A cryptocurrency wallet is a digital software that protects your cryptocurrencies. It’s called a wallet since it operates similarly to a traditional wallet used to hold either cash or credit cards. However, rather than carrying actual money, a crypto wallet maintains the keys that allow you to authenticate your crypto transactions and provides a means to manage your assets.
Because of current Bitcoin wallets, the blockchain has become accessible to everyone. When cryptocurrencies emerged, exchanging crypto assets was a long and tedious process that required lengthy keys to be entered. Most of it is now handled automatically by sophisticated, highly secure algorithms, which are nearly impossible to breach.
Read further to find out what crypto wallets are all about and what their pros and cons are. Besides that, we will share the five best crypto wallets in 2023 and how to choose the right one.
A crypto wallet allows users and crypto exchanges to handle multiple types of cryptocurrencies, such as Bitcoin or Ethereum, depending on which coins are supported by the particular wallet. Because crypto transactions are cryptographically signed, such wallets are considered highly secure. A blockchain wallet meets all the criteria required for safe and secure financial transfers and exchanges between multiple parties.
Like every crypto asset, Bitcoin is a data collection stored in a database. These data are spread across the database; the wallet locates all the pieces associated with your public address and sums their value in the app’s interface.
Sending and receiving cryptocurrency using these applications is a straightforward process. Usually, you input the recipient’s wallet address, choose an amount to send, “sign” the transaction with your private key, submit an amount to pay the transaction fee, and then transfer those funds.
Private and public keys are essential components of every wallet. When setting up a wallet for crypto, you are given private and public keys to access it. As an example, consider email. You provide your email address to the receivers if you wish to receive emails from them.
However, publicly sharing your email address does not imply that someone could send emails from your account. Someone would need to acquire your email account’s password. Blockchain wallets use a similar technique combining public and private keys. A public key is comparable to an email address in that it may be given to anybody. When you create your wallet, a public key is produced, which you may share with others to receive payments.
In contrast, the private key should never be revealed to anybody. If someone gains access to your private key, they will be able to do operations with your crypto funds, and you will lose your funds. It’s vital to remember that once you lose your coins, there will be no chance to get them back.
Now that you are more familiar with crypto wallets, let’s take a closer look at the pros and cons of each type: hot and cold.
A hot wallet is one that is constantly connected online. Web-based wallets, mobile wallets, and desktop wallets are the main examples of hot wallets.
Best crypto wallets of this type have numerous advantages, such as:
Immediate access: You don’t have time to scramble with USB connections if you want to conduct payments regularly. Digital wallet platforms give you complete control over your crypto assets at all times, anywhere in the world, with instant access and a highly efficient way to send funds.
Ease of use: Best online wallets are designed as user-friendly, simple to download, and ready to be used whenever you wish. Besides having a simple and friendly user interface, most hot wallets are linked to a crypto exchange.
Mobility: In most cases, hot wallets allow you to store many different cryptocurrencies, depending on the software and assets they support. They are constantly upgraded and can enhance the user’s experience.
Affordability: Another significant benefit of hot crypto wallets is that they are either free or have relatively low maintenance fees.
Storing assets: Numerous cryptocurrency investors, especially newcomers, prefer not to carry full accountability for the safety of their digital assets. Instead, they utilize the services of third-party custodians. Another entity manages your private keys when you use a hot custodial wallet. As a result, you are less likely to lose all of your assets. Also, most web-based cryptocurrency wallets are known as custodial wallets. Users’ deposits are also insured when they use hot wallets presented by prominent exchanges such as Binance or Coinbase. It is highly preferable due to simple access and comfortable transfer of funds, accessible to anyone.
Nonetheless, hot wallets are not flawless. Let’s take a look at the main downsides:
Vulnerable and prone to cyber theft: Since the public and private keys are held on the Internet with a constant connection to the network, all stored assets on a hot wallet are susceptible to being accessed by cybercriminals, and getting them back is highly unlikely. However, in this case, entities that hold your assets should return at least a portion of them, as has happened in the past.
Third-party reliance: Most hot wallets supplied by exchanges do not give you access to your personal keys. You only can access your username and password. Sharing common responsibility for asset safety, you cannot conduct any purchases without the assistance of an intermediary. As a result, you never really have absolute ownership over your investments.
Possible loss of funds: You will lose everything if the exchange or resource that provides a hot wallet closes and your funds are not insured. The same thing happens if the wallet is compromised.
Now, let’s take a closer look at the pros and cons of cold wallets.
A cold wallet is a piece of hardware that looks like a USB drive and is used to store your keys. Since they are not linked to the Internet, such wallets are also known as offline wallets.
Besides that, paper wallets are another unique type of cold storage for cryptocurrency funds, which is simply a piece of paper that contains the user’s public and private keys.
So why are cold wallets so unique and preferred by crypto “hodlers”?
Robust security: Using a cold wallet, you never give your private keys to anyone else. Because the wallet is not linked to the Internet, cybercriminals cannot breach it. Moreover, it is highly recommended not to carry it around with you; otherwise, it could get stolen. Instead, store it in a safe place.
Furthermore, every user is always required to enter a password on their hardware device on a computer. The majority of hardware wallets are encrypted and have PIN protection. Some even include an additional layer of biometric security, such as fingerprint, face ID, etc.
Recovering your funds: It is one of the main reasons people use it. However, writing down a 12-to-24-word recovery phrase during the initialization phase is crucial. It is a one-of-a-kind “code” and is processed by the gadget only once.
Now suppose your hardware wallet is lost or broken. In that case, you can replace it with a new one to recover your crypto assets or transfer your recovery data into a software wallet(s) to recover your crypto assets instantly. Remember that only the device itself configures the recovery phrase. It should not be provided from third-party sources. Some dishonest vendors may attempt to establish the recovery seed to gain access to your funds. Also, purchasing cold wallet devices directly from the manufacturer is highly recommended.
Cold wallets have their disadvantages too.
Delays: Even if the payment itself requires the standard amount of time, accessing the cold wallet device will take longer. That said, you won’t be able to use it as often. It is not ideal for day traders or those making daily payments.
The cost might be too high: While many online crypto-wallets are free or have small costs, reliable and proper cold hardware wallets typically cost at least $100.
Restrictions: Cold wallets typically do not support as many cryptocurrencies as most hot wallets. As a result, if you prefer a less popular cryptocurrency, cold wallets may not support them.
Considering the pros and cons of both types of wallets, let’s take a closer look at the five best cryptocurrency wallets available.
Ledger’s hardware wallet, the Nano X, was unveiled in 2014, and it is considered one of the best hardware wallets to enter the market. It even led the industry for several years.
The Nano X looks like a USB drive and connects to your phone or tablet through Bluetooth or to a computer by inserting a USB. By linking the wallet to your iOS or Android smartphone, you can utilize it without a computer. This wallet now supports around 2,000 coins. The fact that the crypto community consistently demands more features for their preferred cryptocurrencies indicates that this wallet is stable and ready to serve its clients.
Worth noticing is that the company has created the Ledger Live software, which serves as the user interface for all of your crypto holdings, even though this device is a cold storage hardware wallet.
A convenient user interface is one of the most appealing attributes. It also provides all clients with community support. Utilizing this wallet is very easy and practical. Note that the wallet has only a small amount of storage.
B2BinPay is a robust multi-currency payment platform that is ready to serve businesses and retail clients who want to manage crypto payments online safely and affordably.
B2BinPay offers a web and mobile cryptocurrency wallet with an excellent user interface. After installation, you’ll discover that configuration is a quick, simple process that can be completed effortlessly.
This online crypto wallet is excellent for both people wishing to enter the crypto world for the first time and those who have some knowledge of the industry and know what they want. As a result, this wallet is the perfect option for everyone who wishes to use their currencies with the highest level of convenience and reliability. In addition, this product’s development staff offers round-the-clock help.
This wallet supports the most popular and widely used cryptocurrencies. Clients can reliably store their assets using custodial methods. The team responsible for this product also intends to update the supported crypto assets list regularly.
Furthermore, this wallet also supports stablecoins, which are increasingly becoming popular. Customers can easily trade them for other preferred assets or fiat money using the B2BinPay crypto wallet.
Exodus is a desktop and mobile wallet with an easy-to-use UI and a visually pleasing exchange. One of Exodus’ main features is the ability to convert between an increasing number of cryptocurrencies. Over 150 different cryptocurrencies are accepted for exchange on Exodus.
This wallet is ideal for beginners in the “cryptocurrency world” due to its convenience with excellent customer service, which is essential for newcomers joining a field that many people find challenging.
At its core, Exodus is a closed-source wallet. The code isn’t accessible to the public, which violates the blockchain and Bitcoin fundamentals, and it may cause privacy concerns. However, users trust the Exodus team to maintain the wallet’s security. While it is perfect for beginners, expert users might find some features lacking.
One of the most well-known brands for storing cryptocurrency cold wallets is called Trezor. This model is similar to the Ledger, except that it enables users to use third-party exchanges like CoinSwitch directly from the Trezor website. Although it is practical, some people might think its price is too high.
The Type T screen interface is more user-friendly for beginners than the previous models. Additionally, the Trezor has a MicroSD card connector that you may use to encrypt the PIN and protect your device from cyberattacks.
Guarda is yet another top crypto wallet that was created in 2017. Customers can purchase, keep, swap, and stake their digital assets using Guarda Wallet, a user-friendly yet highly secured service. This solution, one of the most instinctive and effective ones, has passed several platforms and professional reputation background checks while showing the effective security features of all software wallet manufacturers.
With its multi-asset wallet, users can safely manage and store a variety of digital assets across more than 50 blockchain networks.
Guarda offers a user experience that is both beginner-friendly and reliable, making higher fees appropriate for top-level protection, despite the wallet’s in-app purchase expenses being quite costly.
Your understanding of the cryptocurrencies and prior usage will determine the top crypto wallet for you. Besides that, below are the important aspects to think about:
Security: Numerous security features are available in current crypto apps to keep your funds protected. Before actually putting your trust and money into a crypto wallet, you should thoroughly review its security features.
Fees: Transaction fees may be assessed in many ways. Some cryptocurrency wallets let you personalize each charge if you wish to save money, though they can be automatically set to speed up payments. Keep in mind that it can cause payment delays.
Access: Your choice of cryptocurrency wallet should be determined by when and where you trade cryptocurrencies. If you frequently use crypto payments, you might wish to consider either hot or cold wallets, as described above. Apps and browser-based wallets might be more appropriate for people who exchange funds daily.
Cryptocurrencies: While some crypto wallets offer a vast selection, others are more limited. Consider how frequently you could be required to switch between currencies; this will help you determine the level of capabilities you need.
Customer support: Serious firms must include support 24/7. If they do, you know that it is a solution worth considering. Always evaluate the level of help you receive because it might differ substantially in terms of the time it takes for a response and the sorts of issues it can handle.
Remember that cold wallets are developed for safety, whereas hot wallets are designed for simplicity. It would help if you first considered the wallet type that is most effective for you. Research all wallet alternatives as described above, paying particular attention to the cost and security of each.
One of the best methods to take control of your private keys is purchasing a hardware wallet, so those who want to take it one step further can do so by storing crypto this way. For novices, mastering to utilize these could take a bit more time, but doing so might be worthwhile for the increased security. Several experts concur that having a hardware wallet is essential for those who keep significant amounts of crypto.