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Digital assets or cryptocurrencies are a new medium of exchange that is stored in an electronic form on a physical or digital device. These mediums that store cryptocurrencies are called crypto wallets or online wallets. In the case of a physical device, they are also called hardware or cold wallet. It is important to note that specific wallets may only allow the storage of specific cryptocurrencies. For E.g. a bitcoin wallet is meant for bitcoins.
Bitcoin wallets store the public or private keys for cryptocurrency transactions. Think of a public key as a bank account number that a user can share with others, while a private key is like a password that is only known to the owner of the bank account. These keys can be used to track the ownership, receive or spend cryptocurrencies.
Due to poor or non-existent regulations for bitcoin and other cryptos, ensure that you first view the local regulator's official resources to verify the legitimacy of any cryptocurrency wallet.
Currently, available bitcoin wallet services can be classified into two groups – hot wallets and cold wallets.
| Hot wallets | Cold wallets |
| Connected to the internet, easy to hack | Not connected to the internet, difficult to hack |
| Convenient to use on a phone, PC, or any web browser | Hardware, as well as software compatibility, could be an issue |
| Vulnerable to government regulations | Not vulnerable to government regulations |
In the case of both hot or cold wallets, if you lose the private key, there is no way you can access your cryptocurrency money. It is also essential that you research a wallet provider and how they store your bitcoin investments, as they too are vulnerable to hacks.
Most people think that since cryptocurrency wallets are linked to a blockchain they are highly secure, but that is a myth. While blockchain itself is highly secure, the tools and programs linked to it are vulnerable to misuse.
While there is no assured way to ensure safety, there are some wallet providers who have navigated much of the risk of cryptocurrencies for you. Here we list some of the reliable bitcoin, Ethereum, and other digital token wallets based on user and peer reviews, and recommendations from legitimate investing resources.
Note: Since the cryptocurrency space is largely unregulated, the best way to avoid fraud is by using popular service providers and checking user reviews before transferring any money.
| Name of wallet | Type | Supported Crypto |
| Exodus | Hot wallet | Bitcoin and 100 others |
| Electrum | Hot wallet | Bitcoin only |
| Mycelium | Hot wallet | Bitcoin, Ethereum and ERC-20 |
| Ledger | Cold wallet | Multiple crypto |
| Trezor | Cold wallet | Multiple crypto |
| Coinbase | Hot & cold wallet | Multiple crypto |
| Trustwallet (Binance) | Hot wallet | Multiple crypto |
| Paxful | Hot wallet | Bitcoin, Ethereum, Tether |
Exodus is a multi-cryptocurrency wallet that boasts an easy-to-use UI. You can keep your Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), DASH, and more, along with a continuously increasing number of Ethereum tokens, all in one place and easily calculate and organize your savings with their pie chart portfolio. Exodus has a built-in exchange that allows you to instantly trade the supported coin between themselves. The backup wizard will allow you to keep your wallet safe and ready for later use. Exodus is partially open source.
Electrum wallet is a lightweight Bitcoin client, based on a client-server protocol. Cryptocurrency wallet Electrum is a type of thin wallet – this resource does not require a complete jump in the history of the blockchain, which takes a significant weight of memory. The main, and at the same time significant, feature of Electrum wallet is the use of a special phrase "seed", which consists of 12 words-it allows you to create an Electrum wallet online and restore it without much difficulty. This feature allows users not to worry about possible hardware failures, breakdowns, hard disk failures, loss of passwords, and other force majeure circumstances.
Mycelium Wallet gives coin control features for the more adept bitcoin user. The wallet is backed by a large active development team that is continuously innovating. Android Mobile is the main platform although the team has developed cold wallet prepaid cards too, that can act as a form of cold storage.
Ledger is a fast-paced, growing company developing security and infrastructure solutions for cryptocurrencies as well as blockchain applications for individuals and companies. The company developed a unique operating system (OS) called BOLOS, which we integrate either into a secure chip for the Ledger wallet line or into a Hardware Security Module (HSM) for various enterprise solutions. For enterprises and corporations, Ledger introduced the Vault: a fully managed SaaS solution addressing the need to safeguard a very large amount of multiple cryptocurrencies while mitigating both IT and physical assault threats.
Trezor Wallet is a hardware wallet providing a high level of security without sacrificing convenience. Unlike cold storage, Trezor is able to sign transactions while connected to an online device. That means spending bitcoins is secure even when using a compromised computer. It was the first Bitcoin hardware wallet, offering secure cold storage plus the ability to spend with the convenience of a hot wallet. Trezor is a small, key-sized device that connects to your computer with a USB cable. It stores your Bitcoin and cryptocurrency private keys offline and signs transactions. It can be safely used on a malware-infected computer.
Coinbase is one of the larger Bitcoin ecosystems offering a full service across wallets, exchanges to merchant payment software. The wallet advantage of this is that transactions can be done off the blockchain although this does detract from the main ethos of Bitcoin. Using Coinbase is a good experience but that does mean you are trusting a third party with your Bitcoins unless you use their vault service. Essentially the banking industry forms security boxes in a safe.
Trust Wallet is an application that supports Ethereum, ERC20, and ERC223 tokens. Tokens on the Ethereum blockchain can be exchanged for other digital currencies, and the ERC20 standard allows users to interact with other Dapps applications that support the same standard. The app supports about 30,000 tokens. Access to the Trust wallet is stored on the device, so all information is isolated from the Internet, developers, and third parties. Users can log in using a code-password, Face ID or Touch ID. Trust Wallet is somewhat similar to Metamask, but it is safer and has advanced features. The Trust wallet is similar to an ecosystem that allows the user to exchange assets without leaving the application.
Paxful is a peer-to-peer platform focused primarily on bitcoin. As a peer-to-peer platform, Paxful provides a bulletin board of purchase and sale offers, rules for settlements, and surveillance of know-your-customer (KYC) rule compliance. Unlike many peer-to-peer platforms, Paxful requires traders to open an account. Chainalysis announced in March 2020 that it provides Paxful with KYC tools. Paxful provides approximately 340 different ways to transfer fiat currencies, including PayPal and Amazon Gift Cards.
Sources: Bitcoinwiki, CryptoMarketsWiki
Image source: Unsplash.com
