A crypto wallet is a physical container or electronic wallet for storing digital currencies.
The Variety of Cryptocurrency Wallets
All so-called cryptocurrency wallets are divided into two types:
- ❄️ Cold
- 🔥 Hot
What Are Cold Wallets?
Cold wallets are offline wallets or storage devices that you can simply put in your pocket.
These wallets do not require a network connection to access their own funds. For this reason, they are often referred to as offline wallets. They are believed to be less vulnerable to hacker attacks.
What Are Hot Wallets?
Hot wallets are those stored on gadgets on the Internet.
Online wallets or hot wallets are connected to the Internet and can be accessed via a web browser or a mobile/desktop application. To access your own assets, you need Internet access. These wallets are generally used by cryptocurrency exchanges or third-party providers.
Subtypes of Cryptocurrency Wallets
These two groups are also divided into various subtypes of cryptocurrency wallets.
Types of Cold Crypto Wallets
Cold wallets are of the following types:
- Hardware wallets. This is a physical device that stores cryptocurrencies offline. It is usually connected to a computer or mobile device only when a transaction is required.
- Paper wallets. A physical document that contains a private key and can be used to store cryptocurrencies offline. It is usually used as a backup to a hardware or software wallet.
- Brain wallets. Not really a type, but a way of storing assets. It is the most unreliable of all, as it involves memorizing a secret phrase rather than storing a physical document.
Top Cold Crypto Wallets to Consider
- Ledger Nano S Plus (from $65) is a necessary device for securing your cryptocurrencies and NFTs and seamlessly accessing the DeFi and Web3 world. Like the Ledger Nano S, the Nano S Plus is compatible with desktop and Android Mobile via a USB cable
- Ledger Nano X (from US$140) — allows you to securely manage over 5,500 coins and tokens. These include Bitcoin, Ethereum, XRP, and many others. The wallet has a wireless connection to mobile devices
- Trezor Model T (from $190) is the easiest device to use, with a large touchscreen and support for over 1,000 cryptocurrencies
- SafePal S1 (from $50) — allows the purchase of more than 10,000 coins, and is simple and reliable to use.
This type of wallet is suitable for users with large, long-term portfolios. A user with a portfolio of less than $5,000 does not need to buy a cold wallet.
Types of Hot Crypto Wallets
Hot wallets can be divided into three main types:
- Desktop/wallets.
- Mobile wallets.
- Web wallets.
Let’s take a look at the most popular hot wallets.
MetaMask
This is ConsenSys’ most popular cryptocurrency wallet. Metamask supports the storage, transfer, and exchange of cryptocurrencies and NFTs issued on the Ethereum network or on EVM-compatible blockchains. The wallet is used to interact with decentralized applications (dApps), and decentralized finance (DeFi) and carry out transactions on the Ethereum network.
Trust Wallet
A multi-chain wallet that supports 65 blockchains, including Bitcoin, Ethereum, Tron, and Ripple, as well as more than 4.5 million crypto assets and NFTs. The non-custodial multi-currency wallet can withdraw to a bank card and support NFTs.
Trust Wallet does not provide its own services for exchanging buying or withdrawing cryptocurrencies, so it does not charge any fees for transactions.
SafePal Wallet
Unlike Ledger, SafePal allows you to store cryptocurrencies without having a cold wallet. The SafePal mobile app supports 15 languages, over 100 blockchains, over 200,000 tokens, and NFTs with a special RPC function that interacts with over 400 custom EVM networks and is constantly growing.
This type of wallet is suitable for users with a wallet of $1000 or more. Otherwise, the transfer fees will significantly “strip” the wallet.
Exchange Wallets: A Convenient Option for Storing Cryptocurrencies
The easiest and most straightforward way to store cryptocurrencies is to keep them on an exchange. By creating an account on an exchange, each user receives their own wallet.
It supports all the coins traded on the platform and is always quickly accessible. You can sell or buy coins. Another advantage is the ability to easily restore access to your account.
Security Improvements in Exchange Wallets
In 2018, ICORating found that the majority of exchanges (54%) have various security problems. After that, exchanges took on the challenge of seriously solving data storage problems. They added various types of user authentication and strengthened verification.
Now it’s hard to imagine a platform that doesn’t offer at least two-factor authentication.
In addition, every self-respecting exchange has a monitoring department that identifies problem areas, combats fraud, and proactively repels cyber attacks. For example, like Movo.
5 Key Factors to Consider When Storing Cryptocurrencies
Before choosing a wallet to store cryptocurrencies, consider important factors. These are:
- Security. Wherever you store your money, security is the most important thing. A cryptocurrency wallet must be reliable and protected against cyber attacks and theft. If you don’t plan to actively use the assets you’ve accumulated, it’s best to keep them in a cold wallet. If you trade frequently, it’s important to have cryptocurrencies on hand so you can make money quickly when a trend emerges. In this case, a hot wallet or an exchange will suffice.
- Price. The cost of a cryptocurrency wallet is also an important factor for most users. Cold cryptocurrency wallets are generally more expensive than hot ones, but you should always analyze the price-quality ratio on the market. Storing cryptocurrencies on a cryptocurrency exchange, on the other hand, is free.
- Compatibility. It’s important to choose a cryptocurrency wallet that supports the cryptocurrencies you need. A single wallet can be compatible with a huge list of cryptocurrencies or can be created for a specific token.
- Ease of use. A cryptocurrency wallet should be easy and convenient to use. It must have a clear interface, functionality, and quick access to assets.
- Support. 24/7 user support is also very important. After all, you may need money at any time of the day, as well as assistance in solving problems related to depositing/withdrawing cryptocurrency.
Why Storing Cryptos on an Exchange is Beneficial
Because of the above, it is more convenient and economical to store cryptocurrencies on a cryptocurrency exchange.
Advantages of Storing Cryptocurrencies on an Exchange
- Free and Simple: It’s free, simple, and easily accessible for users.
- Liquidity: Cryptocurrencies stored on exchanges are highly liquid, meaning they can be quickly bought or sold.
- Reliability: Most exchanges invest in robust security measures, making it a reliable storage option.
Accessibility for Operators
The money will always be “at hand” on your gadget. This is extremely important for operators who make money from price fluctuations.
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