Cryptocurrency wallets: a complete overview + the guide to choosing your own

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Looking into crypto investments? Apart from deciding whether to put your money in Bitcoin, Ethereum, or any other currency, you will also need to decide how you want to do it. Fortunately, you have many options – aka many crypto wallets – to choose from. This can be both a blessing and a curse, as it’s hard to pick the perfect one. Throughout the spectrum of available solutions, you will see that they differ in terms of operating systems, security levels, and features.

In this article, I will show you all wallet types and hint at how to use each of them. Here you will find anonymous, safe, convenient, and handy solutions.

Without further ado, here’s all you need to know to manage your coins like a Jedi.

Let’s start with the basics. Why do you need a cryptocurrency wallet?

Cryptocurrencies have no physical equivalent (certainly, you can’t pay out some Bitcoin at an ATM). Instead, these are numerical data recorded in a chronological database called a blockchain. The outgoing transaction must be signed with a private key to be confirmed and added to the blockchain.

Only the private key owner has unlimited access to the assigned coins and thus can fully dispose of them.

Deterministic wallets are devices or applications that allow you to generate, save and store a private key, i.e., a string of characters that authorizes you to dispose of your coins.

It is also important to know that you can import your private key into any wallet. This is the reason to keep your private key, well, private. If anybody has access to them, they will be able to steal your funds. 

After this short training, you are already a Padawan in the Blockchain Universe. So the time has come to choose a weapon and enter on the path of the Coin.

The first choice comes down to choosing one of the two types: online or offline.

Online Wallets

An online wallet is called a “hot wallet”. As the name suggests, these crypto wallets remain connected to the Internet. Actually, it is their biggest drawback, as it makes it possible for hackers to break in and take over your private keys.

Of course, it doesn’t mean that you can’t use them. You can, but you should be aware of the threats and take additional safety steps.

The unquestionable advantage of hot wallets is that many are free and do not require verification with documents. However, in some cases, an e-mail address is required.

In this segment, there is a variety of solutions to choose from as it is the most numerous group which can be divided into three categories.

Internet Wallets

In this group, you will find software wallets, available after logging into a web application.

From a user experience point of view, this is similar to handling an online bank account. However, in this case, a third-party operator manages the website that allows access to the service.

Remember that you are not the only holder of private keys. The operator of the website has the possibility to access them, so while putting your money in such a wallet, you are also putting your trust in the operator

Internet HD Wallets are perfect for making micropayments. However, you should not keep significant funds and savings on them under any circumstances.

Here are some examples of Internet Wallets.

Blockchain

Blockchain.com Private Key Wallets are the most widely-used wallets for crypto self-custody. If you are afraid you will forget your private key, Blockchain.com is one of the wallets that comes to the rescue with the feature of Secret Private Key Recovery Phrase. As it is said: not your keys, not your crypto, so the feature might be of real help.

Freewallet

It is a family of secure and straightforward wallets to store and manage digital currencies in an innovative form and easily. The platform is designed as a multicurrency Crypto Wallet for Desktop/Web, iOS, and Android.

CoinBase

A product for individuals looking to buy or sell cryptocurrencies, also available at Coinbase.com. It is an easy, secure, regulated on-ramp to crypto using US dollars or other local FIAT currencies.

Rakott

I’ll end the list with an anonymous, multi-currency crypto wallet that will not tip you off. Especially in times when almost every exchange is hacked and more than a billion dollars has been stolen, public “wallet companies” demand personal data and documents from the holders under the pressure of tax and unique services. On the contrary, Rahakott remains independent, reliable, and the most convenient wallet in the world.

Mobile Wallets

Mobile wallets come in the form of apps to install on your smartphone or tablet. This provides you with the advantage of a QR code scanner, thanks to which you do not have to enter much of data manually.

This solution does not give you anonymity, and the level of security remains average, but you get extraordinary convenience of use.

In many cases, you can link mobile crypto wallets to FIAT currencies. This feature allows exchanging, purchasing crypto coins, and linking transactions with payment cards or balances in FIAT. However, there is a need to provide identity documents for verification.

Speaking of which, it is difficult to determine whether verification is required to use cryptocurrencies or only to unlock options related to FIAT. There is no such information on the official websites of wallet manufacturers. Nevertheless, the aggregation of identification data in Mobile Wallets can potentially lose anonymity for cryptocurrency transactions in a hacking attack on the Wallet.

A crypto wallet mobile app is good for cash withdrawals in Bitomats, payments in a store, service point, restaurant, or hotel. Store your coins in small amounts on them as they are easy to hack.

Here we have representation in the Mobile Wallets category. Most of these provide both iOS and Android apps.

Xapo

Xapo is the first bank with regulated Bitcoin access. They have spent years refining services to provide the most secure Bitcoin storage in the world. Now, they are bringing you the first bank app with regulated BTC access.

BRD

The BRD app connects directly to the cryptocurrency networks it supports. There are no accounts or usernames with the BRD app. Instead, you will have a “wallet” where you will store your money. It’s just like the physical wallet you put your cash in, except that it exists only on the internet and holds digital money.

Mycelium

It is one of the oldest of the currently popular bitcoin wallets. Over the years of its development, it has absorbed all the best inventions from the rapidly growing community of hardcore bitcoiners.

Coinomi

It is a security-first, multi-chain wallet for both mobile & desktop that provides native support and actual ownership for more than 125 blockchains (the most extensive number in the industry for non-custodial wallets) and thousands of tokens.

Edge

Edge makes it easy to buy and sell, or move between assets from your iOS or Android device. Do you want to exchange your Bitcoin Cash for Litecoin? No problem. Do you want to buy Ethereum from your credit card or bank account? No problem. In just a few easy steps, any user can exchange one blockchain asset for another. All of this is done seamlessly inside the Edge Wallet, without a 3rd party ever holding your funds.

Laptop / desktop Wallets

This type of hot wallet is designed to be installed on a desktop or laptop computer. Some applications download the entire blockchain to disk, and they are called “heavy”. Some apps run on blockchains located on external servers, and they are called “light”.

A full blockchain download requires a large amount of disk space. In the case of Bitcoin, it will be over 300GB. Thus, applications of this type are resource-intensive. Additionally, synchronization takes a long time.

Light crypto wallets use blockchain stored on external servers. As a result, they synchronize relatively quickly and do not require significant disk space.

Laptop/desktop wallets save the private key on the computer that you installed them on. Therefore, there is a risk of private key theft as a result of a hacking attack.

To safely use this type of crypto wallet, you should encrypt files with a saved private key, and you should also make sure that your computer remains virus-free.

You can increase security by encrypting the partition used by the wallet. It is also worth using operating systems that inhibit accessing disks or files from the outside.

While choosing a laptop or desktop wallet, you can also consider if they use cold storage. Cold storage is…a system for securely storing cryptocurrency on a completely air-gapped offline computer.

Here are some exciting Computer Wallet solutions available on the market.

Electrum

It improves your bitcoin experience, securing bitcoin payments since 2011, and is one of the most popular Bitcoin Wallets. It is fast, secure, and easy to use.

Exodus

It sends, receives & exchanges Bitcoin and 100+ cryptocurrencies with ease on the world’s leading Desktop, Mobile, and Hardware crypto wallets.

Armory

It is the only open-source wallet with cold storage and multi-signature support. As a result, it is the most secure and full-featured solution available for users and institutions to generate and store Bitcoin private keys.

Bitcoin Core

Bitcoin Core wallet has features most of the other wallets don’t, like… But if you don’t need them, you can use several other wallets other than Bitcoin Core without losing Bitcoin Core’s security and privacy benefits.

Blockstream Green

It is an industry-leading Bitcoin wallet, providing Bitcoin users with an unrivaled blend of security and ease of use. Other Bitcoin wallets offer a choice between convenience, safety, and control. With Blockstream, you get all of those.

Wasabi

It is an open-source, non-custodial, privacy-focused Bitcoin wallet for laptop/desktop that implements trustless CoinJoin. CoinJoin is about: “when you want to make a transaction, find someone else who also wants to make a transaction and make a joint transaction together”. It is a mechanism by which multiple participants combine their coins into one significant transaction with multiple inputs and multiple outputs. An observer cannot determine which output belongs to which input, and neither can the participants themselves. That makes it difficult for outside parties to trace where a particular coin originated from and where it was sent to (as opposed to regular bitcoin transactions, where there is usually one sender and one receiver).

Offline Wallets

An Offline Wallet is called a “Cold Wallet”. That is the safest category of wallets, as the cryptocurrencies stored in them remain disconnected from the Internet. That makes it difficult for third parties to take over the funds.

In this group, we can distinguish two categories of wallets: Paper and Hardware.

Paper Wallets

A Paper Wallet is a private key written or printed on a piece of paper. The card can be stored well or locked in a safe.

The advantage is the high level of security, as the cryptocurrencies remain in the offline zone. The disadvantage of this solution is the inconvenience of use, as to make an outgoing transfer, you first need to import the private key to the application or Hardware Wallet.

Paper Wallets are suitable for storing one type of cryptocurrency. Their execution is easy and free. It consists of a randomly generated string of characters.

The Paper Wallet is one of the most straightforward solutions for storing your funds accumulated in cryptocurrencies. Moreover, you can do it yourself, using tools such as simple scripts for generating Paper Wallets. An example of such a tool is the JavaScript Client-Side Bitcoin Wallet Generator simply called “bitaddress.org”.

To create a new Paper Wallet in bitaddress.org, you need to follow a few simple steps while maintaining security rules.
First of all, make sure that the operating system installed on your computer is virus-free. If you are not sure about it, prophylactically boot the system (preferably Linux) from a clean external medium, e.g., USB flash drive, sd card.

The Linux system has an open-source code and thus is more secure than a closed-source and flawed Windows.

Please remember that even if the antivirus program doesn’t detect anything, it doesn’t mean your computer is free from malware that spies on your activities to steal sensitive information.

If you have prepared yourself as described above, you can proceed.

    1. Download the JavaScript Client-Side Bitcoin Wallet Generator script files.
      Download bitadress.org files from the GIT repository as a zip package. Then unpack the content anywhere on your computer.
    2. Disconnect the workstation from the Internet and other networks.
      Data can be intercepted and passed to third parties via an internet connection, even on a freshly installed operating system. The offline mode effectively prevents this, which directly increases the security of generating a Bitcoin Paper Wallet.
    3. Start the Paper Wallet generator. 
      In the previously downloaded repository, find the file bitaddress.org and open it with a web browser. After running the script, follow the on-screen instructions. This step will generate the private and public key pair that make up your wallet.
    4. Select Bitcoin Paper Wallet options.
      Congratulations, your paper bitcoin wallet has been created. You can stop there, or you can choose additional options. In the process of generating, the script created two strings of characters. These two elements are the most important and, in principle, sufficient.
      SECRET – private key. Don’t show it to anyone. It is needed if you want to spend your bitcoins. It is used for signature and thus to authenticate your spending transactions. 
      SHARE – public key, named a bitcoin address. Disclosure of this code is necessary to receive coins to your wallet. So it is safe to share. By giving it, you don’t risk losing your BTC.
      You can also choose the printing option, generate a few additional keys, and encrypt the wallet. Finally, configure the whole as you see fit.
    5. Save your new Bitcoin Paper Wallet. 
      Just click Print and start printing. First, of course, you should disconnect the printer from the Internet and other networks. You can also save the private and public keys on a USB flash drive or rewrite them on a piece of paper. The choice is yours. Remember that some printers cache documents, so after use, clear the printer’s memory, and it’s best not to use this type of equipment when printing your Bitcoin Paper Wallet.
  • Here are some other tools you can consider when generating a paper wallet.

    WalletGenerator.net

    You will find another design for the Paper Wallet and some improvements here and there. The big difference is that this is a unique project for many currencies, so more people can review it and check its safety.

    BitcoinPaperWallet.com

    The primary purpose of this tool is to make it easier to keep your coins safe once you’ve gone through the hard work of acquiring some.

    The secondary purpose of this wallet generator is to encourage you to expand your understanding and acceptance of Bitcoin by loading up and giving away these beautiful and fairly idiot-proof paper wallets.

    Hardware Wallets

    A hardware wallet is a device that looks like a USB stick. Dedicated software is installed on it to manage the stored private keys.

    You must connect the hardware wallet to a computer (laptop/desktop) if you want to transfer. First, transaction signing takes place in an isolated environment inside of your HD Wallet. Then, the signed and encrypted transaction you can pass to the blockchain.

    Private keys do not leave the device. This mechanism is adequate protection. Therefore, you can use Hardware Wallets even on a computer infected with viruses.

    The equipment allows you to create backups. You can recover the content if your device is lost or damaged. Each transfer requires additional authorization with a PIN code entered manually.

    Hardware Wallets are the best for long-term cryptocurrency storage because they have the highest level of security. They are also suitable for daily transfers. They are moderately comfortable to use but are the safest.

    Hardware Cryptocurrency Wallets give you complete control of your private key as it resides in the device, and only the user has access to it.

    Here are the most popular Hardware Wallets on the market.

    Trezor

    Trezor is the world’s first and most secure cryptocurrency hardware wallet. It enables you to make certain payments and manage cryptocurrencies without exposing any sensitive information to a potentially compromised computer.

    Ledger

    It is the most innovative way to secure, buy, exchange, and grow your crypto assets.

    KeepKey

    Protect your cryptocurrencies, store your private keys offline, and safeguard your assets from hackers. It helps to achieve financial freedom as securely as possible.

    BitBox

    Keeping your crypto secure doesn’t have to be complicated. With BitBox, your coins are kept safe.

    So… what is the best crypto wallet?

    After reading this overview, you probably agree that there is quite a variety when it comes to wallet types. And if you want to become a Cryptocurrency Jedi, you will have to arm yourself with one. So the question is: which one should you choose?

    Search and discover Hot and Cold Wallets.

    Sorry to disappoint you, but as you may already see, you will not find a perfect wallet. Each of the listed Hierarchical Deterministic Wallets has its advantages and drawbacks, making it super practical in one application and utterly useless in another. However, you can use more than one wallet, and this idea seems to be the most reasonable. When choosing a solution for yourself, follow the criterion on which you care most:

    Anonymity.

    The wallets that do not require verification ensure a high level of anonymity, i.e., those that do not integrate cryptocurrency systems with FIAT. An increased level of anonymity will be guaranteed by wallets enabling connections in TOR networks.

    Security.

    For storing more significant funds, the Hardware or Paper Wallet is the best solution. That is the safest option as the assets are kept separate from the Internet.

    Convenience.

    It will be most convenient for all kinds of micropayments to use a computer or Internet kind of Wallet.

    The currency scope.

    Some straightforward Cryptocurrency Wallets only focus on one token or coin. This is perfect for their holders but an ineffective solution if you want to diversify or you are a crypto broker.

    During your search, you will probably ask yourself the following questions:

    Are there wallets for all cryptocurrencies?

    And although such a solution would be highly convenient, unfortunately, you will not find confirmation. It is not possible to develop such a Crypto Wallet primarily for technical reasons. Despite the similarities, particular cryptocurrencies are autonomous systems and therefore operate differently. Creating an application or device that guarantees such versatility is not a simple task and could turn out to be extremely expensive.

    Which Crypto HD Wallets are the best?

    Having in mind all criteria, Hardware Wallets are the best in the overall ranking. They are relatively anonymous, safe, and handy because they allow you to make transfers.

    Consult and check our solutions.

    Although I’ve aimed to make this guide the most informative resource for you, still, this article presents only some of the possibilities available on the market. It is impossible to list and describe them all. In addition, the technology in the field of Crypto Wallets is subject to constant modifications and development. You can find detailed and up-to-date solutions on the official websites of wallet manufacturers. You can also check out our blog or consult one of our specialists. We will love to help you choose a solution tailored to your needs. In case of any questions, emails ut at [email protected]

    Take these steps to keep your crypto wallets safe

    Even the most technologically advanced deterministic wallet does not guarantee 100% security and does not exempt users from following the procedure to effectively protect the assets accumulated. Unfortunately, Internet thieves take advantage of the fact that many users do not even know how to protect their cryptocurrencies from theft. The good news is that by following simple rules, you can significantly reduce the probability of having your coins stolen or lost.

    If you have invested in cryptocurrencies, follow the rules:

    1. Store large amounts of cryptocurrencies only on Offline Wallets.
    2. Make backups of your wallets.
    3. Buy or download wallets only from official and verified sources.
    4. Create strong passwords and store them offline.
    5. Verify the wallet address before accepting the transfer.
    6. Do not install unknown and suspicious cryptocurrency applications or tools.
    7. Do not react to attempts at extortion and extortion.
    8. Set up all possible security features (MFA) on accounts with external operators.

    Failure to comply with the above rules is an unnecessary temptation of fate and exposing yourself to financial losses because they are easy for anyone to learn and, at the same time, the absolute basics of safe cryptocurrency storage rules.

    May The Coin be with you.

    Now you know, dear Padawan, how to join the path of a Jedi warrior in the Blockchain Universe. You know how to choose and use weapons, and you know how to fight and repel an attack. So go ahead, protect your treasure and fight for assets. May the Coin be with you!

    In case you have any questions, or would like to talk about your blockchain project, feel free to reach out to us at [email protected]

    About the Author

    Michal Gorgon – Software engineer with a master’s degree in Automation and Robotics.
    At 4Soft, he is a senior specialist for embedded systems and IoT. In his daily work, he combines the world of hardware and software, which allows him to pursue his passion for automation, control, DSP, cryptography, AI and ML.

    After work, he’s passionate about martial arts, motorization, offshore sailing, and modern electronic music.

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