When starting out with cryptocurrency, it is essential for users to set up a crypto wallet that both is secure and allows for financial flexibility (ease of exchange, streamlined transfers, and so forth). Today, there are wallets that can be hosted online, procured in the form of a hardware entity, or accessed on a computer. However, most users have been found to make use of wallets that are hosted by the exchange that they tend to most often use.
With the recent surge of interest in the crypto domain, it is now recommended that investors store their alt-currency holdings in a personal wallet. This is primarily due to the fact that hosted wallets are susceptible to a number of issues related to security and privacy that can be taken advantage of.
What to look for in a cryptocurrency wallet
A cryptocurrency wallet, in its most basic sense, comes loaded with two key components — a private and a public key. The private key is used for personal access to the wallet as well as for authorizing transactions, whereas the public key is the address that is given out when receiving money from a third party.
With so many options available these days, there are certain keys to think about when choosing a wallet. The core criteria to consider include:
- Accessibility: some currency owners like to be able to access their holdings from remote locations. Thus, when choosing a crypto wallet, it is important to ask oneself the question, “How important is accessibility for me?”
- Security: this should be one’s primary concern when choosing a wallet. One should do a bit of research and find out whether a particular wallet is a “hot” hosted wallet or a “cold” wallet that can be accessed even without an internet connection.
- Pricing: while there are many free options out there, the paid ones usually provide extra features. Thus, one should weigh his or her options and discover the benefits and drawbacks of each.
- Usability: for novice investors, it is best to choose a wallet that offers a highly intuitive UI.
(Infographic courtesy CryptoNews Australia)
Hot versus Cold Wallets
- Hot Wallets: these are the most common crypto wallets used today. They are primarily utilized by online exchanges such as Coinbase and Bittrex, but their safety features are inferior to those of both cold and hardware wallets. It should be understood that hot wallets are primarily suitable for storing small sums of money.
- Cold/Software Wallets: while still providing all of the core features of hot wallets, software wallets provide users with a host of added security features. They also provide more accessibility and can be used with a wide range of digital devices such as PCs and mobile phones.
- External Wallets: these are hardware units that allow for access to currency even when offline. It is the most secure option of the three, and provides users with a storage solution that is free of all hacking-related issues.
The Top Ethereum Wallets of 2018
(i) MyEtherWallet: quite unlike regular web wallets, MyEtherWallet has been designed to provide its users with full control of their ETH private keys on their machines themselves.
Here are its core features:
- Completely open source.
- Does not make use of any third party servers.
- Makes use of smart contracts for all transactions.
- Easy currency exchange.
- Compatibile with other commonly used software wallets.
(ii) Ledger Nano S: this hardware wallet serves as the gold standard of affordable, secure ETH storage solutions today. Not only is it reasonably priced, but the Ledger Nano S also comes packed with an array of online/offline features that make it extremely secure.
It can be easily connected to one’s computer via USB, and makes use of an OLED display that allows users to double check all transactions. Lastly, it is completely immune to malware and secures one’s private keys from all third-party miscreants.
(iii) Jaxx: another familiar name amongst crypto enthusiasts, Jaxx is a free multi-asset wallet that supports over sixty different alt-currencies. Not only is its UI intuitive and customer-friendly, but it also comes loaded with many quality security features.
For example, Jaxx makes use of seed keys, thereby enabling users to access and restore their funds whenever required. Additionally, the Jaxx development team is extremely responsive and resolves customers’ doubts and concerns immediately. Lastly, it supports Shapeshift functionality, thus making crypto trading even more accesible to users.
(iv) Trezor: this was one of the first hardware wallets to hit the market back in 2016. It is fully compatible with Ethereum, and can be used on a variety of platforms such as Windows, Linux, Mac and Android.
Trezor makes use of an authentication system that allows users to access their ETH only after the correct password has been entered. It stores all Ether offline, and is quite affordable (starts at US$99).
(v) Exodus: this is a well-designed desktop wallet that offers its users an array of security features as well as an intuitive interface. It is absolutely free for everyone to use, and presents relevant currency information in a highly simplified and easy-to-understand fashion.
Exodus has been designed to support seven different cryptos, and also comes with the ShapeShift module built into its code.
(vi) Mist: it is marketed online as being the “Official Ethereum Wallet”.
While it takes a little bit of time to set up, once it’s ready for use, Mist incorporates standard security protocols such as private and public keys. It also requires users to remember their password at all times, as it is the only way to gain access to the wallet.
(vii) Ledger Blue: this feature-laden hardware wallet is the cream of the crop when it comes to external wallets. It has been described by various media outlets as being the most secure crypto storage solution on the market today.
Ledger Blue is designed to be malware-proof, and it makes use of a unique “dual chip architecture” that includes cryptographically enhanced firmware modules. However, to get all these features, users will have to dish out a cool $300-$350.
(viii) MetaMask: this is one of the most popular ETH wallets out there. It makes use of a browser-like structure to access the Ethereum Network. However, what sets MetaMask apart from its contemporaries is the fact that it allows for streamlined access to a host of dApps within the ETH network.
While there may be no perfect security solution to safeguard one’s crypto assets, the wallets listed above have been recommended after careful consideration of their security features. While it may be fine to keep small amounts of crypto in hot wallets, when dealing with large sums of money, it is best to make use of a software or hardware wallet.