The cryptocurrency industry has a total value of more than $2 trillion. What’s more, experts are projecting continued growth as the industry attains mass adoption. We have accepted that blockchain networks and cryptocurrency assets are here to stay — today, world banks are working on various cryptocurrency products while legislators are busy regulating the industry.
You are right to consider owning a cryptocurrency wallet, or at least learning how they work, so you don’t remain too far behind. By the end of this post, you will know the things that matter the most in DeFi wallets and some of the best products to pick. Meanwhile, you can read another article about best cryptocurrency wallet.
What is a cryptocurrency wallet?
Cryptocurrency wallets differ from normal wallets in that they don’t actually hold your cryptocurrency – your crypto is stored on the blockchain, and can only be accessed by a private key. Essentially, a cryptocurrency wallet retains your private key, allowing you to access your holdings, so you can send, receive, and manage your crypto assets safely and conveniently. They tend to be classified into two main groups according to their function: hot wallets and cold wallets.
Hot wallets are online wallets that are permanently connected to the internet, allowing you to interact with your cryptocurrency and efficiently manage your assets. Hot wallets can be web-based, desktop or mobile.
Cold wallets (hardware wallets or paper cryptocurrency wallets) highly secure your cryptocurrency assets as they are stored offline and don’t require constant connectivity to the internet, highly reducing the risk of hacking. However, although this ensures the protection of your cryptocurrency, the accessibility to your assets is restricted.
What to look for when selecting a cryptocurrency wallet
Security has to be your number one priority when choosing a cryptocurrency wallet. Hardware wallets will provide the highest level of protection for your assets and you should consider one with a Secure Element chip. This chip stores your private key and offers the same level of security as passports and credit cards. The wallet should also have a recovery system in place, e.g. a recovery seed phrase in case you lose your wallet. As for hot wallets, look out for additional security layers such as two-factor authentication (2-FA) and multi-signature (having two or more passwords).
Most wallets and exchanges accept many unique cryptocurrency assets. However, you should check — google the supported assets of the wallet or contact the provider — to be sure they support the cryptocurrency you wish to own. For example, wallets such as Bitcoin Wallet, Ripple Desktop Wallet, My Ether Wallet, and MoneroWallet only support a single coin.
Ease of use
The cryptocurrency wallet you choose should be easy to use. This factor is crucial if you are just getting started in the cryptocurrency world. Furthermore, it should be easy to understand and let you access all the useful features to help you invest wisely and avoid making mistakes.
Customer support and wallet maintenance
Your wallet may be easy to use, but cryptocurrencies and DeFi can appear complicated at first. It would be best if you opted for a provider with excellent customer support, so you can always solve problems quickly.
The wallet provider should also run regular updates and maintenance to keep things current, such as adding new coins to their list regularly.
Top picks for cryptocurrency wallets
There are at least 82 cryptocurrency wallets. Checking them all out to find the best cryptocurrency wallet may take you a while, but don’t worry. Here are five of the best wallets out there.
MetaMask is a hot wallet that comes in as a browser extension. It has the most comprehensive support in the DeFi ecosystem and many roles across different applications, so you will not have to keep changing wallets whenever you switch to a different exchange or coin.
However, it is worth mentioning that MetaMask has had its fair share of security concerns. In 2021, EasyFi lost $80 million to hackers who exploited MetaMask. So consider not leaving too much money in your MetaMask wallet for long, or use a cold wallet alongside it.
- Supports thousands of coins and tokens
- Has over 1 million monthly active users (shows trust)
- Easy user interface for beginners
- Supports hardware wallet integration
- Available as a mobile app as well as a browser extension
- Integrates with most DeFi protocols
- Supports recovery phrase for retrieving your key
- Greater risk of being hacked because it is an online wallet
- Has had security issues in the past
Trust Wallet is one of the top cryptocurrency wallets that has been called “blockchain agnostic.” This term means it does not limit users to any single blockchain protocol but allows multiple chains. Trust Wallet supports over 1 million assets. If you have heard of any coin, chances are Trust Wallet can handle it.
- Free and easy download
- User friendly
- Supports the most currencies
- Supports a lot of Dapps (distributed applications)
- Recovery phrase helps with lost key
- Apps for both Android and iOS devices
- No desktop support
- Users find it difficult to withdraw their coins
- Less secure than hardware wallets
Argent is a simple non-custodial wallet that provides a single application for all Ethereum dApps. It also has very low transaction fees. However, it does not support Bitcoin readily and instead goes with the Ethereum network. On the plus side, unlike the other hot wallets on this list, Argent has two-factor authentication (2-FA).
- Perfect for Ethereum and ERC20 tokens
- Allows you to purchase cryptocurrencies within the wallet
- Has 2-FA
- Supports hardware wallets
- Supports lending and gives returns for the assets you lend through DeFi
- It can be a bit challenging for new users
- Only has apps for Android and iOS, but none for desktop or computer users
Ledger is a hardware wallet, so you know you are getting some of the best security measures any cryptocurrency wallet can provide. You can choose between the Nano S and the Nano X variations.
Ledger Nano S is more economical but only installs up to 3 apps. On the other hand, the Nano X, although more expensive, allows you to install up to 100 apps and supports more coins/tokens than the Nano S.
Another key difference between the two models is that Nano S only connects to your PC via USB, while Nano X has Bluetooth functionality.
- Supports over 5,500 coins
- Top-notch security
- Has a the Secure Element (SE) chip that we mentioned earlier
- Each Ledger wallet goes through audit by the Agence nationale de la sécurité des systèmes d’information (ANSSI)
- Limited storage when using the Nano S
- A very small screen in comparison to Trezor
- Connects to PCs and Android devices but not iOS
- Irreplaceable battery
Trezor is a cold storage wallet that has two models. So you can choose between the more economical Trezor One, or the more advanced Model T. That said, they both give you very good security.
For example, the keypad changes every time you access your wallet to deter keylogging — recording the keys touched with the intention of hacking into the device. However, the Model T is the best cryptocurrency wallet because it gets updated with new coins more regularly than Trezor One.
- Cold storage offers great security
- Small and portable
- Supports over 1,800 cryptocurrency assets
- Large, readable display
- Has no smartphone app
- Difficult to cash out in FIAT currency
- Trezor One lacks a touchscreen
Where to invest cryptocurrency
What happens once you have bought some coins? Do you just let them sit there in your wallet and gather dust? Instead, you might want to consider increasing their value. In this case, AQRU offers the best investment opportunities in the cryptocurrency and alternative finance space. They provide you with access to high-interest gains in the crypto space, for example by earning you high interest rates on USDC. Among their key features are:
- No fees on buying cryptocurrency
- Highest rates on balances of any size
- No lock-in periods
- Fast funding (depositing and withdrawing)
- High security
- Insurance on your assets
- Regulation by trusted authorities
Which wallet is best for you?
Your needs determine your most suitable wallet. For example, are you looking to buy a small number of coins, trade regularly, or store your assets for a long time? A hot wallet will be adequate if you are comfortable risking the number of coins you wish to own.
For long-term storage of a significant amount of coins, consider a cold wallet. However, if you would like to trade regularly, it would help to have both types of wallets. The hardware wallet will provide you with better security. On the other hand, the hot wallet will allow you to transfer your coins faster.