Bitcoin (BTC), the most popular cryptocurrency on the market, recently reached all-time highs of over $ 52,000 per coin. Meanwhile, even a relatively unknown cryptocurrency like Dogecoin is enjoying the spotlight, as everyone from retail investors to Elon Musk has talked about it. And with the cryptocurrency exchange Coinbase likely to go public sometime this year, cryptocurrencies are poised to gain more legitimacy and attention than ever before.
If for all these reasons you want to buy some digital currency, the first place to start is to find out where you will store this cryptocurrency. In fact, when it comes to investing in cryptocurrency, choosing where to store it is as important as buying it in the first place. So what is the best cryptocurrency wallet in 2021?
What Is a Cryptocurrency Wallet?
The term “wallet” is a bit of a misnomer, as a cryptocurrency wallet doesn’t actually store funds.
Instead, each wallet stores one or more private cryptographic keys, which are required to access cryptocurrency funds that live in many fragments on a decentralized online ledger known as the blockchain. It’s absolutely vital to keep your private keys safe, and losing your key can often mean losing your hard-earned cryptocurrency.
The safest end is what is called “cold storage”. Digital wallets that store keys offline on a physical medium, such as a USB drive, are called cold storage wallets because they are not connected to the Internet. A user has complete control over when and where the wallet is accessed, and all assets are stored offline, making it difficult for hackers to steal. But if you need to access your wallet quickly or on the go, this is not the easiest option.
On the other hand, “hot storage” options come in two forms: software wallets and online wallets. Both versions are connected to the internet – hence a “hot” wallet – where cybercriminals prowl. Software wallets are downloaded to a computer or mobile device, often in the form of an app, while online wallets act like websites, and are usually controlled by a major crypto exchange. Both come with the same benefits: keeping your crypto assets online makes it easier to transfer them, making hot wallets more convenient for users who intend to frequently trade crypto assets. But the downside is the same for both as well: connecting to the internet exposes users to the risk of hacking.
To keep it simple, hot wallets are connected to the internet, while cold wallets are not. Choosing the best Bitcoin wallet for you basically boils down to a continuum with security on one end and ease of use on the other.
So, if you’re interested in crypto wallets, here’s a breakdown of your options:
- Hardware wallets: Keys are stored in a small physical device that you connect to a computer or smartphone for transactions.
- Software wallets: Apps that you download to your mobile device or computer.
- Online wallets: Browser-based wallets that allow you to interact with them like a website.
Hardware Wallets: Ledger and Trezor
Hardware wallets are keychain fob-sized physical devices that store your private keys and can be kept separate from your desktop computer. Most importantly, even when you connect someone to your computer to do cryptocurrency transactions, no malware on this desktop has access to the wallet.
The best cold storage wallets on the market are Ledger and Trezor.
According to Adam Lowe, chief innovation officer at CompoSecure, “when users evaluate hardware wallets, they should look for best in class security as well as ease of use. If it looks too complicated to use, you will either stop using it or worse, lose access to your crypto.”
Ledger and Treasure Wallets have become popular because of the user experience they offer, which includes support for many different cryptocurrencies and a solid physical shape. Trezor first introduced the Cold Wallet back to the market in 2013, and today, its wallets are very popular because of the security measures, multi-factor authentication and easy-to-use touch screen.
Software Wallets: Electrum and BRD
Here’s where security begins to give way to ease of use.
A Bitcoin wallet on a computer that you use to browse the web is less secure than a hardware wallet because it’s susceptible to getting infected with malware that specializes in looking for cryptocurrency wallets. Then again, Pavel Matveev, CEO at Wirex, says that while hardware wallets are incredibly secure because they require physical access, “online wallets are kept secure using next-generation blockchain technology and encryption techniques, making them virtually impossible to hack.”
Online Wallet: Guarda
The easiest to use online wallets are the wallets with cryptocurrencies, which are making them very popular. But there is one obvious downside that new cryptocurrency traders should be aware of: they are hackable. According to Lou, “over $ 1 billion in exchanges have been hacked so far, with more unsubstantiated hacks suspected.”