What is a Crypto Wallet?
A crypto wallet is a tool that helps secure private keys, which are necessary to access and manage digital assets. Without these keys, you may lose access to your cryptocurrency permanently. Wallets do not store cryptocurrency itself but instead keep the credentials needed to sign transactions and interact with blockchain networks.
Choosing a Crypto Wallet
When selecting a wallet, the first decision is between a hot wallet and a cold wallet. Hot wallets are connected to the internet, making them more convenient for transactions but also more exposed to potential security risks. Cold wallets are offline, reducing the risk of hacking but requiring additional steps to access and manage funds. Other important factors include the number of supported cryptocurrencies, the ability to transfer funds to cold storage, and additional features such as staking or earning rewards.
Best Hot Crypto Wallets
Hot wallets are digital applications that allow users to store and manage cryptocurrency conveniently. They may offer features such as built-in exchanges, staking, and decentralized finance (DeFi) integration. However, since they are internet-connected, they are more susceptible to security threats than cold wallets.
Zengo
- Assets supported: 300+
- Cold storage support: Yes, via WalletConnect
- Staking/DeFi support: Yes
Zengo uses multi-party computation (MPC) instead of traditional seed phrases or private keys. This method enhances security by eliminating the need for users to manage their own recovery phrases. The wallet aims to simplify crypto storage while maintaining strong security measures. However, it does not support some major cryptocurrencies like XRP, Bitcoin Cash, and Polkadot.
Crypto.com Onchain
- Assets supported: 1,000+
- Cold storage support: Yes, on desktop
- Staking/DeFi support: Yes
Previously known as Crypto.com DeFi Wallet, this wallet is designed for decentralized finance (DeFi) applications. It allows users to store and manage crypto while interacting with DeFi platforms through a mobile app and browser extension. It integrates with Ledger hardware wallets for additional security. A key advantage is its easy transfer of assets from the Crypto.com exchange to self-custody.
Guarda
- Assets supported: 300+
- Cold storage support: Yes
- Staking/DeFi support: Yes
Guarda is a multi-platform wallet available on mobile, desktop, and browser extensions. It supports a variety of digital assets and allows integration with Ledger for cold storage. It also offers staking programs for users looking to earn passive income on their holdings.
Exodus
- Assets supported: 250+
- Cold storage support: Yes
- Staking/DeFi support: Yes
Exodus provides a set of software tools, including a mobile app, desktop app, and browser extension. It allows users to buy, trade, and stake cryptocurrency directly within the wallet. Exodus also integrates with Trezor hardware wallets for cold storage, making it a versatile option for both beginners and experienced users.
Trust Wallet
- Assets supported: 10 million+ across 100+ blockchains
- Cold storage support: Yes, via Ledger browser extension
- Staking/DeFi support: Yes
Trust Wallet is the official wallet of Binance and supports a wide range of digital assets. Users can buy, sell, and trade cryptocurrencies directly from the app. Although it claims to support over 10 million digital assets, this number should be interpreted cautiously, as the actual number of actively traded cryptocurrencies is much lower.
Coinbase Wallet
- Assets supported: Thousands
- Cold storage support: Yes
- Staking/DeFi support: Yes
Coinbase Wallet is separate from the Coinbase exchange, providing users with full control over their private keys. It integrates seamlessly with Coinbase’s exchange, making it a user-friendly option for those new to self-custody. While it lacks a desktop application, it supports a browser extension that connects to Ledger hardware wallets.
MetaMask
- Assets supported: 650,000+ (supports manually adding ERC-20 assets)
- Cold storage support: Yes
- Staking/DeFi support: Yes
MetaMask is one of the most widely used wallets for Ethereum-based assets. It allows users to store ERC-20 tokens and interact with decentralized applications (DApps) and Web3 services. It is available as a mobile app and browser extension but does not have a desktop version.
Best Cold Crypto Wallets
Cold wallets are physical devices that store private keys offline, offering a higher level of security. They are typically used for long-term storage rather than frequent transactions. While cold wallets reduce the risk of cyber threats, they must be handled carefully to avoid loss or damage.
Ledger
- Assets supported: 5,500+
- Online access: Yes, with software integration
- Staking/DeFi support: Yes
Ledger is a well-known brand in the cold wallet space. It offers models ranging in price from $79 to $249. The Ledger Live app allows users to manage their assets on mobile, desktop, or browser. The wallet supports two-factor authentication and integrates with various software wallets, including Crypto.com and Guarda.
Trezor
- Assets supported: 9,000+
- Online access: Yes, with software integration
- Staking/DeFi support: Yes
Trezor offers offline storage with a touchscreen interface for secure transactions. While it does not have Bluetooth or native staking features, it integrates with software wallets like Exodus for these functions. The entry-level Trezor Model One costs around $49, while the more advanced model is priced at $169.
Additional Considerations
Non-Custodial Wallets
Non-custodial wallets give users complete control over their private keys, removing the need for third-party management. However, this also means users are responsible for keeping their recovery phrases safe. Losing access to a non-custodial wallet can result in permanent loss of funds.
Alternative Crypto Investment Options
- Crypto Exchanges: Platforms like Binance, Coinbase, and Kraken allow users to buy and sell crypto without managing private keys directly.
- Brokerage Accounts: Some traditional brokers, such as Robinhood and Fidelity, offer cryptocurrency trading.
- Bitcoin and Ethereum ETFs: Exchange-traded funds allow indirect exposure to crypto without needing a wallet.
Recovering a Lost Crypto Wallet
- Hot Wallets: Most hot wallets offer recovery options, such as resetting passwords or verifying identity.
- Cold Wallets: If a cold wallet is lost or damaged, funds can still be recovered using a backup seed phrase.
Transferring Crypto from a Broker to a Wallet
Some brokers, like Robinhood, allow users to move crypto to external wallets. Others may restrict this feature. It’s important to check a broker’s policy before purchasing crypto.
Buying Crypto
Once a wallet is set up, users can buy crypto from exchanges, brokerage accounts, Bitcoin ATMs, and peer-to-peer platforms. Understanding transaction fees and security measures can help users choose the best purchasing method.
Crypto wallets provide essential security for digital assets. Whether choosing a hot or cold wallet, users should consider security, usability, and integration with their investment strategies.
