Best Crypto Wallets

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Best Crypto Wallets

Hardware vs. Software Crypto Wallets

Both hardware and software wallets store the information that grants access to your crypto assets on the blockchain: your public and private keys.

Hardware wallets are physical items (often a type of USB drive). The Ledger Nano X, Trezor and KeepKey are popular names in hardware wallets.

Hardware wallets are considered the most secure type of wallet. It is the best choice if you invest large amounts at a time and don’t plan to trade regularly.

Software wallets are applications you download onto your computer or mobile device. Software wallets use encryption to protect your crypto assets. Software wallets are also known as hot wallets, while hardware wallets are called cold wallets.

Online platforms are another option, which don’t need to be downloaded and can be accessed through an internet browser.

Types of Crypto Wallets

  • Hot wallets. These types of wallets use keys (a form of cryptography, kind of like a password) that were created or are stored on a device that has access to the internet. Hot wallets offer a high utility but are often considered less secure than cold wallets.
  • Cold wallets. Cold wallets use keys created on a device that has never had access to the internet. Cold wallets are also known as hardware wallets, which are wallets stored on physical devices.
  • Hosted wallets. These live on another server that you don’t control. Hosted wallets are attractive targets for hackers, as hosted wallets hold all the funds from the wallets on the server. Hosted wallets offer differing levels of protection, and some are even insured by third parties, so it’s important to be aware of what your hosted wallet has to offer.
  • Decentralized wallets. A decentralized wallet means that only you hold the keys to your crypto wallet.. A decentralized wallet doesn’t guarantee complete anonymity, however. It simply means you don’t rely on a 3rd party to send, receive or store your cryptocurrency, mitigating some security risks associated with hosted wallets.

What to Look for in a Crypto Wallet

The biggest factor you should consider when choosing a crypto wallet is how you intend to use your crypto. If you are planning on buying and holding your investment for the long term, a hardware wallet is likely your best choice.

A solid strategy to manage risk is to limit the number of funds that can be accessed through less secure platforms, such as exchanges, while keeping the bulk of your funds in a more secure wallet somewhere offline. You might even choose to have several wallets to limit risk.

Security

2-factor authentication. 2-factor authentication, also called 2FA, is another way to verify your identity when logging into your crypto wallet. If someone had your password or managed to crack your password through any of a number of methods, they would still need to pass the second level of authentication, typically a code sent to your phone which needs to be entered into a sign-in field before access to the wallet is granted.

Multi-signature support. In some cases, a crypto wallet is owned by several people, like business partners, for example. Multi-signature support means that you can set the security for the wallet to require multiple keys before access is granted. This prevents any one person from spending the funds in an unauthorized way or from transferring the funds to another wallet.

Wallet Utility

Exchanges as crypto wallets. A large number of cryptocurrency owners have used Coinbase or other exchanges as both an exchange and a crypto wallet. Coinbase is many people’s go-to, as it has a variety of tokens,  allows payments, buying, selling and even trading through its GDAX platform.

Mobile wallets. While convenient, mobile crypto wallets create a unique set of potential security vulnerabilities. First, phones are often lost or broken. If the wallet key is only stored on the phone, a broken or lost phone could possibly make your wallet permanently inaccessible. However, some mobile wallets like Coinbase and Argent offer ways to restore your wallet if an accident happens.

Multi-currency vs. single currency. Many cryptocurrency owners own more than 1 kind of cryptocurrency. Maintaining a separate wallet for each type of currency can become confusing. Wallets are now available that support multiple types of currency.

Hardware Wallet Versus Exchange Storage

If you decide not to use a crypto wallet to hold your cryptocurrency, then you will have to trust your crypto brokerage to hold your private keys. Although holding your crypto on an exchange is not recommended, exchanges like Coinbase and Gemini are relatively safe from security breaches. However, big exchanges have been breached in the past, including Binance and Bitfinex.

Here are some of the pros and cons you should consider when deciding whether to use a hardware crypto wallet:

Pros of Using Hardware Wallets

  • Impossible to be hacked when stored offline
  • Total control over your crypto
  • More anonymous than crypto exchanges

Cons of Using Hardware Wallets

  • It takes time to get your cryptocurrency from your hardware wallet to an exchange, so you can’t trade it as easily.
  • Hardware wallets cost money while most software wallets are free.
  • Risk of losing the physical wallet

Best Hardware Cryptocurrency Wallets

Check out our top picks for hardware cryptocurrency wallets.

1. Ledger Nano S

The Ledger company has made big strides since its inception in 2014. It’s perfect for anyone serious about storing cryptocurrency. With an LED display for payment validation and a PIN to confirm, the handheld device is convenient and secure.

As another method of security, Ledger Nano S also features 2-factor authentication. The device has its own operating system, BOLOS, supporting Windows (7+), Mac (10.8+)  and Linux. The hardware supports a multitude of the best cryptocurrencies and is easy to via USB compatibility.

The only drawback the device has is that your computer must be connected to the internet and running solely on Google Chrome for all applications to work. Ledger’s website boasts over 1,000,000 devices sold globally.

2. Trezor One

The Trezor One, by SatoshiLabs was designed and crafted in the Czech Republic by cryptocurrency advocates and a stellar cyber security team. In Czech, trezor literally translates to “vault.”

The Trezor team is credited with developing the first hardware wallet for cryptocurrencies using modern cryptography. It provides an LED display for an easy-to-use interface, as well as a PIN to access the wallet. Providing even more security, the devices prompts you to use 2-factor authentication when verifying your purchase.

The unique piece of hardware is compatible with Windows, Mac, and Linux and offers over 500 possible alt-coins to hold and trade. Much like every other hardware wallet, the device requires your computer to be connected to the internet and connected via USB.

3. KeepKey

Another competitor in the hardware wallet space is KeepKey. Created by a subsidiary of the Shaftshift exchange, KeepKey highlights the notable differences its device holds over its competitors. Launched in 2015, KeepKey noted that its security measures were far stronger than Trezor or Ledger.

We have yet to view anyone brave enough to confirm this notion; however, KeepKey does not have an operating system. Not having an operating system essentially makes a device malware proof.

It’s nearly impossible to infect a device with complicated instructions if that device does not have an operating system.

While security remains an advantage in using KeepKey, a major drawback is the availability of only 35 cryptocurrencies. Still, the device couldn’t be more easy to use by plugging it in one of the USB ports of your computer.

4. Trezor Model T

If you wanted to spend just a little more money to secure your digital assets, look to Trezor’s Model T. The innovative second edition hardware crypto wallet by Satoshi Labs was redesigned for better ease-of-use and security measures.

The largest difference from the original is in the easy-to-use touchscreen interface. The only downside to this is that it is the sole way to interact with the device. The Model T features the same availability of about 500 different coinswhile adding more layers of security. To even connect your device via USB, you must enter a PIN.

You only get one shot an inputting a PIN, as every time you input it incorrectly you are locked out for some time period to the power of 2. In addition to its mainstream security, the Model T comes with a 12-word seed recovery card that allows you to back up your coins in the event of you forgetting your password.

All in all, Satoshi Lab’s Model T seems to be the favorite, other than its higher price tag.

 

 

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