In the face of continuous cyber-attacks on exchanges and cryptocurrency holders, it is necessary to safeguard your digital assets.
Unlike an old physical wallet, which stores bills and coins, a cryptographic wallet safeguards the access keys required to prove ownership of the crypto assets, as well as their access to them in the Blockchain.
Crypto wallets can take the form of external hardware or software devices running on a mobile device or computer.
Its main function is to keep the cryptography of the owner safe, in addition to allowing transactions to be carried out. Additionally, they offer more control over the digital currency than you would get with a standard account at a crypto exchange or brokerage.
Bitcoin Custody Wallets: A Good Idea?
Some brokerages and payment services like Robinhood, PayPal, Venmo, and Cash App allow you to easily buy Bitcoin and other cryptocurrencies without a cryptocurrency wallet.
Such services store the digital currency in their own “custodial” wallets, meaning trust is placed in the company to secure, protect, and maintain the crypto. Ultimately, they are in control and the owner will need to trust them to act on their behalf.
Best practices for holding cryptocurrencies include purchasing a hardware wallet for offline storage. The next best thing is a “non-custodial” wallet or software application.
Best Bitcoin and Cryptocurrency Wallets
Coinbase: the best for beginners. The company makes it easy to exchange popular cryptocurrencies, from Bitcoin to Dogecoin, and has its own Visa-backed debit card that integrates with Apple Pay and Google. The interface is intuitive and the wallet is fully integrated with the company’s exchange. It has no custody.
Trezor: the best security features. Trezor’s software is open source, which provides some additional protection, at least in theory. It is designed to run natively on the PC desktop, providing greater security than a web-based application. Trezor wallets support more than 1,600 coins and tokens. However, it does not have Bluetooth support, which could be an attack vector for hackers to exploit.
Ledger Nano X: a good balance between accessibility and security. It is Ledger’s second-generation cold storage wallet. The easy-to-learn and easy-to-use built-in Ledger Live platform support over 1,800 coins and tokens, including Bitcoin and Ether. It is important to remember that Ledger suffered a data breach in July 2020, which resulted in the theft of some customers’ personal data, but not their crypto assets. It is therefore recommended to be careful online, especially when it comes to trading crypto assets.
Exodus: best for desktop users. It is a hot wallet, which means that it is a software wallet that is connected to the Internet. However, it is non-custodial, meaning that only the user has access to their private key, a 12-word passphrase that protects access to crypto assets.
Mycelium: the best for mobile users. It has a simple interface, through which Bitcoin, Ether, and ERC-20 tokens, like Tether USD, USD coin, and Binance USD can be sent and received, but not the hundreds of coins that have been developed in recent years. It is non-custodial and is the only hot storage on this list that is open source. However, its support options are limited.
In summary, it is worth emphasizing the need to do your own research before making any decisions. Examining the pros and cons, and consulting with experts and other users, seem to be the most sensible moves.
By Audy Castaneda