Cryptocurrency continues its march toward the mainstream, and becomes more entwined with the global economy; sooner or later, you are going to need a place to store yours. Bottom line: If you are looking to invest in Bitcoin or any other cryptocurrency, you will need a wallet.
Given that we are talking about digital currency, “wallet” is a metaphor. As a secure place to store your proof of ownership, a cryptocurrency wallet can take the form of physical hardware or software installed on your computer or smartphone or in the cloud. Well-known services like PayPal, Venmo and Robinhood allow you to purchase Bitcoin and other cryptocurrency quickly and with little technical know-how. Most of these online services, and their integrated wallets, are custodial, however, which means you trust the company to secure, protect and hold your cryptocurrency. Ultimately, they have control — and your crypto is in their proverbial hands.
As such, unless you make frequent transactions or have only a modest amount of money involved, we recommend you not store your cryptocurrency in an exchange account. The best practice is to invest in a hardware wallet for offline storage. The next best choice is a noncustodial software wallet, which gives you more control over your digital assets. We will look at both here.
In either case, greater independence brings with it responsibility: You will have to keep track of your own private key — the crypto equivalent of a super secure password. You will also need to determine which a higher priority — accessibility or security is. Hot wallets store cryptocurrency online; cold wallets are disconnected from the internet, offering additional insulation from hackers, but also a few additional steps every time you transact. Read on to find out which wallet is best for you.
Coinbase Wallet
Coinbase, which went public in April, is the best-known exchange in the US. The company makes it easy to trade well-known cryptocurrencies from Bitcoin to Dogecoin, and has its own Visa-backed debit card that integrates with Apple Pay and Google.
If you are new to crypto, the Coinbase Wallet is a good place to start. It can be downloaded as an app for Android or iOS, the interface is intuitive and the wallet is fully integrated with the company’s exchange, which makes it easy to conduct transactions — including purchasing coins and tokens with traditional currency.
Unlike the company’s exchange, the Coinbase Wallet is noncustodial; that means that only you have access to your wallet’s private key, which is generated with a 12-word recovery phrase when you sign up. Note that there’s a difference between storing your cryptocurrency on Coinbase’s exchange, which is custodial, and the wallet, which is not. However, the integration between them makes it simple to transfer funds back and forth.
Coinbase Review
Trezor Model T
Trezor’s new user interface, Trezor Suite, just came out earlier this month, replacing the company’s Wallet Web app. This analysis reflects our initial impression of a new product, therefore. However, Trezor has been around for quite some time, established back in 2011 as a subsidiary of Czech-based SatoshiLabs.
The $190 Model T is Trezor’s second-generation hardware wallet, and it comes with many of the same features as the Ledger Nano X, detailed below. One major difference is that Trezor’s software is completely open-source, which affords some additional protection – theoretically, at least: The code that powers the wallet is available for scrutiny, and, the thinking goes, sunlight is the best disinfectant.
Trezor Suite is designed to run natively on your desktop, which generally provides greater security than a web-based app, though you can also access Trezor Suite through the company’s website. Trezor wallets currently support more than 1,600 coins and tokens, and you can make transactions directly in Trezor Suite with the company’s integrated exchange.
Shaped like an old-school stopwatch, the Model T comes with a touchscreen and a USB cable to connect to your computer; it also features a microSD card if you want to add encrypted storage directly to your hardware wallet. It does not feature Bluetooth support, however – an omission that some security advocates prefer, as Bluetooth connectivity could be an attack vector for hackers to exploit.
Ledger Nano X
The Nano X is Ledger’s second-generation cold storage wallet. The integrated Ledger Live platform, which is easy to learn and use, supports more than 1,800 coins and tokens including Bitcoin, Ethereum and XRP. The wallet can be connected to your computer via a USB cable and Android and iOS mobile devices via Bluetooth – a connection the Model T lacks.
The device is sturdy and features a small LED screen. To start, you will set up a PIN, then a 24-word seed phrase. The seed phrase acts as your wallet’s private key. Just like other wallets, as long as you keep the private key safe, you will not lose your crypto assets – even if you lose your wallet.
It is important to note that Ledger suffered a data breach in July 2020, which resulted in the theft of some customers’ personal data – but, significantly, not their crypto assets. No private keys to wallets were taken, but there were reports of customers receiving phishing emails and other scamming threats afterwards. That noted, Ledger has long been a trusted name in the crypto world, but the data breach is a good reminder to be careful online – especially when it comes to dealing in crypto assets.
Exodus
Exodus is a hot wallet, which means that your assets are stored online; but it is noncustodial, which means that only you have access to your private key – a 12-word password phrase that protects access to your crypto assets.
The Exodus wallet is designed to run on Mac, Windows and Linux computers, though there is a companion app available for Android and iOS devices. The desktop user interface is slick and easy to learn. Your wallet is seamlessly integrated into the Exodus exchange, so it is easy to make transactions.
Exodus supports more than 130 types of cryptocurrency including Bitcoin, Ethereum, Tether USD and Dogecoin. However, the exchange has some noteworthy limits: If you want to purchase crypto with US dollars and store it in the Exodus wallet, you will need to first purchase the asset on a centralized crypto exchange, such as Coinbase, and then transfer the assets to Exodus. The app version allows purchases of Bitcoin with USD. In addition, once you have an asset in your wallet, it can be easily exchanged for other supported assets. While the wallet itself is free to use, Exodus charges a fee for transactions made via its exchange.
Hot storage wallets are generally considered less secure than cold storage wallets, and some Exodus users may eventually want to upgrade to cold storage. The good news: Exodus is fully compatible with Trezor’s One and Model T hardware.
Mycelium
Mycelium has been around since the beginning of the crypto era, and the Mycelium wallet is one of the oldest and best-known Bitcoin wallets. This is a mobile-only wallet – there is currently no desktop version – that supports both Android and iOS.
The Mycelium wallet has an appealingly simple interface but it supports fewer kinds of crypto than others profiled here do: You can send and receive Bitcoin, Ethereum and ERC-20 tokens such as Tether USD, USD Coin and Binance USD – but not the hundreds of esoteric coins that have been developed over the past few years. You can buy and sell Bitcoin directly in the app, and Mycelium lets you buy Bitcoin with regular fiat currency.
The Mycelium wallet is noncustodial, so you will have sole access to your private key and PIN. This wallet is also the only hot storage wallet on our list that is completely open-source. Though there are security advantages in that, it also comes with limited tech support options; basically, if you get stuck, you can submit a help ticket to the email address listed at the bottom of the webpage.
For more advanced users, Mycelium supports QR codes, allows you to set custom transaction fees and offers compatibility with hardware wallets from Trezor, Ledger and KeepKey.
Do you need a crypto wallet?
If you want to invest in cryptocurrency, you should invest in a wallet. That noted, if you are just dipping a toe, services such as PayPal and Robinhood allow you to buy a coin or fractions of a coin and store it on their servers. These are custodial wallets, however, where you do not hold the private key. We recommend noncustodial wallets for long-term cryptocurrency users and investors.
How much money do you need to open a crypto wallet?
It depends. Hardware-based wallets generally cost between $100 and $200, though many software-based wallets are free. Most do not require you to actually own any cryptocurrency.
Which wallet is best for beginners?
If you have never used cryptocurrency before, we recommend Coinbase Wallet. Coinbase is a well-known, US-based crypto exchange that is easy to use, and it works well with Coinbase Wallet.
Which wallet is best for advanced users?
Today’s cold storage wallets can be quickly and easily connected to the internet for fast transactions, so most advanced users nowadays are probably most interested in a cold storage wallet. The hardware wallets sold by Ledger and Trezor are both good options.
What are the risks?
Cryptocurrency is subject to far less regulation than conventional investments and securities. While the lack of oversight is an attractive feature to some investors, it’s important to know that Bitcoin and other cryptocurrencies are highly volatile, experience dramatic price swings on a daily or even hourly basis and lack many of the protections of other forms of investment. The risks are significant.
Are assets in crypto wallets insured?
While the companies offering crypto wallets may offer some guarantees to customers and users, the Federal Deposit Insurance Corporation does not currently insure digital assets like cryptocurrency. That noted, the environment is evolving and many government agencies, including the FDIC, are gathering information and considering legislation for the future.
What’s the safest crypto wallet?
Cold storage wallets are generally thought of as a more secure way to store cryptocurrency when compared to a hot storage wallet. If you plan to store a large amount of coins or tokens for any length of time, we recommend using a cold wallet.
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