So, you want to get involved in cryptocurrency, but you don’t know what a cryptocurrency wallet is and/or what the best cryptocurrency wallet is? Well, in this article, I will guide you through the advantages and disadvantages of different wallet services – from apps, hardware wallets to website services.
Cryptocurrency wallets are places where all your crypto ‘keys’ (which we will discuss later) are stored. They’re a bit like a vending machine in a public place – anyone can insert money into the vending machine, but only those with the keys to the vending machine can remove the money.
There are loads of different types of crypto wallet services. There are app-based cryptocurrency wallet services, offline services, and web-based services to choose from. By the time you finish reading this guide, you’ll be able to pick the right wallet service for your own individual needs as well as start trading crypto safely and worry-free!
First, let’s find out more about what a cryptocurrency wallet actually is.
Table of Contents
- 1. Best Cryptocurrency Wallet: What is a Cryptocurrency Wallet?
- 2. The Importance of Protecting Your Crypto
- 2.1. Let’s See an Example – Meet Cody
- 3. Different Types of Cryptocurrency Wallets
- 3.1. Hardware Wallets
- 3.2. Software Wallets
- 3.3. Mobile Phone Wallets
- 3.4. Web Wallets
- 3.5. Paper Wallets
- 4. Conclusion & Recommendations
Best Cryptocurrency Wallet: What is a Cryptocurrency Wallet?
A cryptocurrency wallet is a software program, online platform or a hardware device that holds the keys you use to send and receive various blockchain cryptocurrency tokens. It literally stores your ‘private’ keys and your ‘public’ keys – the secure way wallets communicate with blockchain cryptocurrency ledgers.
It also lets you look at your cryptocurrency balances. The interface, the way the software looks, helps users to understand their cryptocurrency holdings (how much they have in different cryptocurrencies like Ethereum, Bitcoin or Ripple).
The way blockchain works are that ‘ledgers’ get updated across all ‘nodes’ on the blockchain network. This means all individual ‘ledgers’ are updated at the same time – a wallet doesn’t hold crypto money, but a record of transactions.
Note: A ‘ledger’ is another word for a ‘database’. The word ‘ledger’ is much more common than ‘database’ in the crypto world, so you’ll hear it often!
Also: A ‘node’ is what we crypto geeks call the individual computers that run and maintain the blockchain.
Unlike the wallet in your pocket, your cryptocurrency wallet doesn’t store money in the same way a PayPal account stores funds. This is the crucial difference between cryptocurrency wallets and other online money accounts.
The Importance of Protecting Your Crypto
Investing in crypto isn’t easy. You need to get a crypto wallet and deposit money into an exchange to buy different cryptos – and we’re not even going to talk about transfers between banks. There are so many different moving parts, and when they’re working as they should be, investing in crypto can be easy. But if one part stops working, it all stops running.
In the world of cryptocurrencies, your mobile phone, your hard drive or removable storage becomes the bank vault. That is what decentralization has done. By cutting out the middle man (banks and governments), crypto has made people more independent, but this all comes at a risk.
By making you more independent, it also places all the responsibility on you to make sure your cryptocurrency is safe.
Let’s See an Example – Meet Cody
To show you how unsafe crypto wallets can be, I’d like to introduce you to Cody Brown. Cody is a blockchain and crypto writer, investor, and all-around ‘commentator’. Yet, even he managed to lose $8,000 dollars in 15 minutes.
His story should make everyone understand why crypto wallet security is important.
Cody received a text message at 11:31 PM. His cell phone provider messaged him to say he was on the phone with customer services and a new payment method had been added. This surprised Cody, because he wasn’t on the phone to the cell company.
He got worried, so he tried to call his cell phone company, but there was no answer. In real-time, he watched as his phone was cyberattacked. He saw his Gmail account being accessed, and his crypto wallet being hacked.
He saw Ethereum, Litecoin, and Bitcoin being sent from his wallet to the hacker’s wallet address. That's definitely not what you want when choosing your best cryptocurrency wallet.
That’s how fast it can happen! It takes place daily, so you need to know how to protect yourself and keep your crypto safe.
Having a really safe place to store your cryptocurrency is important. Your crypto wallet is your friend when it comes to making your cryptocurrency investments safer. The next section will discuss the advantages and disadvantages of the different wallets available.
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Different Types of Cryptocurrency Wallets
Do you want to store cryptocurrency on a smartphone, a computer, or offline? There are a lot of different ways you can own a cryptocurrency wallet. This section will outline the different wallet technologies available, and the advantages and disadvantages involved with using them.
Hardware wallets are one of the safest ways to store cryptocurrency investments. They are what is known as “cold storage”. This means it is offline and it is more secure than “hot storage” wallets (like software wallets or web wallets). Therefore, in my opinion, this is the best cryptocurrency wallet type to choose from.
The hardware wallet differs from the paper wallet in that it provides high built-in security. The hardware wallet, which looks like a USB flash drive, has advanced security. This means the device cannot be accessed by people without the correct password. It helps to greatly improve security.
However, remember that hardware wallets have drawbacks as well. If they get corrupted, you may not be able to restore them. What is more, since hardware wallets are physical devices, you might lose them. However, such recommended cold wallets as Ledger Nano S provide you with the word seed that can be used to restore it.
Price is another disadvantage. The fees of paper, web or app-based wallets are a lot less than hardware wallets. This is because you’re buying a digital safety. It’s a USB drive with excellent memory and security. They start from $70-$99+, and some cost upwards of $2,000 dollars!
If you plan to trade cryptocurrency with some regularity and would like offline (‘cold storage)’ crypto wallet protection, hardware wallets are a good choice. Remember, this is like owning a safe deposit box. You need to remember the access code because no one else can help you access it if you forget the code.
Ledger Nano S is one of the most popular and reliable hardware wallets. It supports more than 1,500 cryptocurrencies and keeps expanding the list. The main reason why Ledger is so recommended is security.
Just like other cold wallets, Ledger Nano S keeps your private keys within the actual device - offline, meaning that there's completely no need to worry about cyber attacks. You also have to select a pin code and get a 24-word recovery phrase that's needed in case you forget a pin or lose your device.
Ledger Nano S has an improved version that's called Ledger Nano X. It looks almost the same, however, has a bigger screen and a few additional functions that improve usability. Ledger devices are made of stainless steel that makes them resistant to physical damage.
One of the most recommended hardware wallets is the Trezor wallet. I could call it my best cryptocurrency wallet. It is a “bulletproof” Bitcoin wallet and is hyper-secure — it supports Windows, Linux, Max and has one of the best Android wallet apps available for cold storage crypto investment.
The Trezor hardware wallet has full two-factor authentication, a password manager app, and is compatible with ERC-20 tokens. It also provides cryptocurrency support for a range of different crypto coins, including Dash, Bitcoin, and Ether.
It’s easy to use, you plug in the USB adaptor. You connect via the computer and you can reset using the management software included. Total control, total security, and total peace of mind. It’s tiny as well and can fit in the palm of your hand.
Trezor Model T price is costs $169.99. Even though it's relatively expensive, such a price is completely worth it.
KeepKey is another recommended hardware wallet. It has a huge screen that's protected by a polycarbonate casing and allows you to see the full cryptocurrency address without the need to scroll back and forth.
Being a hardware wallet, KeepKey is really secure. It provides you with a pin code and recovery seeds. What is more, it has this unique feature that switches pin code numbers from time to time, protecting you from malware copying your code.
KeepKey's pricing is only $49, which makes it one of the most affordable hardware cryptocurrency wallets on the market.
Software crypto wallets are “hot wallets”. This means they could be hacked remotely because of internet access. But if you trade in low volumes, desktop software crypto wallets could be the best cryptocurrency wallet for you!
When it comes to Coinbase, the majority of crypto fans know it as an exchange. While that's true, it also has it's own software wallet and can be considered as an online or web wallet (we'll discuss it later in this article).
Even though software wallets are not as secure as hardware ones, the good news is that you can download and use it completely free. Of course, when it comes to buying or selling cryptocurrency, you will need to go through the Coinbase exchange that charges fees for transactions (average of 3.75% per transaction) just like any other crypto exchange (only fees vary).
Coinbase Wallet versions are available for Apple iOS and Google Android users. If you're making multiple trades per day, you can keep a part of your assets in hardware wallets or the Coinbase software wallet and the other part in the Coinbase exchange that serves you as an online wallet and trade easier.
Less Recommended Software Wallets
Electrum is available to download for Windows, Mac OS, and Linux operating systems. It's a popular desktop software wallet, but it is also the most technical. If you are new to Bitcoin and crypto, this software might not be the right choice for you.
The biggest advantage of software wallets — like Electrum — is the fee adjustment setting. When the Bitcoin network becomes busy, fees go up as people wait for transaction confirmations to occur. Electrum allows users to change the transaction fee to help speed up the transaction.
Exodus is a beautifully-designed wallet that supports multi-coin exchanges, including Bitcoin, Ethereum, Litecoin, Dogecoin, and Dash. It allows you to manage your keys, presents your investment in easy-to-understand charts and is totally customizable — meaning, you can make it perfect for you.
Software desktop wallets are not suitable for everyone. If you are holding large sums of cryptocurrency, it would be better to use a more secure wallet type, like a paper wallet or a hardware wallet, such as Ledger Nano S and Trezor. The software desktop wallet is better than the web wallet, but it isn’t the best crypto wallet type available.
Mobile Phone Wallets
App-based wallets are incredibly popular. Which one is the best Android crypto wallet or Apple wallet app available? Let's find out.
Binance is one of the best options when it comes to TOP mobile phone wallets. While Binance is better known as a cryptocurrency exchange, it also has its official mobile app that's called Trust Wallet.
Trust Wallet supports more than 40 blockchains, meaning that it supports thousands of cryptocurrencies and tokens. Needless to say, if you cannot find a wallet that supports a specific token, you should check out Trust Wallet.
Moreover, this cryptocurrency wallet is decentralized and doesn't collect any of your personal data. It has multiple card payment processors integrated into the wallet, so you'll be able to purchase cryptocurrencies without the need to leave the mobile app.
Less Recommended Mobile Phone Wallets
Mycelium is a mobile bitcoin wallet app that’s really easy to use and convenient. It has a strong history with Bitcoin, and the cryptocurrency industry, as a whole. Launched in 2008, Mycelium has been an early player in the crypto wallet field – helping to make one of the best cryptocurrency wallets available.
Mycelium provides its wallet service through an app for smartphone users. It has a very easy-to-navigate user interface (app layout). It is easy to use the tabs that are provided to jump between different tasks — from sending or receiving Bitcoin to looking after your security and settings.
Mycelium provides Hierarchical Deterministic wallet security. HD is a smarter way of protecting the Bitcoin address and the Private Keys by providing an all-in-one Bitcoin wallet security system. Another big advantage is that Mycelium is often mistaken for open source.
But in fact, it uses the Microsoft Reference Source License, which provides limited cover for the technology’s underlying code – helping to keep the technology secure.
The biggest disadvantage of Mycelium is bad customer service and transaction fees. There is very limited customer support and the transaction fees are volatile — they can jump with some paying above market average fees for Bitcoin transaction costs.
Cryptonator is a really easy-to-use cryptocurrency wallet app. It allows instant and direct cryptocurrency payments and exchanges between different cryptocurrencies — from Dash, Monero to Bitcoin. Cryptonator’s popularity is because of its multi-currency account feature. The app allows you to store, send, receive Bitcoin and other popular coins from the comfort of your mobile phone.
Cryptonator is really big on security — meaning, you can trust the app. It uses bank-grade security technology which means it uses professional security systems. It also uses Encrypted SLL web connection technology using HTTPS Google-approved web connection protocols, along with 2-Factor Authentication and Trusted IP technology to help provide the best app-based security.
One of the biggest advantages to Cryptonator is the low Bitcoin transaction/sending fees (around 0.00010000BTC). This is below other crypto wallet providers. This helps make Cryptonator one of the best cryptocurrency wallets services available.
Cryptonator has a bad reputation for customer service. This is a big disadvantage. People are often waiting long periods for money to transfer and this can create problems when people get in touch with customer services — the wait and uncertainty doesn’t help.
Copay was developed by Bitpay, which has made it incredibly popular. It is a wallet that has pure ‘convenience’, which means it is very easy to use! The layout — the way the app works and how the user goes about using it — is very simple.
The biggest advantage of the Bitpay Copay app is that it has very good security – and strong privacy settings –, which means you can trust the app. It uses state-of-the-art HD-multi-signature technology from Bitpay. It is also designed for sharing. This is what makes it the best crypto wallet available – you can share easily with friends and family, just like a joint checking account!
The HD technology that Bitpay uses means you can restore your wallet if anything goes wrong. This is the best choice for Apple users over other types of wallets. It is also the best Android crypto wallet available as well.
The only disadvantage is with customer service (we’re seeing a pattern here, aren’t we?). This is a problem with all app/web-based providers – many are tiny companies and with hundreds of thousands of users, so customer service is an issue.
Overall, what we have found is that phone-based crypto wallets can be very useful. There are problems with security, but wallets that use HD and 2FA technologies are really safe. They use sound security systems and provide reasonable support. The biggest problem is customer service — all of the examples above have quite mediocre customer service.
Mobile wallets are definitely very useful for on-the-go, but are they the best cryptocurrency wallet type? Let's check out the others first before deciding.
Jaxx is rich in all kinds of features, the rebranded version of the previous Jaxx is suitable not only for mobiles but also desktop with web extensions.
Unlike previously mentioned wallet disadvantages, Jaxx Liberty's customer support is one of its advantages. Well-trained professionals are there to make user's experience even smoother.
The wallet allows you to customize and adjust to only show the tokens and coins you want, not all of them at once. The interface is designed in a way to help you understand numbers through diagrams, dashboards, and charts.
In order to keep all your crypto belongings safe, Jaxx Liberty gives you full control over your keys and you can import or export from or to your other wallets. That means that everything depends on you, and the wallet does not include itself in the process and has no responsibility for your actions.
Just like any other wallet, Jaxx Liberty also applies fees to your transactions. Although it is worth to mention that these fees are not collected by the wallet itself, they are sent to the miners in the network.
In conclusion, despite the fact that there are no 2-FA features, Jaxx Liberty is definitely worth your attention. A user-friendly interface and well-trained customer support will answer all your questions immediately.
Web wallets aren’t totally secure – you never get access to your own private keys. At best, they are a temporary place of moving crypto from one place to another. However, it's crucial to mention that it all boils down to the question - how much do you trust a provider?
One of the most reliable providers is Coinbase. As previously mentioned it has both software and online wallets. Coinbase is a popular online crypto exchange that allows you to buy and sell cryptocurrency with fiat money (USD, EUR, etc.). When you buy your crypto on Coinbase, it is stored in a Coinbase web wallet.
The bad thing about web wallets is that they are much riskier than software wallets — if Coinbase’s server is hacked, you could lose all your cryptocurrency. However, as far as it's known, Coinbase has never been hacked before.
In the past few years, Mt. Gox and Coincheck, two major crypto platforms, were hacked. During these hacks, hundreds of millions of dollars’ worth of cryptocurrency was lost. People lost their crypto and Mt. Gox company went bankrupt.
Therefore, if you choose to store your cryptocurrencies in online wallets, you should at least pick a provider that you trust. Coinbase is one of the most reliable options.
To be clear: I would never recommend leaving your cryptocurrency on an exchange!
Paper wallets are one of the safest ways of securing your cryptocurrency - they are are an offline way of holding a cryptocurrency. Put simply, it is literally printing off QR codes that represent your public and private keys. This offline safety net means you have absolute control over your cryptocurrency investments. This is one of the best cryptocurrency wallets format available!
However, paper wallets aren’t suitable for everybody. If you trade daily or weekly, having paper keys will become very difficult to manage — you’ll be using a lot of QR codes.
The paper wallet is best suited for the long-term cryptocurrency investor. If you plan to buy big, over the long term, using paper wallets could provide you with the ultimate peace of mind, as it is one of the safest ways to store your cryptocurrency!
Services like BitcoinPaperWallet.com allow users to print Bitcoin paper wallets for the best offline Bitcoin storage solution. You can buy a tamper-proof offline paper wallet with full QR code availability. Services like BitcoinPaperWallet.com can provide long-term Bitcoin investment security.
You should note that paper wallets need to be stored safely. Any water, environmental or fire damage could result in the full loss of your crypto. You could lose everything — but this is true with all wallets, if they get hacked or lost.
It is about being responsible – looking after your codes. We recommend storing a copy of your paper wallet with a trusted family member if possible. This way, you have a backup of your private key if your original is lost or damaged.
Conclusion & Recommendations
This guide has attempted to bring together all the different wallets available for cryptocurrency investors. Every crypto investor, trader, and the user will need a wallet, so it's up to you to choose your best cryptocurrency wallet.
What we discovered was that “hot wallets” are not 100% safe — they’re only good for small trades. Examples of “hot wallets” include Desktop Software Wallets and App/Web-based Wallets. "Cold wallets", on the other hand, are much better for holding cryptocurrency long term. Examples of cold wallets include paper and hardware wallets.
Here's the list for the best cryptocurrency wallets that we included in this article:
- Ledger Nano S - hardware wallet
- Coinbase - software and online wallet
- Trezor - hardware wallet
- KeepKey - hardware wallet
- Binance (Trust Wallet) - mobile phone wallet
- Electrum - software wallet
I believe hardware wallets are the best crypto wallet type, with paper wallets not far behind!
Make sure to think about wallet security before you end up as a victim and get your wallet hacked as Cody Brown did! You don’t want your hard-earned cryptocurrency stolen, do you? Take responsibility, use good wallet services and keep your cryptos safe!
The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.