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How to Choose the Best Crypto Wallet

How to choose the best crypto wallet
How to Choose the Best Crypto Wallet

Just like coins and paper bills are stored in physical wallets, cryptocurrencies are stored in a crypto wallet. With so many options available, it can be overwhelming to choose the right wallet. Therefore, you need to know more about the factors that can help you choose the best crypto wallet to store and manage your digital assets.

This article will explain what exactly a crypto wallet is and how it works. Then, four types of crypto wallets are defined. Finally, you will learn how to choose the best crypto wallet. Sounds good? Then read on. 

Crypto-Wallet Definition: What It Is and How It Works

Cryptocurrency tokens are purely digital in nature, hence also they are stored digitally in crypto wallets. Generally, a crypto wallet is a software or hardware device that allows you to store, send, and receive cryptocurrencies. These wallets are accessed and utilized by a pair of public and private key

The public key is also known as the “wallet address” and can be linked to a bank account. If you want to receive tokens in your wallet, you should give your public key to the sender. 

Your crypto tokens are managed and represented by private keys. You need this private key to prove ownership of the tokens. Therefore, loss or theft of the private key results in a loss of these tokens.  

Note: keep in mind that you should not give your private key to anyone because it’s dedicated to you. It’s like your home key; you may give your home address to others, but won’t give your key to someone who wants to send you mail! 

This private key can either be stored with a wallet provider (custodial wallet) or directly with the crypto wallet (non-custodial wallet).   

  • Custodial wallets are crypto-wallets where the provider manages the private key for the user. 
  • Non-custodial wallets are crypto-wallets where only the users can have access to and manage their private keys.  

Types of Crypto Wallets

Generally, crypto wallets are divided into two groups: hot wallets and cold wallets. Then, each group has its own wallets which we explain in this section. 

how to choose the best crypto wallet

There are four different types of crypto wallets under the main wallet group: 

  • Desktop wallet, 
  • Mobile wallet, 
  • Web wallet, 
  • Hardware wallet. 

They differ in aspects like usage, user friendliness, flexibility, security and use case. Let’s check out each wallet use case and their pros and cons.

Hot Wallets 

Before finding the best crypto wallet, you need to know that wallets are either software-based or hardware-based. Hot wallets are software-based wallets that are user-friendly. However, since they are accessed online, they are more prone to be hacked. That’s why the wallet security is extremely important. The following types of crypto wallets are considered hot wallets: 

1-Web Wallets (Browser Wallets)

The first group of hot wallets are web wallets, which are also known as browser wallets. As the name indicates, web wallets are crypto wallets accessed via a web browser. This is typically done on a Desktop device, but can likewise be done via Browser on a mobile device. However, that doesn’t make them same as mobile wallets or desktop wallets. 

After creating an account, users can login with their account credentials or seed phrase to be able to access the wallet. 

Web Wallet Pros: 

  • Easy access on a browser on any device (Desktop or mobile). 
  • Great user experience, as most web wallets are very easy to use.  
  • High level of security through measures like a separate PIN or 2-factor-authentication (2FA). 

Web Wallet Cons: 

  • High risk of hacks or exploits through malware on Desktop or mobile devices.  
  • Crypto hackers may create fake web wallet login pages to gain access to login data and seed phrases or exploit wallet browser plugins.  

The web wallet is kind of like carrying your usual debit card – technically you can use it almost anywhere, as long as it is accepted. It is somehow possible to use a web wallet on a crypto ATM to withdraw cash from. These ATMs usually have a QR code that you can scan and from your web wallet. However, that mainly depends on the web wallet platform. Because it is not allowed on all of them. 

Note: until now, Bitcoin and Altcoins are supported by crypto ATMs. However, not all the ATMs support these assets. Some may only allow you to withdraw Bitcoin because it’s more common. 

2- Desktop Wallets 

A desktop wallets is a software installed locally on a Desktop device (Windows, Mac, Linux). Like any other software on your computer, you can run desktop wallets as programs. However, they need an internet connection to link to the blockchain. Desktop wallets store cryptocurrencies and details on the local device and are therefore of non-custodial type. 

Users that employ desktop wallets must – by all means – have state-of-the-art and updated anti-virus software and firewall installed.  

Desktop Wallets Pros: 

  • Great user experience and intuitive interfaces.  
  • High level of security. Storing crypto assets on a local device is more secure than storing them online.

Desktop Wallets Cons: 

  • Risk of hacks and exploits through locally installed malware or targeted hacker attacks. Antivirus and internet security software is necessary. 
  • Damage or malfunction of the Desktop device could prevent access to the crypto-wallet and even lead to a loss of funds. 
  • Low usability as desktop wallets can’t be used on-the-go to spend cryptocurrencies with local retailers etc. as means of payment.  

Although they seem interesting in theory, desktop wallets are the most rarely used. They are like keeping all your cash in a piggy bank – if someone steal your computer or laptop, even breaks into your house, you may lose your tokens. 

3- Mobile Wallets 

Nowadays, it’s easier to carry everything on cellphones. That’s same for cryptocurrency. Mobile wallets are app-based crypto wallets installed and run on smartphones for iOS and Android. As the most widely used wallet type, they are available as both custodial and non-custodial wallets.  

Mobile Wallets Pros: 

  • User friendliness. Ease of use through intuitive and user-friendly interfaces and QR code scanning for wallet addresses.  
  • Availability – Since these wallets are installed on mobile phones, the users can easily access their wallet on-the-go while connecting to the internet.
  • Use case – general use cases plus wallet for payment at retailers, etc.  

Mobile Wallets Cons: 

  • Security risk with theft or defect of smartphone that could lead to loss of funds. 
  • Vast selection on the market with many mobile wallets lacking essential security features, careful selection is essential.  

Commonly, mobile wallets are best for users who spend crypto-tokens as payment for daily purchases or exchange tokens with friends. Yet, users should only store small amounts in their mobile wallets to limit any possible risks. The best analogy for a mobile wallet is your classical cash-filled purse you can carry with you anywhere in your pocket. 

Cold Wallets 

Due to the security issues some online wallets (hot wallets) have, some investors would like to use offline wallets, known as cold wallets, to store their tokens, especially for a long-term investment. If you look for cold crypto wallets, check out the following options: 

1-Hardware wallets 

This type of wallet is crypto-storage on a special physical device, looking similar to a USB stick. Private keys are stored only on the device. Also referred to as “cold storage”, this wallet is not connected to the internet.

Pros of Hardware Wallets

  • Highest degree of security. With private keys offline, hacks and exploits through malware are eliminated.  
  • Additional security measures include implementation of a separate PIN and backup- and recovery-feature in case of theft or loss of device. 
  • Hardware wallets can be secured additionally by storing them with a notary or safety deposit box at a bank. 

Cons of Hardware Wallets

  • High cost of hardware wallets, between 50-150 EUR vs. usually free other wallet types.  
  • Low user friendliness, complex and difficult to use with long and burdensome setup procedures.  
  • Storage – The physical device must be stored safely and secure, out of reach for any third person.  
  • Availability of funds for payment or trading is low, it takes hours to retrieve tokens from a hardware wallet and send or transfer it.  

Given the high level of security but low availability and complicated usage, hardware wallets are an option among the best crypto wallets for crypto holders that store large amounts of crypto-tokens for the long-term. If the desktop wallet is a piggy bank, the hardware wallet is the vault.  

Factors to Consider When Choosing a Crypto Wallet 

So, which of the wallet types should you use? It depends on your preferences. There is no “one single best wallet for everyone”, but there is the right wallet for each user and their needs.  

When choosing a crypto wallet, users need to consider the following factors and their importance: security, experience, use case, fees.  

choose the best crypto wallet

1.Security 

Obviously, security is of utmost importance to every crypto user. Among all types of wallets, hardware wallets are considered the most secure ones. However, they are not always the best option for crypto owners, especially if they want to spend their tokens. Therefore, users should pick a crypto wallet that has strong encryption, backup options, recovery phrases, and PIN codes.  

It will be more secure if your wallet offers additional PIN entry or 2FA for increased levels of security. The bigger the amount of crypto-tokens stored in the wallet for the long-term, the more important this factor must be. 

Note: Never store large amounts of crypto on hot wallets. If you want to spend your tokens in different ways, it is better to carry a minimum amount of your cryptocurrencies on a mobile or desktop. 

2. Experience 

How crypto-affine are you? How much experience do you have with sending and receiving cryptocurrencies? If you are only starting out, a mobile wallet will certainly be easier than using a desktop or hardware wallet. At a later stage, many experienced users switch to hardware wallets to store their grown crypto funds. 

If you are a beginner to this market, you should note that there are several risks involved in this world. Before investing in any crypto, check their uses and differences with other cryptocurrencies on the market. For example, you can check out differences between Bitcoin and Etherreum to find out which is a better investment.

3. Use case 

Do you want to invest or trade your cryptocurrency? Or do you want to use it as a payment? A critical consideration is what users intend to primarily use their crypto wallets for. Users who want to use Bitcoin as a means of payment or frequently send and receive tokens should opt for a mobile wallet. Hodlers who want to store funds for a long time are best off choosing a hardware wallet.  

4. Fees 

It can pay a little higher transaction fee to ensure one’s transaction is processed quicker instead of being queued. Users with this priority should pick a wallet that allows them control over what amount of fees are paid to the blockchain network. Some crypto-wallets e.g., offer the option of three different heights of transaction fees for slow, average or fast transaction processing.  

5. Compatibility 

Different wallets may accept different cryptocurrencies. Therefore, ensure that your tokens are supported by the crypto wallet you choose. Additionally, based on the wallet type, it should be compatible with your device, browser, operating system, or mobile phone. 

For instance, if you want to buy XRP, you need to search for the best XRP wallets. On the other hand, the wallet you choose for XRP might not be the best wallet for ADA. However, if you want to buy several cryptocurrencies, which most experts do, you should find a wallet that is perfect for the tokens you want to buy. 

6. Reputation 

Read the comments and reviews other crypto users write about crypto wallets. Since they have used the wallet before, you can learn more about how safe, secure, and user friendly a crypto wallet is. 

5 Most Important Features in Crypto Wallets

If you are a total newbie when it comes to crypto wallets; Don’t worry! We were all there someday:  Knowing about these features can help you choose a better crypto wallet for your tokens. 

1# 2 Factor Authentication (2FA) 

A high level of security is warranted if users need to provide two factors for login to their crypto wallet, e.g., a password and a PIN sent to their mobile phone number via text message.  

2# Legacy Address Support

 Blockchain networks like Bitcoin upgrade regularly, such upgrades can bring changes like new wallet address formats. Crypto wallets should be able to support legacy addresses, so tokens can be sent to and received from such legacy addresses even after upgrades have occurred as e.g., in case of the SegWit address format update on the Bitcoin blockchain. 

3# Multi-Currency Support 

It is important to distinguish single currency and multi-currency wallets. A single currency wallet, for example a Bitcoin wallet, can only store tokens of one single specific cryptocurrency. Multi-currency wallets consist of multiple sub-wallets that each hold a single cryptocurrency, like the web wallet MetaMask which supports Ethereum and all ERC-20-tokens (different types of coins can be sent to a single wallet address). 

Single currency wallets simply lack usability. Even most crypto beginners soon want to own and use more than just Bitcoin or Ethereum. A multi-currency wallet supports sub wallets so overall numerous popular cryptocurrencies can be stored and saved. 

4# Backup and Restore Function 

The best crypto wallets offer users the ability to generate and use a so-called “seed phrase,” which is a series of words that grants access to your cryptocurrency wallet even if you lose your password, phone or hardware device. This seed phrase (usually consisting of 12 words in particular order) is generated automatically by the wallet. You must write it down or keep it in a safe place out of the reach for of any third person.  

5# Display Currency 

Often overlooked, an important function in usability is the ability to display the total sum of all crypto tokens in a fiat currency of choosing. Great crypto wallets allow users to choose e.g., EUR or USD as display currency for the value of their crypto assets on the dashboard overview. 

The Best Crypto Wallets on the Market

As mentioned before, there are four main types of crypto wallets on the market that you could choose from. But if you’re looking for the best crypto wallet, there are several options to consider depending on your needs:

For iPhone users, the best iOS crypto wallet is often considered to be the Trust Wallet, which allows you to securely store a wide range of cryptocurrencies and even supports staking for certain coins.

On the other hand, if you’re an Android user, the best crypto wallet for android is said to be the Mycelium Wallet, which offers advanced features such as cold storage and integration with hardware wallets like Trezor and Ledger.

But what if you’re looking for the most secure option available? In that case, you may want to consider a hardware wallet, which is widely regarded as the safest way to store your cryptocurrency. Some of the best crypto hardware wallets include Ledger Nano X and KeepKey.

Of course, if you’re looking to store multiple cryptocurrencies in one place, you may want to consider a multi-currency crypto wallet. These wallets allow you to store a variety of different cryptocurrencies in one convenient location, and some of the best options include Exodus and Atomic Wallet.

Ultimately, the best crypto wallet for you will depend on your individual needs and preferences and the cryptocurrency you buy. For example, if you want to buy Fantom crypto, you need to read more about the best Fantom wallets

It’s important to do your research and consider factors such as security, ease of use, and the range of currencies supported before making a decision. And whether you’re an iPhone user, an Android user, or somewhere in between, there’s sure to be a crypto wallet that’s perfect for you.

Conclusion

Selecting the best crypto wallet is essential for safeguarding your digital assets. With the many different options available, including desktop, mobile, web, and hardware wallets, it’s important to carefully consider your needs and preferences before making a decision. Consider factors such as security, usability, and currency support when making your decision. 

A good crypto wallet should have an intuitive interface that allows for easy fund management and transactions. With the right crypto wallet, you can enjoy the benefits of cryptocurrencies with confidence.

FAQ

What factors should I consider when choosing a crypto wallet?

You should consider factors such as security, usability, and currency support when selecting a crypto wallet. Furthermore, if you want to buy multiple cryptocurrencies, it is better to look for multi-currency wallets. We recommend you to read more about each wallet, their users’ reviews, and then select the one that is more adequate to your usage. 

Which type of crypto wallet is the safest?

Hardware wallets are generally considered the safest option as they keep your private keys offline and protected from potential cyber-attacks.

Are mobile and desktop wallets secure enough for storing my crypto assets?

Mobile and desktop wallets can provide adequate security when configured correctly. Meanwhile, it is recommended to have a highly-secure antivirus or firewall to prevent any attack that might happen. However, hardware wallets are generally considered the safest option.

What should I look for in terms of usability when selecting a crypto wallet?

A good crypto wallet should have an intuitive interface that allows for easy fund management and transactions. You can check out the user-friendliness of each crypto wallet on their website or read other users’ reviews about how well they can manage their crypto wallet. 

Can all crypto wallets store multiple cryptocurrencies?

No, not all crypto wallets support a wide range of digital assets. It’s important to consider the currency support of a wallet when making your selection. If you want to store multiple cryptocurrencies you should look for multi-currency wallets. However, you should still ensure that the wallet you select supports all the crypto assets you want to buy. 

Start investing today!

Disclaimer:

This is not financial advice. Mentioning coins and tokens is not a recommendation to buy, sell, or participate in the associated network. We would like to encourage you to do your own research and invest at your own risk.

Editorial team

We are a team of crypto enthusiasts. Each of us has extensive theoretical and practical experience in trading, cryptocurrencies, and blockchain. We also like to dig deep and explore. Our goal is to help you make the right and relevant decisions.

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