Cryptocurrencies are similar to fiat currencies; just like how money is tradable through foreign exchanges, you can buy and sell blockchain assets on crypto-native exchanges. To do any of these, you’ll need a functional and security-tight crypto wallet. These wallets can also be reliable storage solutions for saving crypto tokens in a long duration. However, you must ensure the wallet option you pick meets all the following requirements – safe, efficient, multi-chain compatible, and highly rated by existing users. In this article, we will talk about the different types of crypto wallets, their mode of function, and a list of some of the best crypto wallets you can start using right now.
What is a Crypto Wallet?
A cryptocurrency wallet is either a software application or a physical device that holds your crypto tokens and allows you to send and receive transactions on the blockchain.
It is made of two key components: private and public keys, otherwise known as the wallet address.
The public key functions like your bank account number. It is the address you will use to receive or send crypto.
A private key is akin to the transaction-authorizing signature attached to your account. You can also think of it as the crypto equivalent to the PIN code of your ATM card.
That means anyone who has access to your wallet’s private key can access and move the funds inside without your permission.
How Do Crypto Wallets Work?
In the traditional sense, cryptocurrencies are not kept in a wallet; every crypto, including Bitcoin, is just a cryptographically encrypted piece of digital data on a blockchain network.
Therefore, your crypto wallet or public key serves merely as a digital container that stores blockchain assets belonging to you.
In addition, crypto wallet apps merely help to save your addresses.
However, their efficient and customized design helps to simplify the processes of sending cryptocurrency to other addresses while also allowing users to track and manage their portfolios from a single interface.
Some advanced wallets might even add charting tools and a self-updating news section so you can always be in the loop of what’s happening.
The Different Types of Crypto Wallets
Software and hardware wallets are the two types of crypto wallets.
Most advanced software wallets come in the form of browser extensions that let you transmit, receive, and store cryptocurrency.
These wallets also come in various forms that include; web, mobile, and desktop.
Hardware wallets are physical devices that may be plugged into a computer or connected with another device to be accessed.
The Top Crypto Wallets to Use in 2021
Whatever type of wallet you choose (software or hardware), the functionalities are the same.
However, if you are the kind of investor who prioritizes safety first, it is recommended to use hardware wallets as they are near-impossible to breach.
That said, below are the most preferred cryptocurrency wallets in terms of security, simplicity of usage, transaction speed, and overall user experience.
1. Trezor Model T – Most Secure Hardware Wallet
It is a second-generation hardware wallet that is completely open-source, thus giving it a higher level of security than an online wallet.
However, Model T is also designed to run on desktop platforms, and it can be accessed through the company’s website.
At the time of writing, the wallet supports over 1,600 tokens and comes with integrated exchange inside so you can transact directly with it without having to port over to a third-party exchange.
There is also a slot for a MicroSD card if you ever wish to backup your wallet in readable encrypted files that can be transferred.
However, it does not offer Bluetooth functionality since hackers may utilize Bluetooth connectivity as an attack vector.
2. Ledger Nano X – Accessible & Secure Wallet
The Ledger Nano X is the second hardware wallet on our list.
It is presently one of the most reliable crypto cold storage solutions and can be used to save over 1800 tokens like Bitcoin, Ether, and XRP.
Moreover, the wallet can be accessed in various ways – through a direct USB connection with your computer or via Bluetooth on Android and iOS devices.
3. Exodus – Best Desktop Wallet
Exodus is a noncustodial soft wallet that can be installed on Mac, Windows, and Linus PCs. There are also mobile versions for Android and iOS devices.
However, one of the fantastic features of this wallet is its user interface which is straightforward to use.
Also, like the Trezor wallet, the Exodus wallet has an in-built crypto trading platform for direct transactions.
On top of that, Exodus wallet can store more than 130 cryptocurrencies like Bitcoin, Ether, USDT, and Dogecoin.
Nevertheless, the exchange has some significant drawbacks; if you want to buy crypto using US dollars and store it in the wallet, you must first purchase it via a centralized crypto exchange and transfer the funds to Exodus.
4. Mycelium – Mobile-only Top Wallet
Mycelium is one of the first and most well-known crypto software for storing, sending, and receiving digital assets.
Although the wallet has a good interface, it only supports a few cryptocurrencies. In fact, dozens of esoteric coins that have cropped up in recent years, like Avax, SOL, and the likes, cannot be saved on Mycelium.
5. Coinbase – Best Wallet for Beginners
Coinbase wallet is a great crypto wallet option for beginners.
The software can link to most major bank accounts and features a user-friendly interface with an intuitive three-tab layout for the different functionalities.
Best of all, it is super easy to navigate through the exchange.
Also, Coinbase wallet supports over 500 premium volume crypto assets (including NFTs and digital collectibles).
The best crypto wallets offer a decent blend of security tools and user-facing features.
When looking for a crypto wallet, you should consider how often you trade and what assets you want to store with it, the currencies supported by that wallet, the user interface, customer service, and device compatibility.
With these in mind, you are sure to make an excellent decision.