A cryptocurrency wallet is exactly what its name suggests – a digital wallet to store your cryptocurrency, private and public keys (think of them as records in a public ledger). This ledger or record of your cryptocurrency.
You can also send or receive cryptocurrency from other people in your cryptocurrency wallet. The wallet doesn’t really store your cryptocurrency, since it is not a tangible physical thing.
It rather stores your currency isn’t kept on a single file, it is decentralized. In other words, your wallet records are stored on a public ledger in the blockchain system with access to all users through a set of keys.
If you are looking for safety, hardware wallets are the best option to store your cryptocurrency. We all know pretty well that sensitive data isn’t really safe when stored online. This is the reason many people choose hardware wallets to store their cryptocurrency. Hardware wallets are easy to use: just plug them in your computer and connect it to the internet. Trezor and Nano Ledger are two of the most commonly used hardware wallets in the market today.
To access software wallets, you need an internet connection. But software wallets can be further classified into three types:
1. Web/online Wallets:
Online wallets are accessible through the vendor’s website. But beware of the fact that online wallets are the number one target of hackers. And that is why many cryptocurrency exchanges store the crypto funds in cold storage (hardware). That said, there are some pros of online wallets, but in the end, our advice is: try at your own risk. You should use online wallets for small transactions. For large amount of storage or transfer, you should use hardware wallets.
Pros of online wallets:
Online wallets can allow you to process transactions fast
You can access online wallets from your smartphone/tablet as long as you have an internet connection
Cons of online wallets:
Your keys are stored on another server, which becomes an easy target for hackers. In 2014, hackers were able to steal a gigantic amount of $460 million from Mt. Gox, an exchange service website.
Mobile wallets exist in the form of applications on your phone. You can pay using mobile wallets anywhere and they are more secure than online wallets. They have good features and allow you to use cryptocurrency on the go. You can also have more privacy if you use the TOR network. But they come with their own risks:
If your phone gets infected by a virus or malware, your cryptocurrency can be compromised. Phones are very vulnerable to intrusive attacks.
3. Desktop Wallets
Desktop wallet is safer than both mobile wallets and online wallets. If you have a computer at home that you don’t use much and don’t connect to the internet, then having a desktop wallet can act as a cold storage, which is safe from the prying minds of hackers.
Like many people have an old phone lying in their house, many people also have an old computer that doesn’t get used often. And that is why desktop wallets were created as an effective solution for storing cryptocurrency.
But keep in mind that if your computer gets connected to the internet, it is prone to getting virus and malware attacks which could lead to compromising your precious crypto funds.
The best part of having desktop wallet is that your keys are not stored on a third-party server as it is with online wallets. If your “offline” computer gets faulty and you lose all data without ever creating a backup, then you will have a huge problem. Some of the good desktop wallets include Exodus, Multibit, Armory and Bitcoin bore.
Paper wallets came into existence before hardware wallets did. And they were the primary way to put your crypto funds in cold storage. They require you to understand their technicalities and make some effort to transfer crypto coins. But they are indeed one of the most secure storage option available in the market. Some examples of paper wallets include BitAddress.org and Bitcoin Armory.
Which Wallet to Store Your Crypto Money In?
Things You Should Look for When Choosing a Wallet:
You must have a private key that only you can access. It is necessary to have complete control your crypto funds always. But there a lot more you can learn about private keys. A public key tells who the sender and the receiver are in the bitcoin or blockchain network. But a private key creates an irreplacable message signature to identify the transaction. Note that your private key is meant to be private. If anyone else knows your private key, they can steal funds from you.
What is more important than security when storing your funds? Nothing. Because no matter what features a wallet provides, the ultimate motive is to not lose your funds. Secure wallets come with two-factor authentication, which means they not only ask you a login password but also a second key which only you know, such as a one-time password sent on your phone. Secure wallets also employ effective processes for smooth backup and recovery of your information.
Smart Contract Support:
A usual business contract just describes the terms of a relationship and its enforcement is up to the legal institutions. But a smart contract actually enforces the terms of a relationship with cryptographic code. But to use this feature, you need to check if your wallet supports smart contracts.
Ethereum wallets are relatively new in the crypto world. So make sure there is an active development team that is working to improve the wallet. An active development team indicates that the wallet has a strong future.
Ease of Use:
Some wallets can have a complicated interface that makes storing or using cryptocurrency a painful experience. Make sure to select a wallet that is fairly easy to use.
If you are always on the go, it is important to make sure that your wallet has a mobile-friendly app. Make sure its app is available on the kind of device you use. And if you use multiple devices, make sure it is supported on all of them.
Are you looking to store just Ethereum, or Bitcoin as well? Make sure the wallet supports all the types of cryptocurrency you want to store.
The Best Cryptocurrency Wallets Available on the Market
Hardware Wallets – Hardware wallets are the safest option to store your cryptocurrency. Your private keys are stored in a secure hardware device. Wallets which use the internet or mobile devices are more prone to attack by hackers.
So having a hardware wallet works great. You do need to store your hardware wallet in a safe place because it can be stolen. However, you can always buy a new hardware wallet and recover your funds using the recovery seed key (a string of words) provided by the wallet company.
Why Choose Web Wallets?
So far we have seen which are the best hardware wallets in the market. Hardware wallet is the safest way to store your cryptocurrency because everything that is online is at a risk of attack from hackers.
But sometimes you need a web wallet, which stores your information on the cloud, to transfer funds from your hardware wallet. Web wallets also give you access to your funds on the go, which isn’t as easy with hardware wallets as they can only be plugged to a computer.
For all these reasons, we have listed the best web wallets in the market along with their pros and cons.