 2022, is the best-known cryptocurrency exchange in the US. The company makes it easy to trade well-known cryptocurrencies from bitcoin to dogecoin, and has its own Visa-backed debit card that integrates with Apple Pay and Google.
If you’re new to cryptocurrency, the Coinbase Wallet is a good place to start. It’s a mobile wallet, meaning it can be downloaded as an app for Android or iOS. The interface is intuitive and the wallet is fully integrated with the company’s exchange, which makes it easy to conduct transactions — including purchasing coins and tokens with traditional currency.
Unlike the company’s exchange, the Coinbase Wallet is noncustodial; that means that only you have access to your wallet’s private key, which is generated with a 12-word recovery phrase, or seed phrase, when you sign up. Note that there’s a difference between storing your cryptocurrency on Coinbase’s exchange, which is custodial, and the wallet, which is not. But the integration between them makes it fairly simple to transfer funds back and forth.
The Nano X is Ledger’s second-generation cold storage wallet. The integrated Ledger Live platform, which is easy to learn and use, supports more than 5,500 coins and tokens including bitcoin, ether and XRP. The wallet can be connected to your computer via a USB cable and Android and iOS mobile devices via Bluetooth — a connection the Model T lacks.
The device is sturdy and features a small LED screen. To start, you’ll set up a PIN, then a 24-word seed phrase. The seed phrase acts as your wallet’s private key. Just like other wallets, as long as you keep the private key safe, you won’t lose your crypto assets — even if you lose your wallet.
It’s important to note that Ledger suffered a data breach in July 2020, which resulted in the theft of some customers’ personal data — but, significantly, not their crypto assets. No private keys to wallets were taken, but there were reports of customers receiving phishing emails and other scamming threats afterward. That noted, Ledger has long been a trusted name in the crypto world, but the data breach is a good reminder to be careful online — especially when it comes to dealing in crypto assets.
The $129 Model T is Trezor’s second-generation hardware wallet, and it comes with many of the same features as the Ledger Nano X. One major difference is that Trezor’s software is powered completely by open-source, which affords some additional protection, theoretically, since the code is available for scrutiny. As the thinking goes, sunlight is the best disinfectant.
Trezor Suite is designed to run natively on your desktop, which generally provides greater security than a web-based app, though you can also access Trezor Suite through the company’s website. The Model T natively supports 16 cryptocurrencies including Bitcoin, Ethereum, Dogecoin and Cardano. You can make transactions directly in Trezor Suite though the company’s integrated exchange.
Shaped like an old-school stopwatch, the Model T comes with a touchscreen and a USB cable to connect to your computer; it also features a microSD card if you want to add encrypted storage directly to your hardware wallet. It does not feature Bluetooth support, however — an omission that some security advocates prefer, as Bluetooth connectivity could be an attack vector for hackers to exploit.
Exodus is a hot wallet, which means it’s a software wallet that’s connected to the internet; but it’s noncustodial, which means that only you have access to your private key — a 12-word password phrase that protects access to your crypto assets.
The Exodus wallet is designed to run on Mac, Windows and Linux computers, though a companion app is available for Android and iOS devices. The desktop user interface is slick and easy to learn. Your wallet is seamlessly integrated into the Exodus exchange, so it’s easy to make transactions.
Exodus supports more than 260 types of cryptocurrency including bitcoin, ether, tether USD and dogecoin. But the exchange has some noteworthy limits: If you want to purchase crypto with US dollars and store it in the Exodus wallet, you’ll need to first purchase the asset on a centralized crypto exchange, such as Coinbase, and then transfer the assets to Exodus. The app version allows purchases of bitcoin with US dollars. And once you have an asset in your wallet, it can be easily exchanged for other supported assets. While the wallet itself is free to use, Exodus charges a fee for transactions made via its exchange.
Hot storage wallets are generally considered less secure than cold storage wallets, and some Exodus users may eventually want to upgrade to cold storage. The good news: Exodus is fully compatible with Trezor’s One and Model T hardware.
Mycelium has been around since the beginning of the crypto era, and the Mycelium wallet is one of the oldest and best-known bitcoin wallets. This is a mobile-only wallet that supports both Android and iOS. There is currently no desktop version.
The Mycelium wallet has an appealingly simple interface, but it supports fewer kinds of crypto than others profiled here: You can send and receive bitcoin, ether and ERC-20 tokens such as tether USD, USD coin and binance USD — but not the hundreds of esoteric coins that have been developed over the past few years. You can buy and sell bitcoin directly in the app, and Mycelium lets you buy bitcoin with regular fiat currency.
The Mycelium wallet is noncustodial, so you’ll have sole access to your private key and PIN. This wallet is also the only hot-storage wallet on our list that’s completely open-source. Though there are security advantages in that, it also comes with limited tech support options. Basically, if you get stuck, you can submit a help ticket to the email address listed at the bottom of the webpage.
For more advanced users, Mycelium supports QR codes, allows you to set custom transaction fees and offers compatibility with hardware wallets from Trezor, Ledger and KeepKey.
Do I need a crypto wallet?
While you could keep your assets in an online brokerage like Coinbase, a crypto wallet is the safest way to store your digital assets. It can only be accessed by a unique key that can’t be replicated once it’s generated. That also means it’s very important to store your key in a secure spot where you won’t lose it and only you can access it.
How to store your coins in a wallet
Your wallet will have a public and private key. Your private key is how you access your assets, while the public key is used to send and receive crypto. When you purchase a coin, you’ll have to input your public key as the address for where the digital asset is sent.
A good rule of thumb is to always transfer a very small amount of cryptocurrency from the exchange you purchased it from, confirm that it made it to your wallet successfully, and then transfer the rest. If you include the wrong address, your assets will be sent into the void with no way to be recovered.
How to choose a crypto wallet
Choosing which crypto wallet is best for you will depend on how secure you want your assets to be, and how much trading you intend to do.
People who invest large amounts of money will likely opt for a cold wallet as it’s more secure, while people who dabble in investing will likely be fine not spending the extra money and using a hot wallet.
Security
When it comes to cryptocurrency, security is perhaps the most important thing to consider. You want your digital assets to be as safe as possible from hackers and fraudsters. The best defense from a hacker is going offline, so a cold wallet will be the most secure route to take. Being a physical object, cold wallets can still be lost or stolen, so it’s important to store your cold wallet securely.
However, if you do lose your wallet, you can still access your crypto by using your seed phrase. Seed phrases are randomly generated combinations of words that can be used to recover or access your account in the instance you don’t have your cold wallet or your hot wallet becomes disconnected. You’re assigned a seed phrase, or recovery phrase, upon setting up your wallet.
Fees
While transactions on the blockchain may come with fees, hot wallets like Exodus are typically free to use, while the cold wallets on this list cost up to $149.
Ease of use
Hot wallets are typically easier to use than cold wallets, simply because you don’t need to take an extra step to access them.
Hot wallets are connected to your browser via an extension, to your phone if you’re using a mobile wallet, or via software downloaded to your computer. They can be accessed at any time, while cold wallets require a physical dongle to be connected to your computer.
Amount of trading
If you plan to do a lot of trading, you’ll need a wallet with advanced features. Some wallets support a lower number of digital assets, so you’ll want to opt for one that caters to a wider range of coins. You’ll also need to be aware of any restrictions the wallet has around trading. A cold wallet is the better choice if you intend to trade and store higher volumes of digital currency.
Frequently asked questions
How much money do I need to open a crypto wallet?
It depends. Hardware-based wallets generally cost between $100 and $200, though many software-based wallets are free. Most don’t require you to actually own any cryptocurrency.
Which wallet is best for beginners?
If you’ve never used cryptocurrency before, we recommend Coinbase Wallet. Coinbase is a well-known, US-based crypto exchange that’s easy to use, and it works well with Coinbase Wallet.
Which wallet is best for advanced users?
Today’s cold storage wallets can be quickly and easily connected to the internet for fast transactions, so most advanced users nowadays are probably most interested in a cold storage wallet. The hardware wallets sold by Ledger and Trezor are both good options.
What are the risks of crypto investing?
Cryptocurrency is subject to far less regulation than conventional investments and securities. While the lack of oversight is an attractive feature to some investors, it’s important to know that Bitcoin and other cryptocurrencies are highly volatile, experience dramatic price swings on a daily or even hourly basis and lack many of the protections of other forms of investment. The risks are significant.
Are assets in crypto wallets insured?
While the companies offering crypto wallets may offer some guarantees to customers and users, the Federal Deposit Insurance Corporation does not currently insure digital assets like cryptocurrency. However, the environment is evolving and many government agencies, including the FDIC, are gathering information and considering legislation for the future.
What’s the safest crypto wallet?
Cold storage wallets are generally thought of as more secure when compared to hot storage wallets. If you plan to store a large amount of coins or tokens for any length of time, we recommend using a cold wallet.
+ There are no comments
Add yours