This article summarizes the strengths and weaknesses of 7 different cryptocurrency wallets I have used personally. My goal is to provide information to help you decide which wallet is right for you.
Which Cryptocurrency Wallet to Choose?
Anyone who becomes interested in cryptocurrency eventually realizes they need to set up a private wallet. But this is not necessarily a simple task. There are several different kinds of cryptocurrency wallets, including “hot” wallets, software or desktop wallets, “cold” wallets, and paper wallets. Which of these is the best option?
Every wallet has its benefits and drawbacks. Convenience can come at the cost of security; extra features may come at the cost of simplicity. In this article, I present 7 different wallets I have used personally. My goal is to help you decide which wallet is best for you.
What to Look for in a Cryptocurrency Wallet?
I take several different points into account when looking at wallets. These include the cost. Is it free? Security. How easy is it for someone to steal the coins? Mobility. Is it easy to keep and difficult to lose? Is it accessible anytime, anywhere? User-friendliness. Is the wallet’s user interface intuitively designed? Convenience. Does it let you make fast transactions when needed? Does it store multiple different coins? Style. Is it a neat gadget?
- KeepKey — Hardware/“Cold” Wallet
KeepKey is relatively new compared to the other wallets on this list. It is a hardware or “cold” wallet, which means it is a physical device. Hardware wallets are considered very secure because they are not connected to the internet. This protects the wallet from malware, hacks, and other vulnerabilities.
KeepKey supports many different kinds of cryptocurrencies and comes with a standard, simple to use client user interface. KeepKey is a port of the well-known Trezor wallet’s code and firmware (see below). The main difference between the two is look and materials. KeepKey has a ‘cool’ design. If you’re into tech gadgets this might appeal. It retails for $99.
When you initialize a KeepKey you get a recovery sentence. The recovery sentence is your wallet’s backup. If the KeepKey is lost or stolen, you can recover your private keys using the recovery sentence. If you lose your recovery sentence, however, and you lose the KeepKey, your funds will be inaccessible forever.
To use a hardware wallet you have to connect the device to a compatible computer client and interact with it using an application. KeepKey works with a Chrome app, as well as Electrum and Mycelium. This complexity makes hardware wallets less convenient and user-friendly than some other wallet options.
- Trezor — Hardware/“Cold” Wallet
Trezor was one of the first hardware wallets in the cryptocurrency industry and it has set the gold standard regarding security. Trezor supports many different cryptocurrencies and uses a computer client interface. Like other hardware wallets, Trezor provides recovery sentence when you initialize the wallet that acts as an offline backup. However, Trezor also has features that protect against both virtual and physical theft. Unlike other cold wallets, for example, Trezor can work offline so your private keys are always safe, even if your computer or device is compromised with malware. In this sense, Trezor is more of a vault than a wallet.
What Trezor lacks is style. It is by far the least ‘cool’ looking gadget on the list. However, it more than makes up for this in security features. It retails for $99.
- Nano Ledger S — Hardware/“Cold” Wallet
Nano Ledger S is another well-known hardware wallet. It is just as secure as KeepKey. What makes it popular is its relatively low retail price of $65. It is also the smallest hardware wallet available, which makes it very portable and more comfortable to carry around than some of the others. However, the fact it is so small could make it easier to lose or misplace.
Like other hardware wallets, the Nano supports many different cryptocurrencies. It too needs to be connected to a compatible computer client, such as a mobile app or browser extension. Users also have to securely store a backup phrase or risk losing your funds should the wallet go missing or be stolen.
- Coinbase — Online/“Hot” Wallet
Coinbase is a free “hot” wallet. Generally, online wallets are convenient and easy to use, and Coinbase is no exception. Sending and receiving cryptocurrency is straightforward. You can also purchase Bitcoin and other cryptocurrencies directly using a linked bank account, debit or credit card, which is incredibly convenient. Coinbase also includes a beginner-friendly cryptocurrency exchange that wallet holders can use for free once you register.
One unique feature of Coinbase is it guarantees your funds much like a bank. 100% of crypto holdings are insured. This is a useful feature since hot wallets are notoriously unsafe as they are relatively more susceptible to hacks and malware. However, you can activate 2-Step Verification for more protection, and Coinbase has a vault available if you wish to trade convenience for another added layer of security.
One drawback is Coinbase only offers supports Bitcoin, Bitcoin Cash, Bitcoin SV, Ethereum, Ethereum Classic, Litecoin, TRON, Stellar, Ripple, ZEC, ZRX, EOS and BAT. You can’t store other types of coins on it, at least not yet.
- Exodus — Software Wallet
Exodus is a well-known option. It allows you to receive funds, view crypto holdings, and swap one type of coin for another, all in one intuitive app. Exodus also supports many different coins so it is quite convenient. As with all software wallets, Exodus must be downloaded and/or installed on a personal device. It is available for iOS, Android, and desktop computers.
With Exodus, as with all software wallets, individual users retain control of their private keys, which can be viewed within the application. Exodus also uses a 12-word seed phrase to back up the wallet. You can use the seed to transfer the wallet to a different device or to recover it if it is stolen.
The drawback is Exodus is vulnerable to the extent the device it is installed on is vulnerable. If someone maliciously installs malware or a keylogger onto your computer, your wallet could be compromised.
- Electrum — Software/Desktop Wallet
Electrum is also a free wallet for desktop and mobile users. Founded in 2011, it is now estimated that some 10% of all bitcoin transactions occur on Electrum. It has a long list of supported features that make it the most flexible bitcoin wallet available. For instance, unlike other software wallets, it offers cold storage options, integration with hardware wallets (KeepKey, Nano Ledger S, Trezor) and anonymity (with Tor).
On the security side, Electrum is considered one of the most secure bitcoin wallets available. For example, if your computer is compromised with malware or a keylogger most software wallets are vulnerable. Not so with Electrum. It also enables something called multi-sig support, which is essential for more advanced users. Electrum also has a highly secure seed phrase.
The main drawback of Electrum is that it can only be used with bitcoin.
- MyEtherWallet — Paper Wallet
Last but not least, myetherwallet is a paper wallet that supports Ethereum and cryptocurrencies built on the Ethereum blockchain. Paper wallets are free. They are also considered the most secure option available for storing cryptocurrencies. Thus, they are a good option for those who want to have an extremely secure wallet without paying for a hardware wallet.
Creating a paper wallet involves generating an address and private key online at myetherwallet.com. For greater security, you can download it from GitHub and run it offline. It is crucial to saving a copy of the private key in a safe place. Neither the online or offline versions of myetherwallet store or transmit any private information, including private keys. So if you lose yours you lose access to your funds.
While paper wallets are free and highly secure, they are not convenient and require more in-depth knowledge to use correctly. It can be hard for crypto beginners to wrap their heads around the idea of a wallet that is just a string of numbers and letters on a piece of paper. This type of wallet is not advised for novices.
Which to Choose?
Here is some general advice based on my experience with the wallets above.
Hardware and paper wallets aren’t the easiest to use, so while they are very secure I would not recommend them to crypto beginners. They also are not a good option if you’re planning to make a lot of transactions or send funds back and forth from an exchange. However, if you are confident in your knowledge about cryptocurrency and are looking for a place to store coins long-term, then either a hardware or a paper wallet could fit the bill.
Hot wallets are also free but they are much more convenient to use. They are also much less secure. So I would say they are handy for quick transactions and holding small amounts of cryptocurrency, but would not recommend them for storing large amounts of crypto for long periods.
Software wallets are a decent middle ground. They are free and only slightly less convenient than hot wallets. They are less secure than paper wallets and hardware wallets, but more secure than hot wallets.
I think the main take away from this discussion is that an all-in-one wallet does not yet exist. The decision of which one to use ultimately comes down to what features are most important to you. You have to choose one that addresses your most significant concerns, be they security, convenience, monetary cost, or even style.
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A version of this article was originally published in The Startup.