May 29, 2024

The Ultimate Guide to Choosing the Best Crypto Wallet for Your Needs

The Ultimate Guide to Choosing the Best Crypto Wallet for Your Needs

When you start trading or holding crypto, it’s important to find the best crypto wallet you possibly can. Selecting the right wallet will help you keep your funds secure and protect your private key. With the influx of crypto holders comes a wide range of wallet options, and choosing the “right one” can be tricky. There are various factors to consider before jumping in, such as security features and transaction fees.

Users may also face the question: ‘is a crypto wallet entirely necessary?’ The truth is many crypto trading platforms and exchanges allow users to store their assets in a ‘built-in wallet,’ basically leaving them in the custody of an exchange.

There’s no right or wrong answer - to choose a wallet or entrust the process to a third party - but if you decide on a wallet for crypto, don’t just simply pick the first one that pops up on a subreddit or a search engine. Instead, consider the features that fit your needs and choose the best crypto wallet based on your own experience and preferences.

What’s a crypto wallet anyway, and do I really need it?

A crypto wallet is a type of online software that securely stores the credentials for your crypto assets. It safeguards the encrypted keys that provide access to your digital currencies, be that ETH, BTC, or BSV. Crypto wallet technology continues to evolve as further innovations and new products enter the market, improving accessibility and user protection. The best crypto wallets are always adding new features and functionalities to help users get the most out of their cryptocurrency experience.

Also, while it might seem like your digital currencies live in the crypto wallet, they don’t. They’re actually stored on the blockchain, and you’ll need a valid private/public key combo to access them. And yes, your wallet holds these meticulously encrypted codes away from prying eyes.

Losing those private codes or having them stolen is like misplacing your bank account PIN access. So the quality and reliability of your crypto wallet matter a great deal for security reasons. As we'll see later on though, the best crypto wallets have recovery options that can help you get around this problem.

So, it’s not a straightforward process?

There’s not a one-size-fits-all approach to finding the best crypto wallet, and choosing the best wallet depends on what you prioritize as a crypto owner. It’s like picking a bank, and there’s no ‘king of all banks.’ You need to consider the unique features of each wallet and choose the one that resonates the most with your specific crypto concerns and preferences. For example, you might consider being on the lookout for a wallet that supports multiple cryptocurrencies for added convenience since some wallets may not support a particular cryptocurrency that you own or wish to own.  

Cold wallets and hot wallets

While many types of crypto wallets are available, they fall under two general categories - hot and cold.
Cold crypto wallets live offline on a device, making them the best crypto wallets for owners who wish to stow their long-term holdings securely away from the internet. The downside? They’re pretty inaccessible compared to hot wallets, which could be troublesome if you want to make a quick exchange.

Hot online wallets are the best crypto wallets if you’re an active trader who manages transactions regularly and seeks unmatched accessibility to your stash. These are online wallets usually connected to an exchange, and they’re incredibly user-friendly. Hot crypto wallets may also live on a dedicated program on your desktop or via a smartphone app.

Weighing the risks

There’s a learning process involved in maintaining digital currencies, and it’s best to be well-versed on the subject so that you can choose the best crypto wallet for your needs. As a novice crypto holder, you may choose to entrust your assets to the built-in wallets on crypto trading or exchange sites. Many of the top exchange platforms offer added security and insurance coverage in the event of a cybersecurity breach.

Ultimately, it’s best to move your valuable crypto assets to your personal wallet because it gives you more control over your account. Despite the assurance and security offered by mainstream exchanges, they remain highly exposed to hacking activities. The best crypto wallet option from a security perspective will always be a personal wallet that you control and maintain yourself.

Malicious actors have turned to a series of sophisticated means of penetrating the defense of crypto wallets with insidious methods such as phishing, 2FA exploitations, and malware attacks. With these threats lurking around, it's important to take every precaution possible to secure your funds.

Features to look for in the best crypto wallet

When selecting your wallet, you’ll have a variety of features to choose from. First and foremost, you should be looking for a reputable wallet that provides transparent, robust security. For this, it’s often a good idea to look for wallets built using open-source code that can be reviewed by independent security experts for vulnerabilities.

One critical feature you should be looking for is a recovery phrase option. Recovery phrases allow you to access your wallet if your phone or computer is lost or damaged. Typically, they are 12 words and are randomly generated. Of course, it’s crucial you write down your recovery phrase to make sure you don’t forget it!

It’s also a good idea to consider a wallet that can store multiple currencies. Many wallets can only store one type of digital currency. If you plan to hold multiple cryptocurrencies for different uses, you should find a wallet that supports all of the coins you anticipate using. You can, of course, choose to set up separate wallets for each currency you use. The problem with this approach is that it makes it more difficult to trade between different currencies and raises your overall costs. For most users, a multi-currency wallet will be the more appropriate choice.

Today, some of the best crypto wallets allow users to buy cryptocurrencies directly, rather than going through external exchanges. These wallets let you use your credit card to purchase currencies of your choice, making for a simple one-step buying experience. In addition to an in-wallet buying feature, you should also consider wallets that let you swap currencies without having to go to a separate exchange.

Finally, the ability to easily generate a QR code for sending and receiving payments is a major convenience feature you should be looking for. QR codes let you instantly share your wallet address with others, making for easy payments. This isn’t a necessary feature of a wallet, but it is extremely convenient.

Being safe with your digital currency storage

You can improve the security of your crypto assets with granular control over your wallets or by entrusting a reliable exchange. You’ll have full accountability for your keys if you decide to go the non-custodial route, so make sure you have proper backup strategies in place and be extremely careful when handling your wallets. Prepare to update your network security, apply reliable password managers, and everything in between to keep your accounts guarded. Even the best crypto wallet can become inaccessible if you don't manage it properly.

Choosing the right wallet isn’t always easy, but it’s an essential part of safeguarding the funds you keep in digital currency. Select the best crypto wallet for your needs early on, and you’ll be able to enjoy a safe and convenient crypto trading experience.

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