If you are thinking of diving into the world of cryptocurrencies and bitcoin, you must be wondering what the best wallets for cryptocurrencies are and what their pros and cons might be.
While a crypto exchange can offer you a primary wallet to store your digital money in, a specialized and exclusive cryptocurrency wallet provides you with a much more customized approach. Some of the best cryptocurrency wallets also provide you with better security and reduce the chances of it being stolen.
Fortunately, there are a lot of different types of cryptocurrency wallets in the market nowadays. The type of wallet you choose is going to depend largely on what type of cryptocurrency you want to store and what your specific needs are.
Table of Contents
What are Cryptocurrency Wallets?
Cryptocurrency wallets act just like a physical wallet, except they store your digital money. An electronic wallet can interact with the decentralized network that manages and tracks your digital currency.
Wallets are what secure your cryptocurrency assets, give you ownership of your private keys and keep an account of your digital money. Without a wallet, a user would not have their crypto coins under their control.
Why is it Important to Use a Crypto Wallet?
As cryptocurrency has gained popularity, one problem that has emerged is that people are losing access to their accounts due to a simple mistake: misplacing or forgetting their account password. This has resulted in hundreds of people being locked out of their accounts – accounts that contain digital assets worth millions. All because they forgot a password!
Another problem is online security.
Both of these combined translates into users losing large amounts of money and all because of data mishaps.
Yes, you can store your digital currency on the exchange you are operating on, such as Coinbase, Gemini, and so on. But that would mean trusting the exchange fully with your digital money and letting them handle your private key, the one that is needed to access your cryptocurrencies.
Are crypto wallets safe?
While the exchanges are relatively secure, any data leak or malware attack on the platform would put your cryptos at great risk. A better way to tackle this security issue is to store your money in multiple locations. So, instead of storing large amounts on the exchange platform, you can store your coins on a tool called a cryptocurrency wallet. This way, you will also have full access to your private key.
If you still don’t feel safe with using an online wallet due to feeling vulnerable about cybersecurity threats, you can use an offline wallet.
Offline or cold wallets, such as Trezor and Ledger Nano X, provide extra security by storing your private key on a physical device rather than on a virtual system online. These wallets won’t be connected to the internet, making your crypto extra secure.
Even if you were to plug in your USB wallet to your computer, the information is offline and won’t be exposed to online threats. The best part is that even if you were to lose your hardware wallet, your money would be secure as long as you have your private key and recovery phrases in a safe place and not stored in the same geographical place.
Cryptocurrency Wallets vs Exchange?
Both cryptocurrency wallets and exchanges are useful tools for trading and investing purposes. Whatever cryptocurrency you choose to work with, both of these tools play their own part, separately.
- A cryptocurrency wallet refers to a software program that allows an online investor to store all their cryptocurrency in a safe and secure place. From their wallets, investors can then use their digital money as they please.
- A cryptocurrency exchange, on the other hand, is the place or platform where all the buying and selling of digital coins, such as Bitcoin and Ether, and many other ALT coins (cryptocurrency alternatives to Bitcoin), take place.
The exchange is a website or app where you can convert your fiat currency (USD, CAD, etc.) into cryptocurrency and back.
Wallets for Cryptocurrencies: Pros & Cons
However, as with everything in life, there are pros and cons to every decision you make. By knowing the pros and cons of crypto wallets, you can be happy that you are responsible for your money. Furthermore, the financial system is changing, and blockchain and digital currencies will be part of our lives faster than you think.
The Different Types of Cryptocurrency Wallets
There are two main types of wallets: hot wallets and cold wallets. Hot wallets are connected to the internet, which makes it easier for daily transactions. However, their presence online makes them less secure.
Cold wallets, on the other hand, are stored offline. This makes them more secure, but quick transactions are not possible. These types of crypto wallets are best suited for storing cryptocurrency rather than spending it.
The best wallets for cryptocurrencies will depend on the user, so let’s have a look at each of them below.
| Pros | Cons |
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A digital wallet helps you collect payments and store them as well so you can send cryptocurrency coins to others. |
While the lack of a third party or centralized authority is an advantage, it also acts as a double-edged sword in terms of accessibility. |
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Having a specialized wallet for your cryptocurrency allows you to take complete ownership and possession of the coins or money. It is like how you would hold your money in a bank. |
You can use the best cryptocurrency wallet on the market but if you are not careful and diligent with your wallet and its security, you may end up losing the money. And with no third party to go to, you will ultimately lose all of it. |
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Like a bank, your cryptocurrency wallet will act as a place to hold your money, except that it will provide the extra advantage of locking your currency and keeping it safe. |
If you use a hardware wallet, you could physically misplace it. That single act of misplacing the wallet could seal the fate of your crypto money forever. |
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Each wallet has its pros and cons. Some keep security to the fore, while others attract heavier cryptocurrency users. |
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Some cryptocurrency wallets are designed to hold your money for long-term purposes, while others are more suitable for short-term purposes, such as making quick, online transactions. |
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Cryptocurrency wallets are not controlled by a central entity or a third party; therefore, they are not subject to mass hacking, money fraud, and other malware and security threats from intruders. |
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You are in charge of your cryptocurrency and crypto wallet. You decide the level of security you want, along with every other feature of the wallet, because you do not have to rely on a third party for permission or custody. |
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1) Online Wallet/Web Wallet
As evident by the name, online wallets or web wallets allow their users to access their cryptocurrency wallets online. They provide users with the fastest and easiest way to carry out different kinds of transactions. Moreover, you can manage and track several different cryptocurrencies with the help of these wallets.
However, it is not recommended to store all your cryptocurrencies in an online wallet as they are a lot more vulnerable to cyber threats and hackers when compared to offline wallets.
2) Mobile Wallet
Mobile wallets can be downloaded onto mobile devices, and they allow users to access their cryptocurrencies through their smartphones.
While these are some of the most convenient and best wallets for cryptocurrencies, they are present online, making them less secure.
3) Desktop Wallet
A desktop wallet is a relatively secure way to store your cryptocurrencies. This is because they store bitcoins in offline mode, providing more security.
4) Hardware Wallet
Hardware wallets are the ultimate cold wallets. They are significantly safer than all the other types of cryptocurrency wallets mentioned so far. You can store your private key on a separate device that functions much like a USB drive.
The best part about hardware wallets is that you can still make online transactions but with the added benefit of increased security.
However, hardware wallets are usually more expensive when compared to mobile or online wallets. But, given the security they are able to provide, for something as valuable as your cryptocurrency, they are worth the price.
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What is the Best and Safest Crypto Wallet?
The best and safest crypto wallets make it easy for users to store their money securely and manage their crypto portfolios.
Here is a list of the best wallets for cryptocurrencies based on their overall cost, user experience, number of supported cryptocurrencies, security, and much more.
#8 Best Cryptocurrencies Wallets To Use (Pros and Cons)
1) Exodus
Exodus is a desktop and mobile cryptocurrency option for beginners. It includes the following features: Free of charge, Added cloud storage, and optional support for cold storage.
PROS
- Supports over 100 varieties of cryptocurrencies
- Built-in exchange
CONS
- No open-source software – meaning that the wallet’s software is not free for access to developers globally who can update and modify any security features that they feel can be improved. Open-source software would ideally make any app much more secure than it originally is.
2) Mycelium
Mycelium is a mobile wallet that makes it super convenient. What makes it even better is the fact that it can be integrated with a hardware wallet. Mycelium is free of cost, as well.
PROS
- Great customizability
- Open-source software
- Integration with hardware wallets
CONS
- Mobile only
- Relatively complicated interfac
3) Electrum
Electrum is a great bitcoin wallet with a significant focus on security. It is free of cost and contains cloud storage. This wallet is much more suited for advanced crypto users due to its complexity.
PROS
- Greater security
- Open-source software
- Diverse features
- Better customizability
- Provides cold storage
CONS
- Dull user interface
- Only supports Bitcoin
- No customer support (not ideal for beginners)
4) Ledger Nano X
Ledger Nano X is a hardware wallet providing the utmost security for your cryptocurrency. However, it comes at a cost ($120-$150) and does not provide cloud storage since it is a hardware wallet.
PROS
- Convenient user interface
- Ample storage
- Open-source software
- Customer + community support
- Encrypted Bluetooth + USB connection
- Using the Ledger Live companion app, you can easily carry out transactions wherever you are
- The device supports more than 1100 assets
- Security: the device uses a certified secure chip (CC EAL5+).
- Backup: your accounts can be restored on any Ledger device or other compatible wallet.
- Battery life of up to eight hours
CONS
- Limited storage
- Costly
- Other hardware wallets are cheaper
- No touchscreen
5) Trezor Model T
When it comes to hardware cryptocurrency wallets, Trezor is as secure as it can get. It is one of the best wallets for cryptocurrencies. It has the strongest security features and allows users to access third-party exchanges directly on its website.
Trezor Model T utilizes a touch screen, which is great for beginners as they won’t have to navigate through a bunch of buttons. Not just that, it supports more than 1600 coins and tokens, making it one of the best cryptocurrency wallets on the market.
PROS
- Web-based user interface
- Built-in third-party exchanges
- Open-source software
- Support
- Secure
- Easy to use
CONS
- High price point
- No cloud storage
- Doesn’t support XRP
- Requires additional wallets for specific coins
6) Trust Wallet
Trust Wallet is a crypto wallet that is designed for mobile use. Users can easily send, receive, and store their digital assets and Ethereum-based tokens.
It is a lightweight and fast-performing wallet that doesn’t need a lot of practice to use.
PROS
- Supports a wide array of cryptocurrencies and tokens
- Clean and simple user interface
- No restrictions based on geographical location, meaning equal access for everyone
- Safe and secure
- Affordable price
CONS
- No two-factor authentication
- It is a hot wallet, making it prone to online attacks
7) MetaMask Wallet
MetaMask wallet is a cryptocurrency wallet that can be used on different browsers such as Chrome, Firefox, and others. It also works as a browser extension, which means it will work between both normal browsers and the Ethereum blockchain.
PROS
- The wallet has open-source software, making it secure
- User’s private keys are kept on the browser
- Simple and easy user interface
- Ethereum blockchain can be accessed using MetaMask wallet
- Intuitive user interface
- Reliable customer support
CONS
- It is a hot wallet, so it naturally comes with more safety concerns
- Only provides support for Ethereum and ERC-20 tokens
- Greater risk of being hacked than with other types of wallets (hardware wallets)
- MetaMask doesn’t have access to your info; however, most browsers such as Chrome collect user info, which could compromise one’s privacy
8) Coinbase Wallet
Coinbase is one of the most popular crypto wallets in the world. Its popularity can be owed to the Coinbase Consumer exchange that most Bitcoin traders use. It is one of the most secure hot wallets on the crypto market.
PROS
- Extra security with a two-factor authorization
- Supports multiple financial instruments (NFTs, altcoins, stable coins)
- Beginner-friendly
- Simple user interface
- Top-notch security
- Supports over 25 cryptocurrencies
- Allows you to add an extra layer of security – the two-factor authentication (2-FA)
- Offers a recovery method
CONS
- High fees when not using Coinbase Pro
- Not as safe as a cold wallet
- Small number of supported cryptocurrencies
- A “hosted” wallet – constant connection to the internet is maintained
Take note: Beware of phishing attempts. This is the practice of sending fraudulent communications that appear to come from a reputable source. It is usually performed through email. The goal is to steal sensitive data like credit card and login information or to install malware on the victim’s device.
Please be very cautious. If you’re asked to provide your recovery phrase OR to send crypto assets, it’s a malicious attack. When you decide to use one of the wallets, be sure you are on the official website. This article can be very enlightening on this topic.
Conclusion
The world of cryptocurrency is ever-growing and is evolving by the second. To be successful in such a fast-paced environment, you need to know what is best for you and your cryptocurrency, and what isn’t.
With so much money at stake here, you want to be sure that you are choosing the best solution possible for your crypto purposes while also fulfilling your needs. Whatever option you choose, take the time to understand it.
Also, some wallets required investment if you want to have total control of your coins. Be open-minded and make the investment; things that appear to be free sometimes have hidden or implicit costs and you can end up losing everything.
With this guide, you will be able to figure out the best wallets for cryptocurrencies, one that fits your needs and makes your life a whole lot easier.
Further reading: Cryptocurrency for Beginners: Key Concepts You Need to Know
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