- What are Crypto wallets?
- Are all Crypto wallets the same?
- Which is the safest crypto wallet?
- Do you know how many types of cryptocurrency wallets exist in the market?
Knowing answers to these questions is the first step in your journey to cryptocurrency. Otherwise, you might pick the wrong crypto wallet, which would create a lot of hassle in your journey as a crypto investor or trader.
Also see: How to select a bitcoin wallet
Let us also accept the fact that “your cryptos are as safe as their wallets.” However, different types of wallets serve different purposes, including security and convenience.
It is why in this write-up, I want to tell you about various types of cryptocurrency wallets. If you are looking for wallets specifically for Bitcoin, read this:
- What is a Crypto Wallet?
- Best Crypto Wallets of 2022
- What is a Native Wallet?
- 5 Different Categories of Crypto Wallets
- 1. Mobile Wallets (Easy Access to Crypto Assets)
- 2. Desktop Wallets (Convenient But Not Too Secure)
- 3. Paper Wallets (Not Relevant Anymore)
- 4. Hardware Wallets (Recommended)
- 5. Web Wallets (Least secure But Usable)
- What’s Your Crypto Wallet Type?
- Which is the safest crypto wallet?
- Is it possible to hack a crypto wallet?
- Which crypto wallet is untraceable?
- How does a crypto wallet work?
What is a Crypto Wallet?
A Crypto wallet is an app that lets you interact with the blockchain. A crypto wallet provides the interface to send and receive cryptocurrencies.
How to Get Started with Crypto Wallets?
I have discussed several types of crypto wallets below. If you wish to start a crypto wallet, your best bet is to use multi-cryptocurrency wallets to make the entire process easy.
While there are multiple crypto wallets available today, here are a few that I recommend:
Best Crypto Wallets of 2022
- Trust wallet – A multi-cryptocurrency wallet that supports all popular blockchains.
- Metamask – This is a wallet for Ethereum and other EMV compatible. Metamask is one of the best wallets to store Ethereum that also offers a mobile app with an in-built browser to navigate the world of dApps. It also supports NFTs.
- Phantom wallet – If you are into the Solana ecosystem, look no further than the Phantom wallet. All the dApps on the Solana ecosystem support the Phantom wallet. Like Metamask, it also offers a mobile app full of features.
- Ledger wallet – This is a hardware wallet that offers the best security. If you are storing a large sum of cryptos or NFTs, you should order a Ledger Nano X – It works well with the native wallet called Ledger Live app. I have explained native wallet in detail below. You can read the Ledger Nano X review to learn more about this popular crypto wallet.
You can order a Ledger Nano X that costs around $120-$140 and takes about a week or less to deliver. Rather than waiting to get started with crypto, you can immediately set up a free mobile-based crypto wallet like Trust wallet to explore and understand the world of cryptocurrency.
To get started, you must download the Trust wallet on your phone.
- Head to the official Trust wallet website and download the app for your Android or iOS device.
Now, follow this video tutorial to learn the nitty-gritty of setting up your first crypto wallet.
What is a Native Wallet?
A native wallet is a wallet specific to a service or product. In crypto wallets, Ledger Live is the most popular native wallet of Ledger Nano X, which is a hardware wallet.
Ledger live app can only be used with Ledger Nano series hardware wallets. It could be used to store multiple cryptocurrencies, including NFTs.
Here is what the Ledger Nano series native wallet looks like:
Another popular native wallet is “Trezor suite”, offered by another hardware wallet company called “Trezor“.
Note: These hardware wallets could be used with other non-native wallets like Metamask and Phantom. Don’t feel overwhelmed at this moment as you are just learning. Once you start using them, it will all make sense to you.
So far, you have learned what a crypto wallet is and what are some of the best crypto wallets. A further section of this crypto wallets guide will teach you about different categories of crypto wallets. Lastly, we will explore FAQs that a lot of beginner users have. The FAQ section is a must-read for you to answer the questions related to picking your first crypto wallet.
5 Different Categories of Crypto Wallets
Any type of wallet is simply a combination of your private key and public address. You can categorize your wallets in the following segments based on how and where you store them.
1. Mobile Wallets (Easy Access to Crypto Assets)
Let’s start with the simplest and most widely used crypto wallet type.
Mobile wallets for Bitcoin and altcoins are the most used wallets because of their easy accessibility. For popular cryptocurrencies, you will find mobile wallets compatible with both Android and iOS. Even for lesser-known cryptocurrencies, you can expect a decent Android version.
Before trusting a mobile wallet, one should do due diligence based on the following factors:
- Private keys – Wallets where you control your private keys
- Ease of use – Elegant UI for ease of use
- Development community – Active development community
- Backup & security – Backup and restore features
- Compatibility – Compatible with different operating systems
Mobile wallets are the fourth most secure way to store your cryptocurrencies because they are always connected to the internet (hot wallets) and can be flawed by their development communities.
Some mobile wallet suggestions:
Note: Do read about the security risk of mobile, desktop, and web wallets. This will help you make an informed decision.
2. Desktop Wallets (Convenient But Not Too Secure)
Desktop wallets for Bitcoins and cryptocurrencies are installable software packs available for most desktop operating systems such as Mac, Windows, and Linux.
Any cryptocurrency that is serious about itself will launch its desktop versions of its wallet on day one.
Since your desktop or laptop often connects to the internet, you must follow basic security measures such as antivirus and anti-malware software along with a strong firewall. Multiple desktop wallets are available for Bitcoin and other popular cryptocurrencies that you should use instead of keeping your cryptos on exchanges.
Desktop wallets are the third most secure way to store your cryptocurrencies.
3. Paper Wallets (Not Relevant Anymore)
When Bitcoin was launched in 2008, paper wallets were the only secure way to store this popular crypto asset. It is why only a select few were able to buy and store BTC back in the day. Thanks to technology advancement and wider adoption, other types of wallets are now available for storing crypto assets.
However, it is a good idea to read and learn about paper wallets.
Paper wallets are not for everyone because they are a bit technical and require a high level of caution from the user. It is so because in a typical paper wallet, you just print your private keys and public addresses on a piece of paper and start transferring your bitcoins or altcoins on it.
As it keeps your private keys offline, it is another secure way of storing your cryptos, but not all cryptocurrencies offer paper wallets. You will easily find paper wallets for popular cryptocurrencies that must be used cautiously. They are the second most secure way to store your cryptocurrencies.
Note: As technology has advanced, people mostly use Hardware wallets instead of paper wallets.
4. Hardware Wallets (Recommended)
I saved the best for the last as this type of crypto wallet is recommended for high-value investors. Keeping a hardware wallet is a must if you are storing more than $1000 in crypto. In fact, hardware wallets are the most secure type of cryptocurrency wallets that you can use.
Hardware wallets, as the name suggests, are hardware devices built specifically for handling private keys and public addresses.
It is a USB-like device with an OLED screen and side buttons to navigate through the wallet interface that also comes with native desktop apps for different cryptocurrencies. It is a device you can connect to a PC or mobile device via USB, even on an infected device (although not advised). Since your seed word is shown on an external screen (hardware wallet screen) and the private key is also stored on the wallet, it makes your crypto storage super secure.
Here is an image of the popular Ledger Nano X wallet in which you can see the screen and navigation buttons.
This is also one of the devices with Bluetooth features, which can be connected to your phone or laptop.
A hardware device typically costs between $39-$450, but it is worth owning from the security point of view. Most popular hardware wallets now allow you to store more than 22 cryptocurrencies (including BTC), NFTs, and 500+ ERC-20 tokens.
There are more than 10+ crypto hardware wallets in the market. To make it easy for you, I have already created a guide on the best hardware wallets of 2022.
If you want to know more about how a hardware wallet works, here is a video tutorial series on the Ledger Nano S wallet:
Needless to say, they are the safest way to store cryptocurrencies.
5. Web Wallets (Least secure But Usable)
Web wallets are hot wallets that are always connected to the internet and can be accessed via different internet browsers such as Google Chrome, Firefox, and IE by going to URLs such as https://xyz.com. The private keys are held online for these wallets in your browser itself. Web wallets are also prone to DDOS attacks.
A simple example of a web wallet is storing cryptocurrencies on a crypto exchange. The most important thing you need to know here is that you don’t have access to your crypto wallet’s private key. It also means that if the exchange got hacked or shut down tomorrow, you would lose your cryptocurrencies.
This is why you should keep only those cryptocurrencies on an exchange you are actively trading. For the remainder, you should consider moving them to a hardware wallet (most secure) or mobile wallet (medium secure).
Web wallets are sometimes hosted wallets (no access to the private key) and sometimes non-hosted (control over private key/seed word), depending on what type of wallet you are using. However, we always recommend using “non-hosted wallets” so that you always control your funds.
Some non-hosted wallets:
Some hosted wallets:
These wallets are safe to use as long as they do not get hacked or DDOSed.
Tip #1: You can use a combination of Metamask + Ledger Nano X to enjoy the accessibility of a web wallet and the security of a hardware wallet. How to do that? I will share it in an upcoming article.
Tip #2: Thanks to a new technology called “Walletconnect”, people are now moving to mobile wallets that support this feature, making web wallets outdated. You can use mobile wallets such as Trust wallet instead of web wallets.
If some aspects got too technical for you, do not worry. Instead read my earlier guides on:
- Bitcoin Private key: Everything You Need to Know
- What Is Mnemonic Phrase & Mnemonic Passphrase? (Also known as seed words)
What’s Your Crypto Wallet Type?
|Types Of Wallet||Name Of Wallet|
|Hardware Wallets||Ledger NanoX|
|Mobile Wallets||Samourai Wallet|
|Web Wallets||Coinbase wallet|
In the above table, I have deliberately listed the different types of crypto wallets in order from the safest to the least secure. It doesn’t mean only the safest wallet should be used. Instead, you need to understand the strengths and weaknesses of each type of wallet to use them efficiently.
Which is the safest crypto wallet?
Is it possible to hack a crypto wallet?
Yes, a crypto wallet can be hacked, and how secure you are depends on the type of wallet you are using. For example, if a hacker has remote access to your computer and if you set up your private key/seed word on your hacked computer, the hacker will have access to the same. Similarly, if you use a hardware wallet where seed words are shown only on a hardware device, you are 100% safe from hacking, as long as the hacker does not have physical access to your device.
Which crypto wallet is untraceable?
Most of the private crypto wallets are untraceable. Such as Trust wallet, Ledger wallet, Phantom wallet, and other wallets that are suggested above. However, your I.P could be exposed easily, and that is why it is recommended to use a VPN while interacting with a crypto wallet. You can find the best VPN for crypto here. These days VPNs do not consume too much battery, so you can run VPN 24*7 without worrying about battery drainage.
How does a crypto wallet work?
Crypto wallet uses public and private key cryptography to give you access to your cryptoassets. The public key enables others to send cryptoassets to you, and the private key gives you the ownership to spend it. All these mechanisms happen in the background, and the only thing you need to ensure is the safety of seed words, which you get while setting up your crypto wallet for the first time.
So go ahead and enjoy this post and let me know your thoughts in the comment section below. Also, do share which type of crypto wallet do you use the most and why.