Finding the best crypto wallet can be confusing for a new crypto trader. Deciding first on the type of wallet to buy then you must chose a brand or company. Let me walk you through the process of determining the best bitcoin wallet for your goals.
A crypto wallet is a digital wallet that stores encrypted keys and holds crypto coins or tokens. A Crypto Wallet allows your exchange to process transactions for you. It is similar to your traditional bank account. The exception is that instead of using your name and social security number, it uses a public key cryptography system.
While it is understandable that you want to find the best crypto wallet right from the start. Wallets are relatively inexpensive and it is easy to transfer from one type of wallet to another.
This is known as “public/private key”. You should never share your private key with anyone else- not even your bank! In exchange for this added level of security, however, you need to use an online platform when accessing your funds. The most popular exchange platforms are Coinbase, and Binance.
What is a Crypto Exchange?
Crypto exchanges provide a service that allows you to buy/sell cryptocurrencies for national currency (usually USD, Euro, GBP etc.). Unlike the best crypto wallets, an exchange does not contain your private keys. You should never store your private keys in a publicly accessible place. Exchanges that provide wallet service generally have cutting-edge encryption technology. When choosing the best bitcoin wallet service make sure you insist on a minimum of these security features:
- Two factor authentication
- Advanced encryption
- Advanced notification for any requested account change
- Access notifications
Having said that most good exchanges provide a hot wallet at no additional cost to we who are crypto enthusiasts!
An online crypto wallet or exchange provides you with these basic conveniences.
- Makes it easier to access and manage your funds
- Makes it easier for you to purchase cryptocurrencies by adding a credit card or bank account information.
- Allows you to transfer crypto from one wallet to another separate wallet.
What are the Benefits of Using Crypto Wallets?
A crypto wallet is a digital device or software program that stores the public and private keys that are used to receive, hold, and spend crypto assets. Sometimes people have gotten the idea that the term bitcoin wallet implies that it only supports bitcoin. The term bitcoin wallet has kind of stuck due to the fact that Bitcoin was the first of the blockchain digital currencies.
While bitcoin wallets do in fact store bitcoin you can store NFT’s, and Altcoins in your bitcoin wallet. Any digital asset that is exchanged on the blockchain can be stored in your bitcoin wallet.
There are many benefits to using a crypto wallet, including increased security, convenience, and control over your digital assets.
One of the main benefits of using a crypto wallet is the increased security features it provides. When you use a centralized crypto exchange to hold, buy, or sell crypto, you are trusting the crypto exchange to secure your digital assets. You can find a comprehensive list of altcoin exchanges here.
Though the risk is low, this can be risky, as exchanges have been known to be hacked and funds stolen. In contrast, a crypto wallet allows you to hold your own private keys. What this means is you are in control of your own crypto assets. This way you are not reliant on a third party to keep them safe.
Cryptocurrency Wallet Convenience
Another benefit of using cryptocurrency wallets is the convenience they offer. With a crypto wallet, you can easily send and receive crypto transactions from anywhere in the world, as long as you have an internet connection. This is particularly useful if you trade Bitcoin or do other cryptocurrency trading. Additionally, if you want to avoid the fees and restrictions that can be associated with traditional financial institutions a crypto wallet can provide that convenience.
Flexibility and control
In addition to security and convenience, using a crypto wallet also gives you more control over your digital assets. When you use a centralized exchange, you are at the mercy of that exchange’s rules and policies. With a hardware wallet, you have the freedom to choose which cryptocurrencies you want to hold. Additionally, and you can make transactions on your own terms and store your assets with maximum security.
Overall, the benefits of using a crypto wallet are numerous and significant. By giving you increased security, convenience, and control over your digital assets, a crypto wallet is a valuable tool for anyone looking to enter the world of cryptocurrencies.
Private Key Explained
Digital assets are stored in the form of cryptographic keys on some type of wallet wheather a hardware wallet or a software wallet. The Key is a unique string of characters that serves as the wallet address of the digital asset you are storing.
One of these keys is called the private key. It is an essential part of a crypto wallet. The private key is a long, complex string of characters that is used to access and manage the digital assets stored in a crypto wallet. It is called a “private” key because it should never be shared with anyone else.
The private key is a crucial part of the crypto wallet because it is the only way to access and manage the digital assets stored in the wallet. If someone else gains access to your private key, they could potentially access and steal the digital assets stored in the wallet. Therefore, it is important for you to keep your keys private, safe and secure.
Keeping your Keys Private
There are several ways to store private crypto keys, including online and offline storage. Online storage, also known as hot storage. The term hot storage refers to storing private keys on a device that is connected to the internet. This can include storing private keys on a computer or on a cloud-based service. While online storage is convenient and easy to access, it is also more vulnerable to cyber attacks and hacking.
Offline storage, also known as cold storage, refers to storing private keys on a device that is not connected to the internet. This can include storing private keys on a hardware wallet. Simply a physical device specifically designed to store private keys and other digital assets.
Hardware wallets are considered to be more secure than online storage because they are not connected to the internet. Therefore, a Hard wallet is less vulnerable to cyber attacks.
We will discuss the details of a hot wallet vs a cold wallet in detail below.
In addition to storing private keys, you will want to also take steps to protect their private keys from being lost or stolen. This can include creating backups of the private key, using strong passwords, and using two-factor authentication. In any case your hardware wallet or software wallet keys should be stored were only you can gain access.
In summary, private keys are an essential part of a crypto wallet and are used to access and manage digital assets stored in the wallet. It is important for you to keep your private keys safe and secure by storing them in a secure location. Taking whatever steps you feel are nessisary to protect your keys from being lost or stolen.
Choosing the Best Type of Wallet
When it comes to the best type of wallet there is no single answer that fits every need.
There are several different types of crypto wallets, each with its own unique features and benefits.
The first type of crypto wallet is a software wallet, which can be downloaded as a mobile app or installed on a computer. Software wallets are popular because they are easy to use and offer a high level of security. They also allow users to access their cryptocurrencies from any device with an internet connection. However, software wallets are vulnerable to hacking and malware attacks, so it is important to use a reputable wallet provider and keep the software up to date with the latest security patches.
Another type of wallet is a hardware wallet. Crypto hardware wallets are physical devices that allow users to store, send, and receive digital assets in a secure manner. These devices are considered to be the most secure type of crypto wallet because the your private keys are stored offline and are not accessible by hackers.
Hardware wallets typically have a small screen and a few buttons, and they connect to a computer or smartphone via a USB cable. To use a hardware wallet, users must first set it up by creating a PIN and writing down a recovery seed. They can then add their cryptocurrencies to the wallet by connecting it to a computer or smartphone and following the instructions on the screen. Once the digital assets are in the crypto wallets, users can send them to other users by connecting the crypto wallets to a computer or smartphone and following the instructions on the screen.
Hardware wallets are popular because they offer a high level of security. However, they are also less convenient than software wallets. Whether you are trading bitcoin, making a purchase or donating to charity a hardware wallet requires a separate device to access your digital assets.
Being offline they are also resistant to viruses and malware. However, a hardware crypto wallet can be lost or stolen, and it may not be as convenient to use as software wallets because they require a separate device to access the cryptocurrencies. We have all heard the story of someone digging through a landfill to find their hardware wallets. Overall, hardware wallets are a good choice for users who want the highest level of security for their cryptocurrencies.
The third type of wallet is paper wallets, which is a piece of paper that contains the you private keys and a QR code that can be scanned to access the crypto assets. Paper crypto wallets are considered to be very secure because they are not connected to the internet and cannot be hacked. However, they are also vulnerable to physical damage, loss, or theft, so it is important to store them in a safe and secure place.
A fourth type of crypto wallet is a web wallet, which is a wallet that is hosted by a third-party provider and accessed through a web browser. Web wallets are convenient because they can be accessed from any device with an internet connection, but they are also less secure because the private keys are stored on the provider’s servers, which possibly could be hacked. It is important to use a reputable web wallet provider and enable two-factor authentication to increase security.
Multisignature Crypto Wallets
A fifth type of crypto wallet is a multi-signature wallet, which requires multiple signatures or approvals before a transaction can be completed. This type of wallet is useful for businesses or organizations that need to have multiple people approve transactions before they are completed. However, multisignature wallets may not be the best crypto wallet for individual crypto traders because they require multiple approvals for crypto transactions.
Best Crypto Wallets Synopsis
Each of the several different type of wallet, each with its own unique features and benefits will value under different use applications. Software wallets are easy to use and offer a high level of security, but they are vulnerable to hacking and malware attacks. Hardware wallets are the most secure type of mobile wallet, but they require a separate device to access the cryptocurrencies.
A Paper wallet is very secure but vulnerable to physical damage, loss, or theft. Web wallets are convenient but less secure because the private keys are stored on the provider’s servers. Multisignature wallets are useful for businesses or organizations, but may be less convenient for individual users. It is important to choose the right type of crypto wallet for your needs and to use best practices for security.
Coinbase Wallet the Best Crypto Wallet for Beginners
Coinbase Wallet is a popular choice for beginners looking to store and manage their cryptocurrencies. There are several reasons why Coinbase Wallet is considered the best crypto wallet for beginners.
User friendly Crypto Wallets
First, Coinbase Wallet is user-friendly and easy to navigate. The wallet has a simple interface that makes it easy for even the most technologically challenged individuals to send, receive, and manage their cryptocurrencies. Crypto users and traders love the Coinbase Wallet.
Crypto Wallet Security
Second, Coinbase Wallet is highly secure. The wallet uses advanced security measures, such as two-factor authentication and hardware security keys, to protect users’ assets. In addition, Coinbase is a regulated company that adheres to strict security protocols, giving users added peace of mind.
Versatility for Crypto Traders
Third, Coinbase Wallet offers a wide range of features that make it a versatile choice for beginners. For example, users can buy and sell cryptocurrencies directly through the wallet, track their portfolio in real time, and access educational resources to help them learn about the cryptocurrency market.
Reputation and Customer Support
Finally, Coinbase Wallet has a strong reputation in the industry, with millions of users worldwide. This not only adds to the wallet’s credibility but also makes it easier for beginners to get customer support and find answers to their questions.
If I had to personally state the thing that most convincingly makes me a Coinbase fan is their customer support. When comparing crypto wallets Coinbase’s superior customer support has got the carry a lot of weight!
Other Top Crypto Wallets
While Coinbase is the best software wallet for beginners there are certainly other viable options. The exchanges that I use and recommend are the following:
Mobile Wallet Apps
A mobile crypto wallet app is an app designed to operate on a mobile device. These apps are a convenient type of crypto wallets because they can be accessed from anywhere with an internet connection. Mobile wallets are also secure, as long as users take the necessary precautions to protect their devices and accounts. Never share or save your wallet address where it could find its way into the wrong hands.
To use a mobile crypto wallet app, users must first download the app from the App Store or Google Play and create an account. They can then add their digital assets to the wallet by scanning a QR code or entering a receiving wallet address. Once the cryptocurrencies are in the wallet, users can send them to other users by scanning a QR code or entering a sending address. They can also view their balance and transaction history within the app.
Mobile crypto wallets are popular because they are convenient and easy to use, but they are also vulnerable to hacking and malware attacks. It is important to use a reputable wallet provider and keep the app up to date with the latest security patches. Users should also enable two-factor authentication and use strong, unique passwords to protect their accounts. By following these best practices, users have secure crypto storage and can manage their digital assets on their mobile devices.
Hot Wallets vs Cold Wallets
Crypto hot wallets and cold wallets are two different types of cryptocurrency storage options that have different levels of security and accessibility. Deciding on hot wallet or cold storage will boil down to two issues, convenience vs security.
Hot wallets are digital wallets that are connected to the internet and can be accessed from any device with an internet connection. They are considered to be less secure than cold wallets because they are vulnerable to hacking and malware attacks. However, a hot wallet is more convenient because hot wallets can be accessed from anywhere. Additionally, a hot wallet is suitable for storing small amounts of crypto that can be used for frequent transactions. Examples of hot wallets include software wallets, web wallet, and mobile wallet apps.
A cold crypto wallet, on the other hand, is a digital wallet that is not connected to the internet. They are called cold storage because a cold wallet can only be accessed by physically connecting the cold wallet to a computer or mobile device. A cold wallet is considered to be the most secure type of wallet. Cold Storage wallets are not accessible by hackers and are resistant to viruses and malware. However, they are less convenient because they require a separate hardware device to access the cryptocurrencies. Cold wallets are suitable for storing large amounts of cryptocurrencies that will not be used for frequent transactions. Examples of cold wallets include hardware wallets and paper wallets.
In conclusion, hot wallets are less secure but more convenient, while cold wallets are more secure but less convenient. Users should choose the right type of wallet based on their needs and the amount of cryptocurrencies they are storing.
Custodial vs Non Custodial Wallets
Custodial and non-custodial crypto wallets are two types of digital wallets that you can use to store, send, and receive cryptocurrencies. The main difference between the two is who has control over the private crypto keys associated with the crypto assets stored in the wallet.
Custodial crypto wallets are digital wallets where the private keys are held by a third party. The third part can be an organization such as a cryptocurrency exchange or a bank. This means that individuals who use custodial wallets do not have direct control over their private keys. With a custodial wallet you are relying on the third party to secure and manage their digital assets.
Custodial wallets are convenient because they often offer additional services. Services such as the ability to buy and sell cryptocurrencies are conveniat, but they also come with some risks.
Though the risk is small it is worth of note. If the third party holding the private keys is hacked or goes out of business, you could potentially lose access to your crypto assets.
Non Custodial Wallet
A non custodial wallet, on the other hand, is a wallet where the keys are held by the individual using the wallet. This means that you have complete control over your private wallet keys. With that freedom comes the responsiblity for securing and managing your own crypto assets.
Non custodial wallets offer greater security and autonomy. However, they also require individuals to take more responsibility for the safety and management of their digital assets. Namely, if your key is lost or stolen you alone are responsible.
In summary, a custodial and non custodial wallet is one of two types of digital wallets that differ in who has control over the private keys associated with the digital assets stored in the wallet.
Custodial wallets are convenient but come with some risks. While non-custodial wallets offer greater security and autonomy, They do require your to take more responsibility for the management of your digital assets.
If you are an organized person then you most likely will be best served by a cold storage non custodial wallet.
What if I don’t trust online platforms?
If you do not feel comfortable using a crypto wallet online, you should store your funds offline in a hardware wallet. An offline hardware wallet or cold wallet is what I prefer and recommend after all. As I have already said, a cold wallet is the most secure method of storing your funds. Without the hardware wallet and the private crypto key no one will ever be able to access them. A good cold storage option is the Ledger Nano S.
Here are the top 5 cold storage wallets that I recommend:
- Ledger Nano S Plus – I rate this the best hardware wallet for overall value
- Ledger Nano x – This comes in as a close second for overall value
- SafePal S1 – Best cold storage for a small budget
- Blockstream Jade – Best cold storage for Bitcoin layer-2 digital assets
- Ledger Stax – Best cold storage wallet overall design
Read more on cold storage wallets here.
How do I get started with my crypto wallet?
How do I fund my crypto wallet?
The easiest way to fund your crypto wallet is with fiat currency. Fiat currency is simply your local government-controlled money. You will be able to transfer an unlimited amount of money into your online wallet – very convenient! However, if you are looking to buy other digital currencies, such as Ethereum or NEO (which are considered altcoins), there will be additional steps that you need to take before buying and exchanging the desired currency.
How do I convert my funds?
To convert your funds, such as USD, into another cryptocurrency, you will need to perform a “Funds” transfer from one type of currency to another. After that is done, you will be able to use funds for buying and exchanging other cryptocurrencies. If you are using a crypto wallet, it should appear in your account in less than an hour (depending on what cryptocurrency you choose). If you are using an exchange platform, the process could take up to 24 hours. Also, note that the crypto wallet and exchange may have different terms and conditions when it comes to converting currency. For more information on this topic, check out this Exchange Review.
Depositing Altcoins into your Crypto Wallets
Depositing altcoins, or alternative cryptocurrencies, into crypto wallets is a simple process. The process involves transferring the altcoins from a third-party exchange or another wallet to the user’s own wallet. Here are the steps to follow (they will vary slightly depending on your crypto exchange, and the type of wallet you are using such as a hardware wallet or a software wallet):
Depositing step by step
- First, you must have a crypto wallet (either hot wallets or hardware wallets) that is compatible with the altcoin you want to deposit. Some wallets only support certain cryptocurrencies. It is important to check that the wallet supports the altcoin in question. Some crypto wallets only work with a particular blockchain, an example would be a bitcoin wallet that only works on the bitcoin blockchain.
- Next, the you must have the altcoin they want to deposit. You can purchase the altcoin from a cryptocurrency exchange or receive it as a gift from another person.
- You should then log in to their crypto wallet and navigate to the “Receive” or “Deposit” section. This section will usually display a QR code or a receiving address. The wallet address is a long string of letters and numbers that is unique to the your wallet.
- You should then copy the receiving address or scan the QR code and use it to transfer the altcoin from the exchange or other cryptocurrency wallets to their own cryptocurrency wallet. The transfer process may vary depending on the exchange or wallet being used. However, it generally involves entering the receiving address and the amount of altcoin to be transferred.
- Once the transfer is complete, the altcoin should appear in the your wallet within a few minutes or hours, depending on the blockchain network being used. You can then view their balance and transaction history within the wallet app or website.
Finaly, depositing altcoins into a crypto wallet is a straightforward process. It involves transferring the altcoins from a third-party exchange or another wallet to the user’s own wallet using a receiving address or QR code.
Funding Through your Exchange
While reputable exchanges provide online wallets with very good security, I do recommend using a hardware wallet. The security of a hardware wallet is far superior to online wallets. As we have already discussed the reason is simply that it is only connected when you are making a payment or depositing coins.
So, there are two ways to fund your account:
- by your fiat money
- by buying BTC and then exchanging it for a specific cryptocurrency
- By owning a stablecoin that is supported by your exchange.
So there you have it the best crypto wallets explained. Let me know in the comments below if you have further questions as you consider the best crypto wallets on the market.