NFTs. Digital art selling for $60 million.
IFOs and ICOs.
The latest news includes plenty of crypto topics. Hence, crypto wallets are essential devices to store your cryptocurrencies (Bitcoin, Ethereum). The best crypto wallets validate transactions and securely protect your assets as they include vital hacker-resistant protections.
Last year, a record $51.1 million in cryptojacking attacks occurred as cyber thieves used malware to mine cryptocurrencies from their victim devices.
However, new features can help protect your digital investment.
Read below on how digital wallets work and what to look for in a cryptocurrency wallet (hot/cold storage, private keys).
What Is A Crypto Wallet?
There is a new cryptocurrency called Decibel. It might be a sound investment, Anonymous
Once thought of as a trend, cryptocurrencies are now mainstream forms of digital currencies. Hence, a brief crypto overview can bring you up to speed.
Cryptocurrencies are electronic/digital currencies. They use blockchain technologies (decentralized ledgers) for secure online payments and have no physical coin or paper bill like the US dollar. Examples include Bitcoin (BTC) and Ether (ETH).
Cryptos, while popular, are highly volatile. Take BTC. It reached a record high of $68,990.90 on November 10, 2021, but is currently about $38,781.
Crypto wallets (digital wallets to carry your crypto) are becoming more convenient than cash and credit cards. You can buy a coffee, bet on sports using Bitcoin, or buy an NFT using Ethereum.
However, safely buying crypto requires a secure digital wallet.
While these wallets store your cryptocurrencies and coins, not every site that states they have the top crypto wallets or best software wallet apps are the same.
The type of wallets you select should allow for peer-to-peer transactions. It should also include the highest security features.
For example, when sending Bitcoin to someone’s wallet through a blockchain, the wallet address has a private key (numerical address) based on a blockchain. Hence, you have random numbers for each transaction and can recover them.
Ideally, the most popular crypto wallets let you see real-time balances and access portfolio data. Often this is through your smartphone, tablet, PC, or another device.
How Do They Work
“If I had a penny for every crashing crypto, I would have a bitcoin,” Anonymous
Understanding crypto wallet technology can help you protect your assets. Blockchain fraud in 2020 was valued at $1.4 billion, while crypto-related crimes went up a record 79% last year.
Additionally, DeFi (decentralized finance) transactions increased a whopping 912%. Hence, securing your wallets is essential. We will start with how digital wallets work.
When setting up a crypto wallet:
- Select a crypto wallet from the list below based on your requirements and create a PIN for your new wallet.
- Write down a backup recovery phrase (12-24 characters) and store it offline if you lose your PIN.
- In the crypto wallet app, transfer tokens into the empty wallet. You can do this through purchases on an exchange, instant credit/debit card purchases, or a different wallet.
- To make the exchange, get the sender’s public wallet address. Use the Copy button to avoid typos with public addresses, or you might lose your tokens forever.
- Once you load your wallet with tokens, you can send funds to other locations. When sending funds, paste in the public address, and confirm your transaction. Load times wallet-to-wallet can vary by network. Some transactions are instant or take up to 10-minutes.
Digital wallets include software wallets, paper wallets, and hardware wallets. These vary by crypto wallet app.
- Software wallets use software and are available for mobile applications or a desktop.
- Hardware wallets are USB-style devices.
- Paper wallets are less common and use QR codes you can print out.
Digital Wallet Keys
For the safest crypto wallet or digital wallet for cryptocurrency, they mostly use a BIP32 key. It lets the wallet generate a new address with incoming transactions while keeping change in a separate area to protect your privacy.
P2SH keys or Pay-to-Script-Hash addresses let users access new addresses for their Bitcoin and unlock their account balances. They also include features like rule-setting and advanced privacy features. These are common with wallets that have multiple digital signatures. Hence, you can prove fund ownership and maintain your privacy.
If you search online for what should I use for a private bitcoin wallet, a P2PKH might come up. Pay-to-PubKey Hash is a key that provides addresses to unlock your funds. However, it requires private keys that work with public keys to create the initial address.
Hierarchical Deterministic (HDs) are wallets with master keys and private keys for your different wallets. They have a secure 12-word phrase with a primary key for your wallet.
How To Withdraw Cash From Your Crypto Wallet
When cashing out cryptos through an exchange, you want the best crypto wallet app or blockchain wallet app. Cashing out your Bitcoin from a wallet means that you work with an exchange for your cryptocurrency.
Exchanges let you buy, sell and trade crypto and receive the money in your bank. Once you cash out, you receive a physical token, while online exchanges occur with a bank, business, or person. Exchange examples include Coinbase and Changelly.
In most crypto accounts:
- On the home page, select Transfer, Withdrawal, and Crypto.
- Click on your External Wallet and find the wallet address.
- Type in your Password or biometric ID.
- Enter the Authentication Code from your authenticator app.
- Press Send to get a Verification Code and type in the code.
- Type the Amount and Withdraw.
- Wait for your transaction to process.
If your wallet is not on a platform or exchange that allows crypto swaps, you might have to send your crypto into a crypto-to-fiat exchange.
Note that cryptos are volatile. Meaning the value can fluctuate constantly and might be affected by the news, war threats, or like last December, the Omicron variant. BTC plummeted over 20%. Hence, expect occasional roller coaster instability as there are no circuit breakers like the stock market.
Best Crypto Wallets For 2022 (Ranked)
In February 2022, there were about 68 million wallet users. As crypto gains popularity, digital wallet companies compete for business.
In exploring the best crypto wallet apps, Exodus is ideal for crypto newbies. Other crypto wallet apps include Pionex, Electrum, Mycelium, and Trezor, which we will explore.
The free software wallet supports bot trading. It includes a hosted Bitcoin wallet, along with 40+ digital assets.
- Incorporated Exchange: Yes.
- Website: pionex.com
- Country: US.
Ranked best for users involved in high-frequency trades, Pionex also works as an exchange. Trade your Bitcoin and other types of coins or cryptos. Licensed by FinCEN in the US, the app is compatible with iOS and Android devices.
- Trade with free bots without actively manually monitoring the markets.
- MAS-licensed for use in the United States.
- Withdraw to external BTC wallets.
- Use different technical indicators for BTC trades.
- Minimal fees are 0.05% (makers, takers).
- Buying cryptos on the exchange requires a credit card.
The free software and HD wallet are a user favorite and include live crypto price charts.
- Incorporated Exchange: Yes.
- Website: exodus.com
Ideal for diversified multi-crypto users, it includes real-time and live crypto charts. Monitor your crypto on your mobile device and buy, sell, and trade in real-time.
- It works with over 100 cryptocurrencies.
- Supports and syncs with hardware wallets like Trezor.
- Works on mobile, desktop, and mobile.
- Compatible with Android and iOS devices.
- Buy and sell crypto without an exchange.
- Difficult to verify the code (it is not open-source).
- Cannot customize fees (Altcoins, Ethereum).
A free, deterministic wallet, Mycelium is compatible with different hardware wallets.
- Incorporated Exchange: Yes.
- Website: wallet.mycelium.com
- Country: Austria.
Ranked as one of the best crypto wallets and recommended for diversified holders and traders, it gives you complete private key control. Like Exodus, a secure pin locks your wallet, and your keys never leave the device. Reuse your addresses and operate multiple crypto accounts.
- Works with in-app exchanges and uses a Local Trader feature.
- It includes crypto educational tools.
- It supports master seeds, paper wallets, and private keys.
- Integrate with cold storage (Entropy, Trezor, KeepKey, Ledger).
- Includes PDF backups and lets you restore single key accounts.
- Learning curve for new users.
- No desktop version.
The paid hardware wallet stores your digital assets, and it comes in different versions.
- Incorporated Exchange: Yes.
- Website: trezor.io
- Country: Czech Republic
Trezor lets you securely manage and trade your crypto portfolio. The popular wallet can store your digital assets (over 100 cryptos offline) and is ideal for exchanges, groups, institutions, custodian applications, and organizations. Users can sign in, verify each transaction offline, and use device buttons before their transactions.
- Lets users trade, buy and sell crypto on exchanges (ChangeNow, Changelly)
- It includes a 12-24 phrase backup recovery seed offline.
- Cross compatible with different types of crypto wallet apps.
- It has a convenient password manager tool.
- Storage options are Soon MicroSD and Cloud. Recover coins and assets with backups that take about 5-minutes.
- Not free. Paid wallets range from 59 EUR to 479 EUR.
- It needs better customer support.
The free software wallet is compatible with plugins like multisig services and hardware wallets like Ledger Nano S and Trezor.
- Incorporated Exchange: No.
- Website: electrum.org
- Country: N/A
An ideal choice for advanced crypto investors and traders, your private keys are encrypted and password protected. It gives you a backup of your key. Because the keys never leave your computer, it provides added security.
- A 12-24 keyword phrase for wallet recovery.
- No lock-in, cold storage, instant-on, proof-checking (verifies transactions with SPV.
- No downtimes as the servers are redundant and decentralized.
- Because it supports transactions in Segwit, trading on these exchanges may be at a lower cost.
- It supports Android, Python, OSX, and desktops and can sign transactions offline.
- You cannot buy or sell crypto like with other types of wallets.
How Safe Are Crypto Wallets?
Safety is a top feature that every crypto wallet should have. To best protect your crypto assets, here are a few tips.
Carefully evaluate wallets first.
With so many choices, read the reviews and user feedback. Check for wallet legitimacy and safety features.
Always use 2-factor authentication.
The extra security step, while a nuisance, can give you added protection, so look for wallets that offer this added security.
Take caution with your passwords.
Only use strong and unique passwords, PINs, and user IDs, and avoid sharing them in your other accounts.
Look for multi-signature wallets.
A multi-sig wallet (can take a little longer) forces other wallet users to sign their transactions in addition to providing private code.
Keep your antivirus protection updated.
Secure your devices routinely with the latest software and antivirus updates to block viruses and malware attacks
Routinely update your wallet software.
Modern wallets are constantly improving. Hence, the updates usually have enhanced security protection.
Consistently backup your crypto wallet.
With so much hacking online, having a backup of your wallet can help you recover any stolen funds.
Confirm addresses before sending out funds.
Because errors can cost you, always check for a misprint when sending cryptocurrencies.
Avoid using public wifi to access your wallet.
Man-in-the-middle attacks are common with public internet access, so do not assume your hotel, airport, or coffee shop wifi is not vulnerable to criminals.
Keep your holdings in several different wallets.
Like diversifying a portfolio, keep your smaller tokens on multiple online wallets and larger amounts in hardware or paper wallets.
Maintain a secure private key.
Choose a crypto wallet where you have total control of your keys.
The best crypto wallets with the most security features are the hardware versions.
While more expensive, these let you sign your transactions offline. Mobile versions of crypto wallets are also popular and let you manage, store, send, and receive digital currencies.
Because so many wallets boast reliability and security, undoubtedly, the best choice is one that repeatedly ranks high with users.
For optimal asset safety (and to mitigate hacking risks), only use the most recommended and well-known crypto wallets. These are routinely tested, including the latest updates, and they offer complete transparency.