Is your cryptocurrency safe enough? That’s the primary question you should be asking yourself if you’re adding cryptocurrency to your investment portfolio. Your crypto exchange, of course, offers a hot wallet. But there are several other cryptocurrency wallet options to consider if your long game involves significant growth in the crypto market. If you are going to buy Bitcoin or make Bitcoin transactions on a cryptocurrency exchange, cryptocurrency wallets are essential. For the best protection of your crypto assets, cold storage wallets are the way to go.
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1. What is Cryptocurrency?
Cryptocurrency is one of the hottest topics online and off, and it can be portrayed as a scary concept for both novice and experienced investors. But it’s really not that scary at all. It just needs to be understood and approached intelligently. Cryptocurrency is virtual currency or digital currency. It’s bought and sold solely on the exchange. And the storage of the personal keys to access the currency can be secured in Bitcoin wallets or other types of cryptocurrency wallets. This type of wallet can be cold storage, a hot wallet, or a wallet app. Wallets are required for cryptocurrency transactions and to store Bitcoin.
What is the Best Crypto Wallet?
Well, that’s actually subjective and depends on several factors, including your investment goals, your security needs or expectations, and your budget. In fact, for those with exceptional organization skills, a paper wallet can be considered the best crypto wallet, or at least the best Bitcoin wallet if that’s your sole crypto investment. But whether you just write your keys on a piece of paper or store them in a ledger, there can be serious security risks with such a simple cryptocurrency wallet solution. In most cases, a hot wallet or hardware wallet is several steps up as far as security and access are concerned.
Is a Hot Wallet Ever Enough?
Yes, it can be enough for beginners, those just dabbling in the cryptocurrency market, or those with a small crypto portfolio. However, the safest crypto wallet is one that provides offline storage for your private key.
2. Hardware vs. Software Crypto Wallets
There are several types of crypto wallets, whether you want just a basic Bitcoin wallet or one to store keys for all your crypto options. But they’re all divided into two categories: hot storage and cold storage.
- Hot Storage: This type of storage is digital. These software wallets are programmed into all crypto exchanges so members can access, buy, sell, and store cryptocurrency. Using a software wallet or digital wallet for your crypto assets means the member has to be online to access the cryptocurrency.
- Cold Storage: This involves cold wallets or hardware wallets. They aren’t like the typical canvas or leather wallets that hold your physical cash and credit cards. Although, some do fit in the palm of your hand. They’re actually physical devices that store the keys offline until you’re ready to access your cryptocurrency. A hardware crypto wallet connects to your tech device via a USB port or Bluetooth for mobile access so you can make transactions on your preferred cryptocurrency exchange or purchase items that accept cryptocurrency.
Hot or digital wallets are great for beginners or those without much crypto to worry about. But they have security risks since all the keys are stored and accessed online. The same can be said for wallet apps. The best wallet apps are non-custodial, which means they’re not connected to a specific exchange, even if the wallet app name is the same as the exchange. But all wallet apps are still digital and, therefore, hot wallets.
A cold wallet or hardware wallet is definitely the safest type of cryptocurrency wallet for storing Bitcoin or your public and private keys. A hardware wallet or cold storage wallet is also the best crypto wallet for those who store and access large amounts of cryptocurrency.
3. Best Software & Hot Crypto Wallets
When it comes to the best crypto wallet, you need to consider your actual needs and budget. For example, cold wallets are great, but are there any free cold wallets? The answer to that is there are no free hardware wallets. There are serious security concerns with that, however. Paper can be lost, stolen, accidentally thrown away, or destroyed.
Unless you’re especially organized, paper probably isn’t your best option. So no, other cold wallets are not free. Hot wallets are always free, and some are much better than others. Hot wallets can be the best bitcoin wallet or overall cryptocurrency wallet for those who don’t want to invest in cold storage. So what are the best software and hot crypto wallets?
- Coinbase Wallet: The Coinbase exchange launched in 2012. And in 2021, it became the largest exchange in terms of trading volume in the entire U.S. To say Coinbase is popular would be an understatement. They specifically appeal to investors who prefer to focus on the stable and more prominent cryptocurrency names like Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. In addition, Coinbase released its own wallet app in 2018 and then a standalone browser extension in 2021. But is the Coinbase Wallet good?It is decentralized or non-custodial, which means it’s not connected to the actual exchange. It runs independently as an app or browser extension to provide an extra layer of security to those who want more than an exchange-based wallet. The wallet app still supports the leading crypto players and holds over 500 coins or tokens. It can be the perfect Bitcoin wallet for those just getting their feet wet in crypto. Coinbase Wallet is also FDIC insured for deposits up to $250,000.
- Electrum: Founded in 2011, Electrum is undoubtedly the best crypto wallet for Bitcoin because it only supports Bitcoin trading. It is an open-source wallet that provides more security than typical digital wallets. It’s free to use, easy to set up, and offers customizable transaction fees. Electrum also provides a cold storage-only option for those who want even more security for their private keys and digital assets. For these reasons, the Electrum wallet is a popular choice for those looking for those interested in Bitcoin wallets.
- Exodus: Many beginners consider Exodus the best crypto wallet due to its ease and hybrid function. Exodus is a desktop wallet that isn’t connected to a specific exchange. However, it supports over 100 cryptocurrencies, including Bitcoin. Exodus can be paired with a Trezor hardware wallet to store your private keys offline in cold storage. And Exodus customer support is top-notch, which is crucial for all levels of crypto investors.
- Mycelium: The Mycelium Wallet was released in 2008 and focused heavily on Bitcoin users and transactions. It currently also supports Ethereum and other ERC–20 tokens–in other words, those using the standard Ethereum blockchain model. Mycelium is a mobile wallet that is not connected to a specific exchange, making it more secure than most hot wallets. It was awarded the Best Mobile App award in 2014. This crypto wallet app is also available for download for both Android and iOS users. Mycelium Wallet is also compatible with physical wallets such as the KeepSafe, Ledger, and Tezor cold wallet options for extra security.
- Trust Wallet: Trust Wallet was released in 2017 and currently acts as one of the five best crypto wallets, at least in hot storage form, of 2022. Like the others listed, Trust Wallet is decentralized, which means it doesn’t work in conjunction with a specific crypto exchange. It supports over 160,000 tokens, including ER-20 (crypto that follows the Ethereum script) and ER-223 (crypto that functions like ER-20). Trust Wallet is the official cryptocurrency wallet of Binance, and it not only tracks crypto prices but also offers daily interest on stored cryptocurrency.Trust wallet keeps and maintains its members’ cryptocurrency on cold storage servers. So it’s like having a hot wallet with cold wallet security. Plus, Trust Wallet requires not only a password but also a 12-word phrase for members to access lost or forgotten login details. Like the others on this list, it’s completely free to use other than typical crypto transaction fees (which are required everywhere).
These, of course, are hot, or digital, storage wallets. As far as cold wallets go, the best are still:
- KeepKey: KeepKey is a beginner’s wallet that supports seven blockchains, including Bitcoin, and stores up to 40 coins. It’s a great cold storage solution for those just starting crypto or any level of crypto investor who wants extra security for their limited or modest investments. And for a $50 device, you can’t go wrong.
- Ledger: Ledger Nano starts at $59, and Ledger X is the pro version at $159. These hardware wallets look similar to old-fashioned flash drives, and they both support 5,500 tokens. The Ledger Nano supports up to three apps and connects via USB to your tech device. The Ledger X supports up to 100 apps and connects via Bluetooth.
- Trezor: Trezor One is the original Trezor cold wallet for beginners or intermediate crypto investors. It initially focused on Bitcoin but now supports over 1000 tokens. The small hardware device connects via micro USB and costs $70. The Trezor T, on the other hand, is the big dog. It supports over 1200 tokens, it’s even smaller than the T-One model, and it has a touchscreen on the device for extra security. But at $215, you’re really paying for the fun extras.
In Conclusion
There are a lot of crypto wallets on the market, but they’re not all equal. One of the above-listed cold wallets may be the best crypto wallet for your cold storage needs. But if you really want the convenience of a hot wallet with an extra layer of security, opt for one of the best wallet apps listed above for 2022. You won’t be disappointed.
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