Choosing the right digital wallet is a critical part of engaging in the crypto ecosystem. There are many different types out there, from paper printouts to purpose-made physical wallets, and the choice can be overwhelming to someone new to the space.
So if you’re looking for a user-friendly, easy-to-understand guide to the different types of crypto wallets out there, look no further than our crypto wallet guides.
What is a Crypto Wallet
Just like how you use a wallet to store your fiat money and debit/credit cards, you’ll need a safe space to store your cryptocurrency. Crypto wallets also come in many different forms, so it’s important to know the difference and choose the wallet that best meets your needs.
How Does a Crypto Wallet Work?
Your crypto wallet keeps your crypto secure via an encryption key. The type of key you have will be determined by the type of wallet you choose. Nobody can access your wallet without your key, not even you. So it is important that your key remains safe but accessible.
There are two types of keys: public and private keys. A public key can be shared with anyone while still keeping your crypto secure. But with a private key, anybody with access will have complete control over your crypto funds. All crypto transactions will use your private key. This is why it is so very important to keep your private key stored in a secure location.
Most Popular Types of Crypto Wallets
As stated above, you will find many different types of crypto wallets. However, they will all fall into one of these three categories:
- Exchange Wallet
- Hot Wallet
- Cold Wallet
Hot Wallets vs Cold Wallets Infographic
Exchange Wallets
Exchange wallets are where your crypto funds are stored directly on the site of the crypto exchange. You will use your exchange wallet to do any transactions on the exchange. This includes buying, selling, trading, and withdrawing. Exchange wallets are highly insecure as websites are vulnerable to hackers and cyber-attacks. You should store only the amount of crypto you immediately want to use on the exchange in your exchange wallet. All other crypto should be kept in either a hot or cold wallet.
Hot Wallets
The most popular type of wallet found is known as a hot wallet. A hot wallet uses software and an internet connection to be accessed. Hot wallets can generally be accessed on your laptop or mobile devices. This makes them very convenient but also less secure. Hot wallets are more susceptible to hackers, so it is not recommended that one keep large amounts of their crypto on them. The most common types of hot wallets are desktop wallets, mobile wallets, and web-only wallets.
Top Desktop Wallets
Desktop wallets will require you to download a wallet to your desktop. They are generally free and easy to use. Desktop wallets are ideal for conducting small crypto transactions. Remember, they can still be potentially vulnerable to malware and viruses, and anyone who has access to your computer could potentially access your wallet.
Electrum
Electrum is one of the oldest and most trusted desktop wallets around. The wallet is easy to install and easier to use. It is highly portable and can be accessed using Windows, Linux, Mac, and Android devices. With Electrum, you will use your own private key, meaning no third-party site will have access to your crypto.
Top Mobile Wallets
Mobile wallets allow users to quickly and securely make crypto transactions using their mobile devices. This will require you to download a mobile app. These are generally viewed as the most convenient of all wallets. But remember, your wallet will only be as secure as your mobile device, and mobile devices are still susceptible to computer viruses and malware.
Pungo
Pungo is a mobile wallet available on Android and iOS devices. It is very user-friendly with a sleek interface that uses a peer-to-peer swap system where you can exchange your crypto. This makes exchanges very fast using Pungo. This wallet also uses a system to convert your crypto to stablecoins, making it faster and easier to use your cryptocurrency for transactions.
Lite.im
The mobile wallet Lite.im perfectly integrates your wallet with mobile messaging apps. Using the in-app chatbot, you will instantly be able to send and receive crypto with others. This system works very similar to popular money transfer apps (Venmo, Zeele, Revolut) but for crypto. This app can be integrated with Facebook Messenger, WhatsApp, Telegram, and SMS.
Hedgehog
Decentralized applications, or dApps, run on a blockchain or peer-to-peer network of computers and require a specialized Ethereum wallet in order to be used. Hedgehog is the perfect mobile wallet for this. We recommend Hedgehog for dApps that use microtransactions, anything to do with gaming, or signing lots of data requests.
Web Only Wallets
Web-only wallets tend to be the most common among new investors. These wallets are linked directly to a crypto exchange site and are accessible using any browser. Web-only wallets will generally be linked to a crypto exchange which makes it easier to make transactions. However, you will also be trusting this third-party site with your private key, and these sites are still vulnerable to hackers, cyberattacks, and malware.
Cold Wallets
Cold wallets are ideal for those who have invested large amounts into cryptocurrencies. These types of wallets are viewed as the most secure. This is due to your cold wallet never being completely or mostly offline. Instead, you are in complete control of your crypto wallet with no security threats from hackers, malware, or viruses. However, keep in mind that physical wallets are still susceptible to theft and have been known to become easily misplaced or even completely lost.
Paper Wallets
Paper wallets are the best low-tech solution available. These can be done as hand-written or computer printed. Paper wallets are completely offline, making them impossible to hack. However, these wallets are not the most convenient for use and are the most common type to be lost or accidentally destroyed.
Top Hardware Wallets
Hardware wallets will require more technical savvy and are not completely offline as you will need to connect it to your computer to access your crypto. The most common types of hardware wallets resemble USB drives and will plug into your laptop in much the same way. These wallets are viewed as being among the most secure and convenient types available, but they are not free. The price of a good hardware wallet can run you up to $200.
Keevo
The Keevo wallet is a hardware wallet loaded with features to make accessing your crypto as fast and secure as possible. It uses dual-chip architecture to encrypt and segregate private information, a best-in-class fingerprint sensor, a strong password setup, a unique carbon key, and a Multi-Factor / Multi-Sig Authentication System (“MF/MSA”). For a hardware wallet, Keevo has taken the extra step to make their device easy to use for those crypto investors who may be less tech-savvy.
Ledger Nano S
The Ledger Nano S is a cold wallet that’s compact size makes it easy to store and use. Set up is easy, and it can be used with devices using Mac OS, Windows, and Linux. However, technology is not infallible. This wallet has been known to have some glitches from users, and it is not cheap. The most updated model, the Ledger Nano X, is currently priced at $150.
FAQ:
What is the best crypto wallet?
The best crypto wallet for you will be determined by what best meets your needs. If you need a wallet to store a limited amount of crypto that you need easy access to, you will want a hot wallet. However, if you plan to keep a large amount of crypto stored, you will need a cold wallet for added security.
Why should I move my crypto to a wallet?
It is not wise to keep your cryptocurrency in your exchange wallet. Exchange wallets are the least secure type and make your crypto vulnerable to malware and cyberattacks.
What is a cold wallet?
A cold wallet is a physical crypto wallet, sometimes referred to as a “hardware wallet.” These wallets are viewed as the most secure type of wallet for storing crypto as they are either always or mostly offline. However, cold wallets have also been known to be misplaced, completely lost, or accidentally destroyed. When this happens, you will lose your crypto with little hope for it to be recovered.