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Avast Academy Security Other Threats What Is the Best Cryptocurrency Wallet in 2023?

What Is the Best Cryptocurrency Wallet in 2023?

The crypto world can be intimidating. To help you get started, we’ve put together a guide to the best cryptocurrency wallets of 2022. Here, we’ll cover a variety of crypto wallets and offer recommendations for beginners and experts alike. And whenever you make transactions online, use a VPN to protect your personal data.

Academy-Whats-the-best-crypto-wallet-Hero

What is a crypto wallet?

A crypto wallet is an app or hardware device that stores cryptocurrency, like Bitcoin. Crypto wallets let people trade, sell, and store their digital currency. Wallets can take the form of physical hardware, software installed on your computer, an app on your phone, or even cloud technology.

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    While crypto wallets are where you store your crypto, crypto exchanges are digital currency businesses that facilitate cryptocurrency trades. If you want to make short-term investments or are a crypto beginner, use an exchange that integrates crypto purchasing and storage with a wallet.

    This article covers everything you need to know about crypto wallets, as well as what to expect as you become more experienced trading with your crypto account. Most people who’ve heard of crypto still need cryptocurrency wallets explained to them, because they’re very different from normal wallets.

    Best crypto wallets

    The following crypto wallets are integrated with cryptocurrency exchanges — meaning you can trade and store your crypto all in one place. That makes these wallets a great option for crypto novices or those who trade frequently.

    • Coinbase
      Widely considered the best option for beginners, Coinbase offers an easy-to-use interface to help you get started. For 98% of its cryptocurrency, Coinbase uses offline (“cold”) storage, which is a safe way to hold crypto because the coin can’t be accessed online.

    • Gemini
      Gemini offers a ton of resources for beginners as well as low trading fees, making it another great option for crypto beginners. There’s also an array of insurance options to keep your crypto secure.

    • Kraken
      Kraken has low trading fees and offers advanced trading options. Like Coinbase, Kraken stores the vast majority of its cryptocurrency offline.

    Sometimes, exchanges don’t offer built-in wallets. So-called hybrid exchanges use blockchain wallets, and you have access to a given amount of coin with credit — not direct access to the crypto itself. If you’re looking to hold onto your crypto for a long time, be careful using these hybrid services too long. For more direct access, use a dedicated crypto wallet.

    How do crypto wallets work?

    Crypto wallets safeguard your cryptocurrency, storing your crypto keys and keeping your coins accessible when you need them. Every crypto wallet is a pair of keys. The public key appears on the blockchain along with the amount it gained or lost in a given transaction. The private key allows the wallet’s owner to claim the amount associated with the public key.

    You don’t actually have Bitcoin “inside” your wallet -– you have an identifying number associated with an amount that appears on the blockchain. All cryptocurrency exists as blockchain records. Crypto wallets share and track these crypto records securely, to prevent crypto accounts from being tampered with or faked.

    Billions of dollars in Bitcoin worldwide are associated with individual keys, which are basically long strings of text. Each key is a universally shared text file of blockchain info.

    Each crypto trader has a wallet with a public key and a private key.Crypto wallets have a public key (for the blockchain) and a private key (for individual transactions).

    Why should I use a crypto wallet?

    Using a crypto wallet is the best way to have direct control over your cryptocurrency. You’re less likely to lose your crypto or get hacked when you use a trusted crypto wallet. And, having a wallet that you can access freely cuts out the middleman completely.

    While the top exchanges are widely trusted, hackers target them more than individual users or their blockchain wallets. You need a crypto wallet if you want to have full control over your own money.

    What is the best cryptocurrency wallet?

    The best cryptocurrency wallet depends on your situation — how you want to trade and whether you’re just starting out or already an advanced user. It’s not about choosing the best cryptocurrency wallet, but rather learning about good crypto wallets and choosing the one that’s right for you.

    Do you want to trade actively? Look for the best digital crypto wallet. How about trading in lots of different cryptocurrencies? Look for the best multi-cryptocurrency wallet.

    Here’s our list of all the best crypto wallets by type and usage.

    Best crypto wallet for desktop users

    The best crypto wallet for desktop users has to be Exodus. Exodus is popular because it helps you secure, manage, and exchange cryptocurrency in a single application — and supports over 100 cryptocurrencies, so you can experiment with different crypto.

    Pros

    • Multi-currency

    • Decentralized exchange integrated into the wallet

    • Supports Trezor, one of the leading offline (cold) wallets

    • Intuitive interface for new users

    • Customizable for advanced users

    • Allows Bitcoin payments in US dollars or Apple Pay

    • Accessible on Mac, Windows, and Linux operating systems

    • 24/7 customer support

    • Non-custodial

    Cons

    • Closed-source wallet

    • No two-factor authentication or multi-signature support

    • High fees for transactions

    • Customizable fees only for Bitcoin transactions (since Sept 2021)

    Best crypto wallet for mobile users

    Our choice for the best crypto wallet for Android and iOS is Mycelium Wallet. Use it alongside a free mobile security or free iOS security app to protect every stage of the transaction.

    Pros

    • Buy/sell Bitcoin with regular currency

    • Non-custodial

    • Open-source software

    • Supports QR codes

    • Custom transaction fees

    • Support for hardware wallets

    • In-app crypto exchange

    • Provides secure authentication capabilities

    Cons

    • Only supports Bitcoin, Ethereum (Ether), and ERC-20 tokens

    • Not available for desktop (Windows, Mac, Linux)

    • Can be confusing for beginners

    • Mobile phone wallets come with more risk, especially when considering the security benefits of Android vs. iOS

    Best cryptocurrency wallet for Bitcoin users

    Electrum is often referred to as the best Bitcoin wallet. A hot wallet with Bitcoin-specific security features, Electrum is highly customizable and offers adjustable fees. That means you get the most secure Bitcoin wallet at a relatively low cost.

    Pros

    • Fast transaction times

    • Integrates with popular hardware wallets

    • Prevents theft and fund loss

    • Customizable fees

    • Uses simple payment verification (SPV) for both speed and security

    • Open-source wallet

    • Two-factor authentication and multi-signature support

    Cons

    • Only supports Bitcoin

    • Challenging interface for beginners

    • No customer support via chat, email, or phone

    • A hot wallet isn’t the most secure type of wallet

    Best crypto wallet for maximum security

    The best crypto wallet for maximum security is a cold (offline) hardware wallet, like Trezor or Ledger. The security benefits of the two crypto wallets are comparable, though Trezor’s easy-to-use touchscreen and insurance against forgotten passphrases are big benefits. But, the fees for Trezor could be invested in the many more cryptocurrencies supported by Ledger.

    Trezor

    Pros

    • Easy-to-use touchscreen that reduces risk of human error

    • Runs on open-source software

    • Trezor Model T includes Shamir Backup, which helps to ensure entry codes

    Cons

    • No mobile app (but reportedly coming soon)

    • They’ve had a few security breaches, which were quickly patched

    • Costs more than Ledger devices

    Ledger:

    Pros

    • A Ledger device has reportedly never been hacked

    • Supports more cryptocurrencies than Trezor

    • Mobile apps available

    Cons

    • Display size isn’t as big

    • No touchscreen

    • Closed-source software

    • Ledger had a marketing database leak in 2020

    What types of crypto wallet are available?

    There are many different crypto wallets. Hot wallets offer quick, 24/7 access to your crypto, while cold wallets are better for long-term storage. Non-custodial wallets give you complete authority over your funds, and custodial wallets offer certain conveniences and safeguards.

    Let’s break down the different types of Bitcoin wallets:

    Hot wallet

    A popular choice for those who wish to access their crypto wallet on the move, hot wallets are online, software-based, and connected to the internet at all times. Your public and private keys are stored and encrypted on your wallet’s app or website, so your crypto wallet can be accessed across a range of devices or existing hardware.

    Hot wallets can be split into three categories:

    • Desktop: Desktop wallets work on browsers and desktop computers.

    • Mobile: Mobile wallets are apps for smartphones or tablets and run on mobile operating systems.

    • Hybrid: Hybrid wallets support both desktop or mobile platforms.

    Because they’re always online, hot wallets are at increased risk of cyberattacks, such as malware attacks or exploits. But they’re easier to regain access to if you lose the private key. The key is encrypted, and only a seed phrase (a really long password) will unlock a hot wallet.

    Cold wallet

    Cold wallets (also known as hardware wallets) provide additional security because they’re only connected when a user wants to complete a transaction. The keys to a cold wallet are stored offline and can be connected to a computer via a USB drive. When the cold wallet is connected, you can buy, sell, and trade crypto.

    Unless the wallet owner’s security is especially faulty, or they fall victim to something like phishing, hackers have no way of obtaining the owner’s cold wallet keys.

    Cold wallets are great for long-term storage. But they can be a bit cumbersome for making regular trades. So, while cold wallets are the best hardware wallet for crypto, they’re a bit of a hassle if you want to trade more frequently.

    Exchange wallet

    Crypto exchanges hold your assets in a cold-storage wallet. In a cold-storage exchange wallet your money is very secure, but even with the best crypto exchange wallets, you never know what a company might eventually do with all the money they’ve amassed.

    Exchange wallets are a good option if you just want to trade in small amounts casually. If you’re only investing a couple hundred dollars, the stakes are much lower — buying a special cold wallet device for $200 isn’t worth it for most people.

    Custodial wallet

    If you constantly forget your passwords, custodial wallets are worth considering. This type of crypto wallet keeps track of your crypto and the exchange of your choice.

    Companies behind custodial wallets hire trusted third parties to secure their assets. And they make sure your private key isn’t lost, so you can transact on the blockchain without having to actually manage your keys.

    Non-custodial wallet

    If you’re looking for the ultimate in control and privacy, non-custodial wallets are what you need. They provide complete control over your public and private keys — and your funds. Nobody has access to your non-custodial crypto wallet but you, which means you’re solely responsible for keeping it safe.

    While some people store large amounts of crypto on custodial exchange accounts, non-custodial wallets eliminate the need for a third-party between you and your crypto. Non-custodial wallets can be accessed through a web browser, or they can take the form of software for desktop and mobile devices.

    In terms of security, the best crypto wallets are offline, and some non-custodial crypto wallets are also physical hardware devices.

    Hosted wallets

    Hosted wallets live on servers you don’t have control over. These crypto wallets are often used by hackers to store their illicit funds, because cloud technology offers greater anonymity.

    Hosted wallets offer various levels of protection — some are insured by third parties, making them similar to custodial wallets.

    Decentralized wallets

    Decentralized crypto wallets enable peer-to-peer trading, removing the need for a platform or third-party service to manage trades. In that way, decentralized wallets greatly reduce the chances of information interception.

    Key features of crypto wallets

    There are many different types of crypto wallets available and thousands of cryptocurrencies out there. We’ve narrowed down what qualities to look for when choosing how to store and trade your crypto.

    Convenience

    Hot wallets provide the most convenience for active traders, while cold wallets are beneficial for longer-term investors. It’s best to gain some experience with hot wallets before moving a large sum of crypto onto a cold wallet.

    Security

    You want robust safety features and strong security protocols in any crypto wallet. This is your money, after all, and you want to keep it safe.

    Here are some of the best crypto wallet security practices:

    • Two-factor authentication (2FA) or multifactor authentication (MFA) make it substantially harder for hackers to access your wallet

    • Biometrics or facial recognition functionality

    • Multi-signature support (where a crypto wallet is owned by several people, such as business partners or family members)

    • Open-source code and strong security protocols for transactions

    • Safeguards against browser fingerprinting

    • A strong history of security from the wallet provider

    Interoperability/flexibility

    Interoperability between different exchanges, wallets, and currencies gives you flexibility whenever you want to make a transaction.

    Here are some questions to ask yourself when looking for the best coin wallet:

    • Which currencies does this wallet support?

    • What kinds of digital assets are supported?

    • Does this wallet give me visibility over live charts?

    • Can I stake my crypto via this wallet?

    • Can I lend my cryptocurrencies easily?

    • Are my hot and cold wallets compatible?

    • How expensive are my crypto wallets?

    Cost

    Some of the most popular crypto wallets are expensive. Let’s examine the cost of the top cryptocurrency wallets along with their key characteristics.


    Wallet (type)

    Price

    Currencies supported

    Gemini (software)

    $0.99 to $2.99 for each transaction, 1.49% fee for trades over $200

    52

    Coinbase (software)

    1% fee on all transactions

    150

    Kraken (software)

    0% to 0.26% for each trade, 3.75% + €0.25 for credit card transactions, 1.7% + $0.10 for online banking

    1700+

    Trezor Model T (hardware)

    $250 purchase fee

    1500+

    Ledger Nano X (hardware)

    $150 purchase fee

    1100+

    Electrum (software)

    0.001 Bitcoin per transaction

    1

    Exodus (software)

    Varies, depending on platform

    126

    Mycelium (software)

    Between $0.25 to $8 per transaction

    1

    How safe are crypto wallets?

    Cold wallets are a more secure method for storing cryptocurrency than hot, software-based crypto wallets. Since software wallets are computer programs, there’s still a small chance that an online hacker can breach hot wallets, and cold wallets offer more security capabilities.

    Back up your wallet to protect against both computer and human errors, then encrypt the backup. And use a long, strong, and unique password to keep it protected.

    If you have a lot of crypto and frequently trade it, you can manage risk by keeping the bulk of your funds in a more secure, offline wallet. And limit the funds that can be accessed through less secure platforms, such as exchanges.

    Having several wallets can keep your crypto safer, because hackers love centralized points of attack. Some investors even split up their cold storage among a group of trusted friends and family, so no single individual can be targeted.

    There are various threats unique to crypto wallets, such as cryptojacking and phishing attacks that take advantage of the crypto hype. In 2021, Binance wallets were hit by a crypto heist. Hackers stole about $600m (£433m) from Binance, in what was one the largest cryptocurrency heists ever. Earlier, in 2016, Bitfinex lost the equivalent of $72m in crypto.

    Crypto wallets are generally safe if you take precautions and diversify your holdings. But we’re still waiting for the action movie where the hero has to solve cryptographic puzzles to break into a crypto wallet…

    What are the risks of using crypto wallets?

    One of the biggest risks of cryptocurrency is its volatility — just look at Bitcoin’s wild price swings since 2020. Governments and institutions worldwide are still figuring out how to regulate crypto, which means consumers are not yet protected against many crypto crimes and scams.

    While companies offering crypto wallets may offer guarantees to customers and users, digital assets like cryptocurrency are not insured. There have also been several crypto crashes, and the value of Bitcoin has dropped considerably since its 2021 high.

    Also, there have been several high-profile hacks of crypto exchanges, like the infamous Mt. Gox hack in 2014 that resulted in the loss of hundreds of millions of dollars in Bitcoin.

    A software bug can also lead to disaster, like when the entire $300m value of the cryptocurrency Ether was accidentally collected by one individual, who then accidentally deleted all of it when he tried to return the money to the rightful owners.

    Crypto wallet comparison

    We’ve covered a lot of crypto wallet information throughout this article. Here’s a consolidated review:


     

    Best for beginners

    Best for security

    Best for desktop

    Best for mobile

    Best for Bitcoin

    Gemini (software)

     

     

     

     

    Coinbase (software)

     

     

     

     

    Kraken (software)

     

     

     

     

    Trezor Model T (hardware)

     

     

     

     

    Ledger Nano X (hardware)

     

     

     

     

    Electrum (software)

     

     

     

     

    Exodus (software)

     

     

     

     

    Mycelium (software)

     

     

     

     


    By now, you should feel emboldened to choose your very first cryptocurrency wallet app, or perhaps your next one. The best digital wallet apps are changing all the time, and support for new cryptos is always growing.

    Experience comes with trying things out. We can’t vouch for the financial soundness or security strength of any of the wallets on our list, but as with so many things in life, the general best practice is to start small. That way, no loss is catastrophic.

    Protect your personal data and communications with Avast

    Regardless of what crypto wallet you choose, whenever you’re online — for crypto trades or anything else — use a VPN to ensure your activity and communications stay protected.

    Avast SecureLine VPN secures your Wi-Fi connection, keeps your IP address hidden from snoops, and encrypts your internet connection. Get true online privacy and protect your activity from hackers with Avast.

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    Other Threats
    Security
    Anthony Freda
    21-10-2022