With the rise of crypto-culture, security is more important than ever.
And the wallet you use determines how you can hold, trade, and buy cryptocurrencies.
There are hundreds of wallets to choose from, and even more places to buy and trade crypto that make the learning process very confusing, here I'll be breaking down the best methods of storing crypto into sections, describing the differences between the wallets, and providing options that suit specific needs
Hardware vs Software -and- Custodial vs Non-Custodial
The two types of wallets that are most commonly used are referred to as Hardware or Software.
Hardware wallets are PHYSICAL wallets that you can trade and send crypto to and from. You are given your own private key, so that crypto is yours. The main advantage of these is that they remain offline most of the time, keeping them safe from almost all attacks, in some cases they have even be used on a computer with malware, and remained secure. (not that its recommended)
Software wallets are DIGITAL wallets, they are stored online and accessed by a computer or mobile device. Sometimes you will be given your own key, other times the company will hold the key for you. These wallets are always online so they are not completely safe from online attacks, but if you keep your key protected properly you should be fine. Do not go using them on malware infected computers though. The main advantage of these wallets are the price point, most often free.
There are two other categories wallets can be put into, Custodial and Non-Custodial, the difference is very straightforward
Custodial
Your wallet has custody of your key, your coins belong to your wallet
Non Custodial
You control your key, your coins belong to you
The saying goes
Not Your Key, Not Your Coins
This is fairly true, when a wallet holds your key for you (meaning, you create a login password and don't worry about a key at all) you are trusting that they will not take whatever crypto is in that wallet, where as when you are responsible for holding your own key, you are in full control of that wallet.
Thus, Remember to keep large sums protected under a key YOU own, I personally only use wallets with private keys. Though, small investments or trades shouldn't be entirely feared without one, just make sure you keep any large investments protected.
So, which one should you use?
Deciding your wallet comes down to a handful of factors we will decide with a few questions.
These questions being:
• Is this wallet custodial or non-custodial?
• Does this wallet support the currencies I want to buy?
• Can I buy, trade, and sell from this wallet?
• What trading fees do I need to know about?
• How much money will I be investing?
• And, is this wallet trusted?
These questions can be tweaked say, if you are not looking to buy or sell from your wallet then you may only need trading to store and transfer, but these questions will help narrow down your choices
Software wallets
We will start with the cheapest and quickest option! These always online, free to use, easy to setup wallets are all the craze! Software wallets have made it possible for anyone to get into crypto from the comfort of their home using their phone or computer. These allow you to Buy, Sell, and Trade crypto with often just a few minute setup. Software wallets are perfect for beginners, small investors, or as a bridge to your more secure wallet, the ease of use is unmatched.
Some of my favorite software wallets are:
Binance:
Pros
-Low fees
-Multiple transaction methods
-Supports most cryptos
You decide
-Incredibly secure / scarily personal (needs photo id, home address, personal info)
Cons
-Requires full identification before full use is available
-Custodial
Coinbase:
Pros
-Easy to use
-Supports most cryptos
-Non-Custodial
Cons
-High fees
-Fewer transaction methods
Exodus:
Pros
-Very beginner friendly
-Mobile and desktop
-Low fees
Cons
-Missing many cryptos
-Custodial
Hardware wallets
Now for our whales! Those of you with diamond hands will want to invest in a hardware wallet. Offline and secure, private keys and remarkable recovery services for lost passwords or devices. As mentioned before these have so far proven to keep users safe from any hacking, malware, and even worry of loss with the recovery services. Anyone with a serious amount invested will want to look into these brands to keep their crypto secure.
Trezor:
-Plastic
-Password entered via keyboard
-Tamper-evident seals
-Larger, possibly a screen
-Open-Source
-Thousands of cryptos supported
-NO mobile support
*Data safe, so far
Ledger:
-Metal
-Password entered via device
-Device integrity verification
-Smaller, USB style
-NOT Open-Source
-Thousands of crypto supported
-Mobile Support
*Recent data leak, crypto still secure, but emails of user were leaked resulting in spam mail scams
Overall
As a beginner, it will be easier to start with a software wallet as you learn and play with small investments, preferably one that gives you the responsibility of keeping your own key, as it will develop good habits while you learn.
BUT, the second you decide you want to do some serious trades, pick up a hardware wallet to keep yourself and your crypto safe.
If there is a wallet out there that you think we should know about, put it in the comments! I'm sure there are some amazing options I've yet to discover
This is my first post, I tried to fill it with facts but also not drag on forever, let me know what you thought! I really hope this helps someone, as I've done a lot of research that I wish was all in one place when I started!
~ ywmy