Before you buy bitcoin or any other cryptocurrency, it is important to know how to best store your coins. This is why we wrote this guide. Over the next few chapters we will discuss the different options of cryptocurrency wallets and help you choose the best option available. Ready to find out more? Read on!
At the time of this writing, there are several different types of cryptocurrency wallets, each with its own pros and cons. We will list all the options bellow and briefly discuss them separately:
These are the most popular types of cryptocurrency wallets. They can either be downloaded on your phone or accessed online, providing multiple points of access. They also have an easy to use interface, which makes it perfect for beginners.
Both online and mobile wallets are certainly the most convenient option in the market, but they often lack security. While they can be secured with a 4-digit pin code, sometimes even with an addition of 2 Factor Authentication, they store your funds in online (hot wallet), and the manufacturer often keeps a copy of your private keys. Hence, exchange-based wallets also fit in this category.
Desktop wallets are a little safer than online/mobile wallets as you need to download and install the software on one device. The single point of access ensures that cyber criminals cannot access your wallet remotely simply by entering your personal details, but that does not mean they are your best available option.
Desktop wallets often support more cryptocurrencies that the prior option, but come with UI/UX limitations, which makes them somewhat confusing for beginners. You also need to remember that your funds can be at risk in case your device breaks down.
The safest crypto wallet you can purchase is a hardware wallet. These USB-like physical devices have multiple security layers, including manual authorization of transactions, an 8-10 digit pin code, and cold wallet storage.
Hardware wallets, like Trezor, Ledger, and Safepal, support more than 2000 cryptocurrencies, are relatively easy to use, and ensure full protection of your funds. The only drawback one could mention is the price – Hardware wallets come at a cost of $70-$200 (all other options are free). Considering the added protection their offer, these wallets are ideal for individuals who are looking to invest significant amounts of money and are looking to protect their funds in the best possible way.
Before choosing a cryptocurrency wallet, it is important to familiarize yourself with some important terminologies:
- Custodial vs non custodial: Custodial wallets are able to see and copy your private keys, for added protection and security. This however also means that your funds are not only in your control. Non custodial wallets do not keep a copy of your private keys, giving you full responsibility over your funds. The second option is the best from both an objective and ideological viewpoint.
- Hot vs cold wallet: Hot wallets, or online wallets, store your funds in the web, and require an internet connection to make transactions. This inherently increases risk. Cold wallets, on the other hand, create your keys when offline, and thus make it impossible for cybercriminals to access them from the web. The second option is, once again, the best.
- Seed phrase: A seed phrase, or backup phrase, is a list of 12-24 words that is provided to you during the installation process of the wallet. Write these on a piece of paper and keep them safe, as they can be used to recover your funds in case your wallet does not work, or is stolen.
From all the options mentioned above, the safest option for your funds is a hardware wallet. Not only do they have many layers of security for added protection, but they are also non custodial, and store your funds offline (cold wallet).
When choosing a hardware wallet, it is important to consider how you will be using it. If you regularly want to check your portfolio and cryptocurrency prices, it is best to use a hardware wallet with a screen. This limits your options to 4 great brands:
Each option comes with its own unique features, but Ledger and Trezor are the market leaders since 2014. Safepal is an excellent option if you’re looking to trade directly in decentralized exchange BSC, while KeepKey looks like a more elegant version of the other options.
Overall, we recommend doing some more research on each of the above options and choosing the wallet that suits you the best. We have tested all of them and found Ledger Nano S and Trezor Model T to be the more durable and easy-to-use options available.