If you have gold, it’s probably stored in a safe place in your house or in a bank locker. Some money is usually kept in your wallet for daily use while the rest is in bank accounts. But when it comes to cryptocurrency, how and where do you keep them safe? The answer, obviously, is a cryptocurrency wallet!
But the term wallet is actually a misnomer as a cryptocurrency wallet is neither an actual wallet stuffed with cryptocurrency nor does it digitally store your cryptocurrency funds.
So What Exactly is a Cryptocurrency Wallet?
Any cryptocurrency you have purchased remains in a decentralized online ledger called the blockchain. To access your cryptocurrency funds you need private cryptographic keys and these keys are what is stored in your cryptocurrency wallets.
One of the most repeated phrases within the cryptocurrency community is “Not your Keys, Not your Coin.”
In other words, whoever holds the key owns the coins. When you have cryptocurrency in an exchange wallet, be aware that these are custodial accounts offered by the cryptocurrency exchange platform. Even if you are the person using this wallet to trade your cryptocurrency, you are not the holder of the key to the currency held in that account.
So entrusting your key to a third party custodian does not provide any guarantee of your ownership. It’s not just hackers you need to worry about when you store your crypto assets on an exchange, the accounts may get frozen by a regulator or the exchange itself may go bust.
It is not advisable to keep significant amounts of funds in exchange accounts. You should quickly finish your transactions on the exchange and store your crypto keys safely, either in a secure software wallet that enables you to store them offline or in a hardware wallet.
If your account becomes compromised in any way or the exchange gets hacked, your funds will still be safe.
The Dangers of Being your Own Cryptocurrency Bank
To ensure your cryptocurrency remains safe, you need to be in control of your crypto wallet.
But, if you have offline cryptocurrency wallets that are storing significant amounts of crypto assets, you are going to end up with sleepless nights, unless you have ensured their security. How do you do this? With high-security uncrackable safes and heavily armed guards at your doorstep or would you expect any less from the bank where you gold or money is stored?
Well, the answer lies in your choice of cryptocurrency wallets. Considering your currency is virtual, pick a wallet that offers you the best virtual versions of the heavy-duty safes and armed guards.
But do keep in mind that while some cryptocurrency wallets do offer you the high-security protection you seek, they may not be very user friendly. On the other hand, the wallets that are quick and easy to use tend to be less safe. So which one should you choose? Probably both!
Hot and Cold Storage Wallets
Having multiple wallets can be the right choice depending on your investment choices. Your most secure choices are the cold storage wallets, especially if you are planning to hold on to your cryptocurrency for a while.
The hot zone is where the cybercriminals stalk their prey – that’s on the internet! So you store your crypto assets in the cold zone, away from the internet. This includes physical mediums such as a paper with your key printed on it or a USB drive for securely storing your private keys.
Hot wallets, on the other hand, are on devices that connect to the internet. Hot wallets are ideal for quick and easy transactions, but they are also vulnerable to cyber-attacks. Security issues may crop up since your private keys for the coins are generated on internet-connected devices such as computers, mobile phones, or tablets. Yes! The funds in your hot wallets can get stolen and this does happen frequently.
This is why you need at least two wallets – one hot and the cold. Keep only small amounts of cryptocurrency in your hot wallets for trading while the bulk of your crypto assets remain safe and secure in your cold wallets. You can shift your funds between them as and when needed.
Back up your Private Keys!
Did you know that about 23% of all cryptocurrency traders have lost their digital assets because of botched wallet management?
In 2017, Chainalysis, a digital forensics firm that conducts studies on the bitcoin blockchain, revealed that “30 to 50% of all Bitcoin will likely be lost and out of circulation due to users losing their private keys.”
Whether hot or cold wallets, you are still prone to losing your wallet. Your device with the hot wallet, the laptop, or the phone may get stolen. These technological devices can get damaged and their data irretrievable. You may have printed it on a paper wallet, laminated the paper, and stored it in your home safe. But what if there is a house fire or a thief cracks your safe? Once your key is lost, the treasure it guards is also lost forever.
Thus, one of the biggest problems faced by crypto enthusiasts is the proper storage of their private keys. Irrespective of whichever wallet you choose, hot or cold, you should consider making multiple copies of your keys and storing this back up even more securely.
The Best Bitcoin Wallets
If you understand these risks and are ready to overcome them, then here are the best 4 cryptocurrency wallets in the industry. Study their specifications to see which suits your needs the best.
- Best for Mobile: Trust Wallet
- Best Hardware Wallet: Ledger
- Best Web Wallet: CoinBase
- Best Wallet for Desktop: Atomic Wallet
Best for Mobile: Trust Wallet
A mobile-based cryptocurrency wallet, Trust Wallet was created with a focus on simplifying the way Ethereum token was traded or stored on the ETH blockchain. Its usability is enhanced by its simple and clean interface.
Trust Wallet gained prominence when Binance acquired it in 2018. From Bitcoin to Binance Coin, Ravencoin, Ethereum, and Ethereum Classic, you can send, receive, store, and exchange various cryptocurrencies using your Trust Wallet account.
As Binance’s official wallet, you can expect many additional features such as an in-depth integration with Binance’s infrastructure, custom networks, market monitoring, and a native DEX.
The company aims to make crypto more accessible to all. Their primary focus is Ethereum and ERC20 tokens. You Trust Wallet has an exciting feature for “automagically” displaying ERC20 tokens inside your Ethereum Wallet. The Trust Wallet has an open-source and audited code.
The Trust Wallet Pros:
- Free cryptocurrency wallet: The Trust Wallet app is completely free to use and does not require any subscriptions. Trust Wallet does not collect any fees nor do they have any access to the funds in your wallet. You will still have to pay a gas fee for transactions such as those charged by the miners on the Ethereum network.
- Easily accessible and user friendly: Trust Wallet is available on both Android and iOS platforms. It has an intuitive user interface that’s simple and easy to navigate. Your personal data is not required and there are no registration forms to fill. You can install it on multiple devices as there are no installation limits.
- You get to keep the key: Most cryptocurrency exchanges or online trading platforms do not offer you the key for the digital currency they are storing for you. But with Trust Wallet, the private key remains with you, giving you not just the security that comes with Trust Wallet, but also direct access, and full control over your wallet and your cryptocurrency portfolio.
- Supports card purchases: You can buy cryptocurrency using your bank account or a credit card.
- Has Wallet Connect feature: Connect desktop DApps to mobile wallets using end-to-end encryption with the Wallet Connect feature of Trust Wallet.
- Access to multiple currencies from a single wallet: With Trust Wallets, you don’t have to use multiple wallets, instead you can get access to top digital currencies such as ICON, TRON, VeChain, TomoChain, GoChain, etc.
- Stake Proof-of-Stake coins: With a Trust Wallet account, you can stake Proof-of-Stake coins including Tron, Cosmos, and Tezos. This allows you to mine or validates block transactions depending on the number of coins you hold. In other words, the more Bitcoin you own, the more mining power you get.
- Offers Anonymity: SinceTrust Wallet does not have a KYC process, your personal details are not asked. All you have to do is to create a password after entering your email ID and then you have to enter a seed phrase. However, your seed phrase needs to be kept secure if you need to recover your account, so make sure to write it down somewhere safe.
The Cons
- Not as secure as a hardware wallet
- Does not have Two-factor authentication (2FA)
Best Hardware Wallet: Ledger
Ledger Nano S is a cold storage hardware wallet, the first of its kind. The Ledger Nano X and its successor the Ledger Nano S are the best way to keep your private crypto keys offline.
Your crypto assets are only as secure as your private key is. With Ledger, your key is protected in a certified secure chip in the hardware wallet, ensuring a strong layer of security for your funds. These highly secure chips are similar to those in chip-based credit cards.
Covered in a sleek stainless steel cover, this stunning looking device is the size of a USB flash drive. They can be connected to computers or smartphones to access your crypto holdings.
When you purchase a hardware wallet from Ledger, the company also provides you with Ledger Live software which offers you a user interface for your crypto assets.
The Ledger Nano S Pros:
- The Ledger Live software: This enables you to manage your portfolios and add new wallets, when needed, for the various cryptocurrencies in the device. It can support more than 1500 cryptocurrencies.
- Good choice for beginners: Ledger Nano S, along with the Ledger Live, is a great choice for beginners who are dealing with only a few types of cryptocurrencies. The Nano S can support up to 18 wallets at a time, thus limiting the number of currencies stored at a time.
The Cons:
- Delete a wallet to add a new one: To add another type of cryptocurrency to your Ledger Nano S, you have to delete an existing wallet. But no worries, since the cryptocurrency is stored directly in the blockchain, you do not actually lose your crypto assets in that wallet.
Even if the wallet is no longer visible on the Ledger device, you can still view it and its contents on the Ledger Live.
If you need to use the cryptocurrencies in this wallet again, you’ll have to delete another wallet from the device to make space for it. If you find yourself doing this too often, then it’s time for an upgrade to the Ledger Nano X.
- Lacks a USB type-C cable: The Nano S comes with a USB type-B port and its cable, so it cannot be connected to modern smartphones.
The Ledger Nano X Pros:
Bluetooth connectivity: The Ledger Nano X is the successor of Ledger Nano S with additional Bluetooth connectivity and USB Type-C cable.
Stores up to 100 wallets: Another advantage the Ledger Nano X has is that it can store up to 100 wallets at the same time. It also has access to Ledger Live software and can support the same list of cryptocurrencies as the Ledger Nano S.
100 mAh battery: Ledger Nano X comes equipped with a 100 mAh battery which is designed to last for 5 years. The battery can last for several hours of usage and even for a few months if left idle (on a full charge). You can recharge it easily by using the USB cable provided by connecting to the USB port of a computer.
The Cons:
- Complex set-up: The setup may seem too complex to less tech-savvy users.
- No incorporated exchange
- Bluetooth is not smooth: Some users have indicated that the Bluetooth feature is not as smooth as expected. There are also some security-related concerns regarding the usage of Bluetooth.
But the company assures its customers that the Bluetooth communication does not expose the device to any additional security threats and the private keys never leave the secure chip.
Best Web Wallet: CoinBase
One of the oldest and biggest cryptocurrency exchanges in the world, Coinbase has over 35 million customers spread out over 100 countries. Founded in 2012, Coinbase was initially launched as a Bitcoin brokerage that sold Bitcoins directly to the buyers.
Their list has, over time, expanded to include more than 25 cryptocurrencies, such as Ethereum, Bitcoin Cash, XRPA, and Litecoin, that fit its decentralized criteria. Although Coinbase currently offers a wide variety of services, buying and selling cryptocurrencies using debit/credit cards or through bank transfers remain their main service.
Coinbase offers both mobile and web wallets for cryptocurrency. It is ideal for beginners in this niche as their platform is a simple and user-friendly way to buy, sell, and store cryptocurrencies. It is quite similar to a brokerage account used for buying and selling shares. You can easily transfer dollars in and out of your Coinbase wallet by connecting to a U.S. bank account and use these funds to buy cryptocurrencies.
The Coinbase Earn is an awesome feature of this platform as you can earn free cryptocurrency in exchange for doing quizzes and watching videos.
The Pros of Coinbase:
- Strong security track record: Coinbase offers multiple safety measures for its users. It has a two-step verification procedure and biometric fingerprint logins. In case Coinbase itself gets hacked, your crypto assets are insured.
- But if the breach occurs from your end, due to a lack of security measures, the insurance is invalid. So make sure to use the two-step verification and a strong password as the account is only as secure as you choose to make it.
- Easy to use interface: With easy sign-up procedures that allow you to buy cryptocurrencies within just minutes, Coinbase has a really simple user interface.
- A wide variety of cryptocurrencies: From Bitcoins to Ethereum, XRPA, and Litecoin, over 25 cryptocurrencies can be traded on Coinbase.
- Highly liquid exchange: Cryptocurrency trading is a highly volatile market. Coinbase has high liquidity which helps protect its users from serious price slippage.
- Get paid to learn about cryptocurrency: Coinbase pays in cryptocurrency to its users for utilizing their learning programs on how cryptocurrency works.
The Cons:
- No control over wallet keys: Those who open a Coinbase account need to be aware that you don’t get a private key or direct access to your coins. This lack of control over your own funds is the main drawback of Coinbase.
Just like you put your money in the bank and the bank now owns your money, Coinbase controls your money as long as you store it with them.
This is an issue that’s common to most centralized exchanges. This can be avoided only if you withdraw all your cryptocurrency into a personal wallet, preferably a cold storage wallet.
- Complicated fee structure: Coinbase is said to have one of the lowest fee structures in comparison to many other brokerage services. But their fee structure is a bit complicated.
The Coinbase Pro is the standard Coinbase platform that beginners tend to use. Though they can switch over to Coinbase Pro without additional charges to avail the lower fees, this version has more features which can be quite confusing to the freshers on this scene.
- Past incidents of outages: There have been instances of outages in Coinbase where its investors have been unable to sell or buy cryptocurrencies.
Best Wallet for Desktop: Atomic Wallet
The Atomic wallet is claimed to be an all-in-one cryptocurrency solution. Normally, you’d need a different blockchain wallet for every type of cryptocurrency you buy or store. But with this universal multi-currency wallet, you can store and manage more than 300 cryptocurrencies such as Bitcoin, Ethereum, Litecoin, etc. in a single interface.
More than just a digital cryptocurrency wallet, the Atomic wallet works as an exchange with a decentralized order book. You can exchange assets using the non-custodial Atomic Swap feature of this third party wallet.
The Atomic Wallet boasts of various features such as high security, anonymity, multi-currency support, decentralization, in-wallet exchanges, and atomic swaps. It also supports the usage of multiple devices.
As an open-source wallet, its code can be examined by its users to confirm it is free from bugs or other security threats. All the important information is stored on your personal devices such as your smartphone or laptop. It is up to you to ensure the safety of the devices you use.
Run regular checks to ensure your devices are free of viruses or malware. Avoid security risks by connecting to the internet using only secure Wi-Fi networks. Alternatively, you can pair your Atomic Wallet with a hardware wallet to add an additional layer of physical security. But this feature is not yet available for Atomic Wallet although their team is working towards making this possible.
The Pros of Atomic Wallet:
- A single wallet supports for over 300 cryptocurrencies
- You can buy cryptocurrency legally with your credit card using Simplex (EU’s licensed card processing service)
- The Atomic wallet has a simple and user-friendly interface
- Your private data is not stored by the company, it remains safe with you
- Has an inbuilt decentralized exchange
- You can exchange assets using Changelly or Shapeshift
- Atomic swap enables P2P order execution
- Provides cross-chain swapping between BTC-LTC-QTUM pair
- It offers both iOS and Android support for mobile phones. You can download the Atomic Wallet app from their respective stores.
The Cons:
- Hardware wallet integration is not yet functional
- You have the complete responsibility for the security of your crypto assets
- The Atomic Swap feature supports only a limited number of coins
Conclusion
A digital wallet is a must for bitcoin users. We have listed the best 4 best digital wallets for bitcoin according to our research. Check them out and decide on the one that suits not only your goals but your comfort level with the technology being used.
A wallet with more features is not the best choice if you are not able to use the more complicated ones. So go for the easiest bitcoin wallet that is simple to understand and user-friendly.
If you are new to cryptocurrency, then it’s advisable to start with an online wallet such as Coinbase. For advanced users, a hard wallet such as Ledger offers the best security for their crypto assets. A combination of a hot wallet and a cold storage wallet is the best protection for your cryptocurrency.
