Why do you need a crypto wallet?
Crypto wallets can store, send, and receive multiple types of coins and tokens. They vary tremendously in complexity and form, with some supporting only basic transactions and others having an array of advanced functions. Before settling on a wallet, consider what you will primarily be using it for and what is most important to you in a crypto transacting experience.
The dilemma of choosing a crypto or Bitcoin wallet generally comes down to a matter of safety versus speed, or control versus convenience.
What to look for in a crypto wallet?
Ideally, a wallet should:
- be easy to install
- be safe to use
- put users in complete control of their funds
- be accessible on the go
While it is not easy to find a crypto wallet that satisfies all the above conditions, we can certainly help you determine which type of wallet could be best for your needs.
Custodial vs. Non-Custodial wallets
One of the most important ways to classify crypto wallets is by whether they allow users access to their private keys or not. This is important because cryptocurrency was meant to be used as a bearer instrument, akin to cash. Maintaining personal ownership of private keys means that nobody but you is responsible for the security of your funds, which may be too big of a first step for those new to the crypto world.
Custodial wallets safeguard the private keys for the user. Examples of these include cryptocurrency exchanges, certain web wallets and most mobile wallets. These wallets act like a bank, tasked with keeping funds secure until the user wants to withdraw them.
Non-custodial wallets place control of private keys in the hands of the user. The most popular of these include Exodus (software wallet), Blockchain.com (web wallet), and Metamask (browser extension). Wallet clients released by coin developers themselves (such as Bitcoin Core and Litecoin Core) are also non-custodial wallets.
Once you are a bit more comfortable with the idea of keeping the private keys to your coin stashes, you may want to consider moving them to one of the three most popular non-custodial wallet solutions. Each has its advantages and disadvantages, and some are designed for longer-term storage than others.
Related article: How to buy Bitcoin in Australia: 3 Step Guide
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A desktop wallet is a PC application that runs on Windows, iOS, or Linux. They include full applications like Bitcoin Core and lightweight clients like Electrum and Metamask. If you are looking for a dependable wallet specifically tailored for bitcoin (BTC) storage and transacting, Electrum is a great choice. The only issue with Electrum is that it is for Bitcoin only. Similar in design and function, applications inspired by Electrum have been built for Litecoin, Bitcoin Cash and most recently, Moner. However, they are not multi-coin wallets, and you will need to download each application individually to store your coins.
The browser-based Ethereum (ETH) wallet Metamask is among the most popular in the world. This is because it allows anyone to transact any token in the broad universe of ERC20 tokens, such as Chainlink (LINK), Tether (USDT) and Basic Attention Token (BAT), right from their web browser. Like Electrum, it requires a basic understanding of how cryptocurrency transactions work, which can be a little more complex in the world of Ethereum. Regardless, both Electrum and Metamask are at the top of the desktop wallet game and good starting places for those jumping into self-custody wallets for the first time.
Mobile wallets include cryptocurrency wallets that run on phones, tablets, and other mobile devices (Android and iOS). They are a good option for those who favour portability and convenience, though they can also be the least secure. Mobile wallets make transacting a snap as funds can be sent to addresses represented by QR codes, which means no copy/pasting of the address is necessary. There are several decent multi-coin mobile wallets out there that come in handy if you unexpectedly need to send or receive a particular coin on the fly.
Trust Wallet, for example, supports 160+ coins and tokens, adding new ones all the time. Digital assets can easily be swapped for one another from inside the app and even purchased using a credit card option. While Trust Wallet does not maintain your private keys per se, they allow you to recover the entire contents of your wallet using a backup mnemonic (which essentially acts as a cross-coin private key).
For those looking for a more straightforward mobile wallet experience, Edge is a bit pared down in comparison, supporting only seven cryptos at the moment. For the coins that it does support, Edge has integrated several easy-to-use conversion services that make spending crypto in real life a cinch. Like Trust Wallet, Edge lets users maintain total control of their funds.
Related article: How to tell if your cryptocurrency exchange is safe and secure
As the name implies, a hardware wallet, also often referred to as a “cold wallet”, is a physical device that connects to a computer and/or mobile device. Therefore, these devices allow cryptocurrency to be stored offline; a practice commonly referred to as “cold storage”. They are great for those who value security and are looking for a safe place to leave their coins alone for a considerable time to come.
If you’ve previously heard of “hot wallets”, this refers to wallets that are connected to the internet, such as mobile and desktop wallets.
By design, hardware wallets can make the spending process a bit more cumbersome as you will need to connect your device to the internet to sign an outgoing transaction. For those looking to do some long-term investing and wary of leaving their coins on an exchange, a hardware wallet can be the optimal solution.
By far, the two most popular hardware wallet brands are Trezor and Ledger. Both brands are relatively similar in concept, allow the storage of a multitude of coins, and have similar costs. Trezor is generally considered to be the more secure of the two. Its open-source nature renders it not only more trustworthy among the community but signifies that its developers are ready for it to be battle-tested. One of the only significant differences between the two is that Ledger wallets tend to be made of stainless steel, and Trezor wallets tend to be made of plastic.
What to look for in a crypto wallet
Regardless of what wallet you decide upon, consider the risks imposed by storing your coins beforehand. Did a trusted publisher build it? What happens to your coins if the wallets’ servers go down? Being familiar with the reputation and the ins and outs of your wallet can go a long way in terms of avoiding crypto catastrophes, so take your time before deciding and remember to consider the breadth of options available for your crypto(s) of choice.
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