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Sam Becker is a freelance writer whose work has appeared in and on CNBC, Fortune, USA Today,…
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There’s no better way to protect your crypto investments than with the right wallet.
That’s because a crypto wallet amounts to “the keys to the kingdom,” says Brent Campbell, founder and managing director of Fort Lauderdale, Florida-based digital-asset investment firm NXS Crypto Fund. “I tell clients that a wallet is the first step for anyone who wants to participate in the blockchain ecosystem — its purpose is to save, store, and receive [crypto] coins anywhere in the world, without a bank.”
Not all crypto investors technically need their own wallet, since most mainstream exchanges allow you to store your crypto within your account, much like how a 401(k) or IRA lives within a Fidelity or Vanguard account. But unlike the traditional stock market, there aren’t robust federally mandated protections in place for crypto investors. So as the value of your crypto becomes more significant, you could benefit from the added security that comes with your own wallet.
Depending on your investment strategy, you might consider a hot or a cold wallet, or a wallet offered by your go-to exchange. We asked four crypto experts what long-term investors should know. Based on our own research and input from the experts, here are six of the best crypto wallets long-term investors should consider.
Coinbase is an ideal choice for beginner crypto investors. It’s simple, easy to use, and supports thousands of different cryptocurrencies.
If you’re new to the crypto space, experts recommend a simple hot wallet. These tend to be free, easier to use, and are often connected to an exchange, meaning they support a large number of tokens and coins.
Coinbase Wallet, from the popular Coinbase exchange, is probably the best bet for beginners, experts say. It’s simple, supports thousands of cryptos, and is also noncustodial, meaning you maintain control over your private keys.
“We’ll tell 95% of the people we talk to, just use a Coinbase wallet,” says Chris Brooks, founder of Crypto Asset Recovery, a company that specializes in helping crypto investors recover passwords and seed phrases to their wallets.
Most crypto investors already start with an exchange-hosted wallet like Coinbase Wallet, says Campbell, which is like using “an on-ramp and off-ramp into crypto.”
Electrum was designed to work specifically with bitcoin in mind, so it’s a great choice if your only crypto investment is bitcoin.
If you are primarily a bitcoin investor, you might consider a special wallet that was designed to work with bitcoin in mind.
As such, Electrum may be good for you, as it’s easy to use and has been around for more than a decade — something very few other wallets can claim. Because of its focus on bitcoin and only bitcoin, Electrum is worth checking out if you’re shopping for a bitcoin wallet.
Electrum has been around for more than a decade now, and was built specifically to work with the bitcoin blockchain, which gives it some speed and security advantages. For example, users can easily connect with the bitcoin blockchain via Electrum’s Simple Payment Verification. Electrum can basically dance around the Bitcoin blockchain more efficiently than other wallets because it was built specifically for that purpose.
The drawbacks are that it may not be as beginner-friendly, and the biggest downside is that it only works with BTC, so if you want to store other cryptos, this isn’t for you.
Exodus allows you to plug into multiple different crypto exchanges, while keeping multiple altcoin investments in one place.
“Altcoin” is the catch-all term for any cryptocurrency that isn’t bitcoin, and there are thousands of altcoins out there. As such, a good crypto wallet for safely storing altcoins is one that supports many of them, and allows for easy trading and purchasing.
Exodus supports more than 180 different types of cryptocurrencies, and you can transact from within the wallet, without going to an outside exchange. While Exodus may support fewer coins than some other wallets, you’ll get the convenience of keeping all your crypto in one place while plugging into multiple different exchanges. Plus you can connect directly to other users through the wallet’s built-in exchange. That said, it’s a bit more advanced than Coinbase, but Exodus has an edge if you would benefit from the options to navigate more coins and exchanges more freely.
You can also choose between a desktop, mobile, or hardware wallet, depending on your security preferences. The hardware option is a Trezor wallet integration, meaning a Trezor wallet with an Exodus hot wallet running on it.
The Trezor Model T is among the best, most secure cold wallet options for investors who prioritize security and are willing to pay for it.
If security is your primary concern, experts agree a cold storage hardware device can’t be beat. “For somebody who wants to take no security risks, move [your assets] to a hardware device,” says Campbell, who adds that he has some assets on a hardware device and locked in a bank vault.
Trezor is among the best cold wallet options, says Charlie Brooks, Chris’ son and CPO and co-founder of Crypto Asset Recovery LLC. “A cold storage solution is the safest place to hold your funds.”
A physical hardware wallet from Trezor, such as the Trezor Model T, is a solid choice for the security-minded crypto investor, experts say. At $280, it’s not cheap. However, the Model T has numerous features that make it a standout, such as a large, full-color touchscreen display, and add-ons like Shamir Backup, a Trezor-designed security standard only available for the Model T. The Shamir backup lets you create 16 recovery phrases to use as backups. The security standard also offers protection if your wallet is stolen or destroyed by allowing you to recover the entire thing using a recovery seed.
Along with Ledger wallets, Trezor products are going to be very secure, albeit in a few slightly different ways, so it probably comes down to a user’s preference. The Model T is physically more robust and tough, at least in appearance, which some people might also like. Plus it’s user-friendly, intuitive, and easy to set up.
The Ledger Nano X is another great cold wallet option for security-minded crypto investors, and costs less than the Trezor Model T.
As we’ve covered, cold wallets are the best for keeping crypto assets secure, since they’re not connected to the internet at all times and as such face much less risk of hacking. And hardware devices like the Trezor Model T can go a long way in ensuring your holdings remain safe. But you can find cold wallets that won’t break the bank. We think the Ledger Nano X is the best cold wallet for investors on a budget.
The Ledger Nano X supports thousands of coins and is more affordable than the Trezor Model T. The experts mentioned Ledger wallets along with Trezor as being the best for securing holdings. While the Ledger Nano S costs less, the Nano X’s extra features and the fact that it doesn’t need to be plugged in, because it has Bluetooth, put it over the top. The Nano X supports a lot of tokens and coins, and up to 100 apps. It’s a good choice if you’re an active investor with interest in a bunch of different cryptos.
In terms of security, the Nano X’s most notable feature is its Secure Element security chip, which is similar to what is used to secure credit cards. The chips have been certified by the Common Criteria EAL5+ process.
MetaMask is a favorite free hot wallet that operates on the ethereum network, which gives investors easier access to the blockchain and Web3.
A cold wallet can be an asset if you’re looking to buy and hold. But if you want to trade your crypto, having a hot wallet is a must, as it’ll make it much easier and faster to transact. With that in mind, MetaMask has become a favorite of crypto traders because it opens up new avenues into the Web3 world, too.
MetaMask is also the best hot wallet for ethereum. “MetaMask operates on the ethereum blockchain, the biggest blockchain, which can talk to [NFT exchange] OpenSea,” says Campbell. “MetaMask gives you the most access to the blockchain.”
MetaMask can connect to multiple ethereum-based blockchain networks (such as Binance), NFTs, and all ethereum-based tokens. It’s a popular, easy-to-use wallet that can work with anything built on ethereum, which is a good percentage of the Web3 world. Combined, these factors give it an edge over competing wallets.
It’s also easy for “Web2” users to bridge the gap to Web3, as the mobile app can be downloaded to both iOS and Android smartphones, or you can use the web extension for most major browsers.
You can store NFTs and other collectibles on it, use it in conjunction with a hardware wallet (like Trezor or Ledger), and use it to exchange or buy tokens/cryptos. So if you’re looking to explore NFTs and the metaverse, MetaMask can be a solid choice.
You don’t need a crypto wallet to own cryptocurrency, especially if you don’t have too much and are new to exchanges and the world of crypto. But if your holdings are piling up and you’d like more security and more control, this could be a good time to find the right wallet. Especially if you’re secure in your understanding of things like private and public digital keys, and other aspects of crypto security.
“The wallet is like a gateway into the crypto world,” says Bec Jones, CEO and co-founder of blockchain-app developer Clutch Wallet. “It’s the first product you download, and it’s the first thing you need.”
A digital wallet is similar to a physical wallet in some ways, says Jones, but while your physical wallet may contain cash, credit cards, and even photos of your loved ones, a digital wallet may hold the online equivalents — cryptocurrencies, NFTs, and more.
Of course, digital wallets are not made of leather, but rather, strings of code — they are software or an application (sometimes physical hardware, too) that are installed on your computer or smartphone. Different crypto wallets have different features, but most have basic functionalities, Jones says, like swap and send options, and the ability to make purchases within the wallet. Many allow users to connect debit and credit cards, too.
But digital wallets, like physical ones, come in a range of types. One of the most important distinguishing features concerns custody.
The basic difference between custodial and noncustodial wallets is that a custodial wallet’s private key is held by a custodian, or a third-party. For example, if you get your wallet through a crypto exchange, it’s likely a custodial wallet, and the exchange likely holds the keys.
A noncustodial wallet is privately held by its owner, so you hold the private key and are fully responsible for control of your assets. Using a noncustodial wallet would be like depositing cash in a vault at your home, rather than at a bank. The issue, however, is that you could lock yourself out of that vault with little hope of retrieving your assets, because no third party can help you.
The learning curve for new crypto investors is steep, and the stakes are high. For example, you may potentially risk your investments if you don’t know how to protect your sensitive information, says crypto expert Wendy O.
So if you’re a new crypto investor, Wendy O recommends a custodial wallet from an exchange.
Another critical thing you should know is the difference between cold wallets versus hot wallets.
The primary difference is that hot wallets are connected to the internet, or store assets in the cloud (i.e., “hot”), whereas cold wallets are not, and are often encased in a piece of physical hardware, like a thumb drive. Therefore, a cold wallet is impervious to hacking attempts and provides an almost insurmountable layer of security to its contents, barring the hardware being stolen.
“A cold storage solution is the safest place to hold your funds,” says Charlie Brooks, CPO and co-founder of Crypto Asset Recovery, and Chris’ son.
On the other hand, a cold wallet introduces the risk that you might lose the physical device and all the cryptocurrency it holds. So there is a trade-off for that extra security, which is also why some investors keep their cold wallets locked up in safe deposit boxes or even a safe in the home.
When you’re ready to choose, you’ll want to know whether a crypto wallet is custodial or noncustodial, whether it’s hot or cold, and what coins or tokens it can hold, too.
You’ll also want to keep the price in mind. You can purchase some cryptocurrency wallets outright for a one-time fee, while others charge fees for moving assets in or out.
You could start winnowing down your choices by considering whether wallets have been on the market for a while, says Campbell. “Look at how long each wallet has been around. Are they battle-tested?” he says. And check if a wallet supports the types of crypto you want to purchase. “Not every wallet has the capacity to buy every token,” he says.
Generally, you’ll want to consider these factors to narrow down your selection, taking into account your security preferences and trading/investing activity:
No matter which wallet you choose, be sure to keep security top of mind. You’ll need to safely store your seed phrase, which is a series of words generated by your wallet that allows you to access your crypto. It’s basically a password the wallet makes for you. So you want to physically write it down and store it in a safe or vault, as opposed to jotting it on a piece of scrap paper next to your computer, where it can be lost or discarded, potentially locking you out of your wallet forever.
“It’s more likely that you’ll throw it away if it’s on a Post-It note,” says Charlie Brooks.
Campbell says that he has his seed phrase in a vault, and written down in two other separate locations. He recommends crypto investors do the same. “If you lose it, it’s gone,” Campbell says.
After all, your seed phrase is the key to your wallet. “Your wallet is your identity point,” says Jones. “It’s going to be a fundamental, daily-use product for people interacting on the web.”
So once you’ve chosen your wallet, make sure your seed phrase is protected and easily accessible to only you. “Keeping track of your seed phrase is much more important than choosing the right wallet,” says Chris Brooks.
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