There is no doubt that cryptocurrencies are the thing of the moment. A revolutionary new way of buying, selling, and trading – the concept of digital money acquired through the means of cryptography is something that is turning the financial, and the digital world on its head.
With so many different currencies on the market all claiming to be the next big thing, and so many crypto wallets all competing for your business, it can be difficult knowing where to start, or who to place your trust it.
That is why we have written this guide for you that will cover all of the basics and point you in the direction of the best cryptocurrency wallets on the market.
What Is Cryptocurrency
A cryptocurrency is a digital asset with a value assigned to it which is designed to work as a medium of exchange, much like traditional money, but while using cryptography to control and secure the transactions and to control the creation of additional units of currency.
They are considered as a particular subset of digital currencies, virtual currencies, and alternative currencies. The first cryptocurrency to be created was the famous Bitcoin back in 2009.
The first decentralised cryptocurrency to be created, its popularity and success have spawned many other similar currencies which are referred to as altcoins. Other examples of cryptocurrencies include Litecoin, Ethereum, Zcash, Dash, Ripple, and Monero.
The key benefits and the reason why cryptocurrencies are so popular is due to the levels of privacy, security, and anonymity that are associated with their use.
Users of the currency in question can enjoy superior levels of privacy that cannot be matched by traditional money. The process of converting legible information into a uncrackable electronic code to facilitate purchases and transfers is an enticing thought to many, as well as offering cheaper solutions, especially when facilitating cross-border transactions.
With over 900 cryptocurrencies available on the market, the sector shows no sign of slowing down.
What Is a Cryptocurrency Wallet
So now you know what a cryptocurrency is, you need to know what to do with it. You cannot just keep your cryptocurrency in a regular wallet, nor can you print it out, nor is it tangible in any way other than in a digital format.
To safely and securely store your money, you need to procure yourself a cryptocurrency wallet. But what exactly is it? Let us find out.
The first thing to note is that a crypto wallet doesn’t store your money directly as such, it is better to think of it as the keys to your assets. By using specific algorithms to generate pairs of keys, your public key is the address that another cryptocurrency user can send you funds, and your corresponding private key is what gives you the ability to receive the funds that you have received.
Without a private key, your public address becomes a never-ending put that can receive money, but not be retrieved. All of the different wallets on the market only represent the various ways in which an individual can keep their private key secure.
There are two main types of wallet – a hot wallet and a cold wallet and the names refer to the level of connectivity that the wallet has.
A cold wallet is a hardware wallet or paper wallet which are not actively connected to the internet.
A hot wallet is one which is connected to the internet or a network which makes it more comfortable and more convenient to use, but it also makes it more susceptible to cyber-attacks and hackers.
Cold wallets offer protection from cybercrime, but it is still the responsibility of the owner to ensure that their property is psychically secure.
You can also get mobile and desktop wallets, which as the name would suggest, keep your keys stored on your device. While these are secure, if you lose your phone or your laptop crashes, you lose all of the currency you have.
In other words, your money is only as secure as the device you are storing it on, and it is still open to attack or compromise, either digitally or physically.
Different Types of Cryptocurrency Wallets
We have touched on some of the different kinds of category of cryptocurrency wallet above, so now it is time to drill down and highlight the differences between them so that you can ensure you are making the best and most informed decision for you.
A software wallet or a desktop wallet is similar to an online wallet with the exception that it is hosted on your computer, as opposed to an online exchange server. A software wallet is only as secure as your computer or as the protection and security of the company’s online server.
The software can be bug-free and secure, but if you have a keylogger nefariously installed on your computer, all the security in the world won’t stop them from being able to access your password. As long as you follow reasonable security precautions, these wallets are safe and are a right way of storing your cryptocash.
Having a software wallet means you are in full control of your private keys and therefore, the responsibility of securing your finances is down, only to you. Ensuring you have up to date virus protection on your computer, as well as taking precautions and following security best practices is the primary way to make sure your safety remains intact.
Otherwise known as cold storage, hardware wallets usually take the form of USB sticks. They are smart cards or miniature computers that are capable of generating the address all by themselves. For this reason, it must have some good computing power to calculate a functional and useful crypto address.
Hardware wallets are the equivalent of using an old laptop, sans internet connection, to run the necessary algorithms that are used to generate public-private key pairs.
A cold wallet is incredibly secure as there is no way for anyone to install key-logging malware or viruses on it, it cannot be hacked via the internet, and no one can see what you are doing unless they are physically next to you.
These devices connect to your computer via port or USB, or even a self-generated QR code. The only way they can be compromised is if the wallet is lost, stolen, or damaged.
A mobile wallet is just like one that you would have on your desktop computer, but you can download it as an application to your tablet or smartphone. As we use our mobiles for pretty much everything these days, mobile wallets are a practical solution to those that like to have access to their cryptocurrencies in their pocket.
Some mobile wallets also have the facility where instead of scanning a QR code, an individual can use tap and pay technology to any merchant which accepts cryptocurrency as a means of payment. In the future, and as more merchants start to accept digital currencies, it is expected that mobile wallets will grow exponentially in popularity.
An excellent example of a paper wallet would be if you were to visit a Bitcoin ATM and feed some fiat cash into it, it would then print out a sort of receipt with a selection of QR codes on it. These systems would correspond to your private key, and as long as you have a record of the QR codes or the corresponding 4-character long hashes, you can access your money.
Should you lose them though, your money is lost forever. At least with hardware wallets, should your hardware fail, there are ways through using digital forensic methods which allow you to recover your fortune.
To avoid issues with people losing their slips of paper, or say water being spilt on them, a solid metal “paper wallet” has been developed known as cryptosteel where your public and private keys are engraved on stainless steel.
The Best Cryptocurrency Wallets
So, what are the best wallets out there?
Marketing themselves as a bulletproof Bitcoin wallet, Trezor has been in the game for a very long time. A single purpose device, retailing for less than €100 it allows you to both store, and make secure transactions. Even if your computer is compromised or vulnerable, it still keeps your currency secure, and its intuitive and easy to use interface makes it perfect for people not familiar with the technicalities of cryptocurrencies.
A cryptocurrency hardware wallet, Ledger Nano S is designed to hold Bitcoin, Ethereum and Altcoins and offers a range of robust safety features allowing users to store their cryptographic assets safely, as well as to make secure crypto payments. It connects to the PC via USB and includes a safe OLED display, allowing the user the ability to double check and confirm each transaction with a simple tap of a button.
Jaxx offers protection for holders of most of the leading cryptocurrency platforms. All keys are created locally on the device of choice, and that means that the user has full control of the wallet with no access being given to any third party, even Jaxx themselves. Offering a streamlined process with no onboarding, no verification – privacy is paramount along with a clean user interface which gives access to even the most unexperienced crypto dabblers.
A great example of a desktop crypto wallet, Exodus offers an all in one application solution that manages, exchanges and protects blockchain assets. With full encryption of all keys, local transaction data and a lack of reliance on servers, accounts or data sharing- users can be sure of their security and privacy at all times.
Copay is an open source, HD-multisignature wallet with a focus on users of Bitcoin. A true wallet as opposed to an account, it allows users to secure their funds with multiple signatures or just one. Entirely bypassing third parties, Copay enables users to have joint accounts, or just singular, and in the case of joint accounts, it requires the signatures of all parties to approve the transaction.
Electrum is one of the most versatile wallets on the market- with encrypted keys and the ability to recover funds through the use of a secret phrase, users can also export their private keys and use them in other wallets. Boasting zero downtime, as well as offering the ability to split permissions between several wallets- this is by far one of the most popular cold storage options available.
A simple hardware wallet, Keepkey secures Bitcoin, Litecoin, Ethereum, Dogecoin, and Dash amongst others. Offering comprehensive protection from hackers and thieves it provides a simple, straightforward and user-friendly solution to the issue of keeping your cryptocurrencies secure.
What to Look For When Choosing a Cryptocurrency Wallet
Depending on you and your needs, your requirements for a cryptocurrency wallet are likely to vary significantly. When it comes to these sorts of things, people’s needs, and preferences can differ a lot from person to person, but there is a solution out there for everyone.
Before taking the leap and getting yourself a wallet, you need to know what you want out of it. Do you want the security of cold storage? Or do you need a wallet that you can access on your phone 24/7? Deciding what your security and usability priorities are is the first step in knowing what to look for when choosing a cryptocurrency wallet.
You must also take into account the popularity of the wallet that you choose- stick to well-known names with a solid reputation and a good track record for security and reliability.
Last but not least, make sure that the wallet you choose is suitably secure for your needs. Remember, once you have lost your currency, you cannot get it back so be sure to pick the best solution that suits not just your needs, but your personality, lifestyle, and purpose of having cryptocurrencies as well.
Once you choose a wallet, make sure to read our guide on how to create a cryptocurrency wallet to be able to set it up properly.
What do you think of our choice of the best cryptocurrency wallets? Do you think any other wallets should be added? Let us know in the comments below!