What is a Crypto Wallet? (Plus: How to Choose the Right One)

No one else can access your cryptocurrency unless you give them your private key.

The cryptocurrency exists on the blockchain on the internet using public addresses that anyone can see. The owners of digital currency have private keys that they use to access their coins. Your private keys are what allow you to access your cryptocurrency, so it is essential to keep them safe. If someone has access to your private keys, they could use your cryptocurrency.

A cryptocurrency wallet is a digital wallet that stores your private and public keys. These keys are what you use to access your funds. Not sure which cryptocurrency wallet is best for you? Here’s a rundown of different wallet options to help you make a decision.

What is a crypto wallet?

A digital currency wallet is a secure way to store the private keys that allow you to access your digital currency. To transact cryptocurrency, you need the keys from your wallet to transfer the currency.

A “crypto wallet” is where you store your private keys for crypto currencies. The keys are complex and difficult to remember, so having a safe place to store them is important. They often come in the form of a 256-character binary code, a 64-digit hexadecimal code, a QR code, or a format that is just as complex.

Why a crypto wallet is important

Private keys that are made up of random strings of numbers, letters, or images are not easy for people to memorize. Instead of leaving your cryptocurrency on an exchange, you need to store them securely so you can use them when you’re ready.

If you lose your private key, you will not be able to get your cryptocurrency back. Many people are surprised to learn that cryptoassets are not regulated by the government. If you do not have your private keys, you cannot access your wallet. Losing your private keys means that you have lost your crypto.

This has actually happened before. In 2013, a British man threw away a hard drive containing the keys to 7,500 bitcoins. The bitcoins are now worth hundreds of millions of dollars. He has been trying to talk his city into letting him excavate the landfill, but so far they haven’t agreed. And he isn’t alone. Chainalysis has estimated that 20% of the world’s Bitcoin is lost, based on the fact that it hasn’t moved from its current address in five years or longer.

The level of security provided by a wallet depends on the form you use. This allows you to store you private keys safely to use at a later date when you want to trade your cryptocurrency. Digital asset wallets that can store private keys for other assets, like non-fungible tokens (NFTs).

Your Bitcoin, Ethereum, Litecoin, or other cryptocurrency still exists on the blockchain’s public address. The only thing kept offline in your wallet is your private key.

How crypto wallets work

There are many types of cryptocurrency wallets, each with their own sets of private keys. Each works in different ways.

Paper wallets

A paper wallet is the simplest “wallet” you can have. This is a piece of paper with your private and public keys printed on it. One advantage of paper wallets is that they cannot be hacked. Whomever controls the token on the blockchain has complete control of the cryptocurrency.

Although the process of generating and printing cryptocurrency keys is still vulnerable to hacking, If your computer or printer is infected with malware, hackers can still access your cryptocurrency.

You must be careful if you choose a paper wallet for other reasons, too. If the paper on which you have stored your cryptocurrency information is destroyed or becomes illegible, you will no longer have access to your cryptocurrency. There is a risk that your paper wallet could be destroyed by a flood or fire. An alternative to keeping your paper wallet in a safety deposit box at a bank is to keep it in a secure location in your home. However, even this comes with some risk.

Due to these risks, you may want redundancy. This suggests using a paper wallet in conjunction with another type of wallet for increased security. Alternatively, you can make multiple copies of your paper wallet and store them in different secure locations to minimize any risk.

Hot storage wallets

Hot storage wallets are wallets that are connected to the internet. Examples of these online wallets are:

A mobile wallet that is an app on your mobile device, such as Mycelium
A desktop wallet in the form of a program on your desktop computer, such as Electrum
A web-based wallet , such as Exodus , that you access through a website or cryptocurrency exchange

Hot wallets are sometimes known as software wallets. They are easy to use for transactions. You don’t have to waste time messing with a paper or cold storage wallet and inputting the right keys to trade. Your internet-connected wallet can make the trades for you. This allows for quick trades to be made when prices for cryptocurrencies are highly unstable.

Since anything that is connect to the internet is susceptible to being hacked, it is important to take measures to protect yourself. The security procedures in place are the only thing protecting your wallet. How much protection a hot wallet offers against hacking varies, depending on which company’s hot wallet you are using.

The hot wallet being a weak link in the chain means that it is easy to access. Logging in to hot wallets with just a password or two-factor authentication can be compromises. If your password is found and someone gains access to your mobile phone, your hot wallet could be compromise and a hacker might be able to take control. You are more likely to be hacked if you use the same password for different websites.

Cold storage wallets

Cold storage wallets are a type of cryptocurrency wallet that falls in between paper wallets and hot storage wallets in terms of security. These wallets are not always connected to the internet. This refers to a means of storing data that can be in electronic or non-electronic form. A hardware wallet is a type of cryptocurrency wallet where you can store your cryptocurrencies on a physical device, such as a hard drive or USB drive. Although paper wallets are not connected to the internet, they are still considered cold storage.

A cold wallet is a wallet that is not connected to the internet. The primary benefit of a cold wallet is the increased security from not being connected to the internet. Hackers are less likely to attack devices that have been updated, but it is not impossible. The main disadvantage of using a cold storage wallet is that you have to go through additional steps to access the wallet before you can transact with your cryptocurrency. This additional step could make potential trades take longer and cause experienced traders to miss out on good opportunities.

Cold storage wallets aren’t invincible, either. You might lose them in the same way you could lose a paper wallet. If you forget the password or PIN needed to access your cold storage wallet, you will not be able to access it. If you get locked out of your cryptocurrency account, you could lose access to it forever.

Several companies make cold storage wallets. Each has its pros and cons. They vary in price depending on their features. Some wallets that can be used for storing cryptocurrencies are the Ledger Nano X and the Trezor Model T.

Best crypto wallets for 2022

What is the best crypto wallet for you will depend on your individual needs. There are numerous wallets on the market that are not included in our picks.

1. Ledger Nano S Plus – Best wallet overall

The Ledger Nano S Plus is a great choice for a crypto wallet because it is very secure, can hold a lot of different types of cryptocurrencies, and NFTs. It is also a very affordable option, costing only $79.

The Nano S Plus is a hardware wallet that is manufactured by the French company Ledger. Ledger has been around since 2014. Ledger wallets are known for having a great security track record, with no hardware breaches being recorded.

The accompanying Ledger Live app allows you to swap cryptocurrencies, purchase them with debit or credit card or earn rewards via staking. You can also connect your device to MetaMask so you can use DeFi protocols while keeping your private keys safe offline.

It is difficult to find another wallet which provides so much value for such a reasonable price.

Cheaper than the Nano X, but has most of the same features
Supports 5,500 tokens
Highly secure
CC EAL 5+ rating

Not Bluetooth enabled
Not iOS compatible

2. Ledger Nano X – Best hardware wallet

The Ledger Nano X is a hardware wallet that is feature-rich and well-known. We picked the best hardware wallet because it is very secure, supports many cryptocurrencies, and can be used on both desktop and mobile devices.

With the help of their secure chip and closed-source firmware, they have been able to prevent tampering and keep user data safe. Ledger’s secure chip and closed-source firmware help prevent tampering and keep user data safe.

The Nano X hardware is supported by the Ledger Live app, which can help you manage up to 5,500 cryptos, Ethereum and Polygon NFTs, as well as a range of DeFi apps, from a single user interface that is available on both desktop and mobile devices.

You can also use Ledger Live to stake a selection of your digital assets.

The Nano X can be connected to your mobile phone via Bluetooth, so you can manage your cryptocurrency holdings while you’re on the move.

Manage over 5,500 crypto assets
Highly secure
CC EAL 5+ rating
Mobile and desktop compatibility

Expensive compared to the Nano S Plus
Can’t stake many cryptos via Ledger Live

3. Exodus – Best wallet for beginners

The Exodus wallet allows users to hold a variety of different cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and more. The wallet is available for both desktop and mobile devices, making it a convenient option for those who want to use cryptocurrencies on the go. Exodus allows you to manage your coins on multiple blockchains including Bitcoin, Ethereum, and Solana. This wallet is the best pick for beginners because it is an all-in-one wallet.

The wallet has a portfolio overview feature that helps you keep track of your assets. The wallet also has a built-in exchange that you can use to trade your digital assets.

You can also bet on cryptos like Algorand (ALGO) and Cosmos (ATOM) through Exodus.

You can increase the security of your assets by storing the keys on a Trezor hardware wallet. This will also make it easier to upgrade to a different wallet if you decide to move to a more professional platform.

One of Exodus’s most appealing features for beginners is its highly responsive support staff. If you email them for support, you should expect to hear back from them within an hour.

Easy-to-use interface
Supports tokens and coins from a variety of blockchains
Great customer support

Less secure than a hardware wallet
Doesn’t support 2-factor authentication

4. Ledger Nano S Plus – Best value crypto wallet

The Nano S Plus provides the same high level of security as the Nano S, but with almost all the same capabilities as Ledger’s premium hardware wallet, the Nano X.

The Nano S Plus costs $79 and the Nano X costs $149, so the Nano X costs $70 more. The only significant difference between the X and S Plus models is that the latter has Bluetooth connectivity and is compatible with iOS. This makes the S Plus a more appealing option in terms of value.

The Nano S Plus wallet lets you store the private keys to over 5,500 digital assets and NFTs in cold storage.

The Ledger Live software helps you manage and stake your digital assets. You can also connect your Nano S Plus with MetaMask to access DeFi apps and use your assets.

Even though there are many hardware wallets on the market, it is difficult to find one that offers as much as this one does for such a low price.

Larger screen size (128 x 64px) than the original Nano S
Highly secure
CC EAL 5+ rating
Native support for NFTs

Can’t stake many cryptos via Ledger Live

5. Atomic Wallet – Best desktop wallet

We think Atomic Wallet is the best desktop wallet option because it supports such a large number of cryptocurrencies and is available on multiple platforms.

Many people like using this software because it is easy to use.

In 2017, Konstantin Gladych, CEO of Changelly, launched the wallet. Changelly is a cryptocurrency exchange that is integrated into Atomic Wallet. This exchange allows users to swap cryptocurrencies or purchase them using a credit or debit card.

The wallet allows you to stake ten or more digital assets, including Cardano (ADA), Cosmos (ATOM), and Tezos (XTZ). It also features an NFT gallery for the Solana blockchain.

If you need help using Atomic Wallet, you can contact the customer support team any time.