Like any currency, cryptocurrency needs to be stored somewhere, and the place to do that is in a digital wallet. There are different types of wallets for crypto, and each has its own benefits. In fact, many cryptocurrency buyers keep their coins in multiple wallets. Ultimately where you keep your wallet is up to you, but we've broken down the different kinds of wallets below to help make the choice—or choices—a little bit easier!
Hot wallets give you easy access to your cryptocurrency and are stored on your computer or online. They're best for small amounts of cryptocurrency that will be used frequently, such as for daily trading or making online purchases.
Types of hot wallets
- Desktop wallets: These wallets are installed directly onto your computer and can only be accessed from the device they've been downloaded to.
- Online wallets: These cloud-based wallets can be accessed from any device with an internet connection and are stored with a third party.
- Mobile wallets: Mobile wallets are also based with a third party, but they live as an app on your own device.
Pros of hot wallets:
- Easily accessible
- Usually free or inexpensive
Cons of hot wallets:
- Vulnerable to hacking
- Online and mobile wallets are kept through third parties, which are also vulnerable to hacking and are often uninsured
- Susceptible to scams
A common cryptocurrency scam is the fake wallet: a third-party platform or app that claims to be a legitimate wallet but instead either steals your private keys, or steals your funds directly. Always do careful research before choosing a wallet.
Hot wallets we like:
Jaxx: This is a multi-currency wallet that lives online and has a mobile option
Exodus: Another multi-currency wallet, this one lives on your desktop
Cold wallets live offline, either on a USB or similar device or on paper. They're usually for storing larger amounts of cryptocurrency that are meant for investment and won't be used often.
Types of cold wallets:
- Hardware wallets: These are physical devices similar to a USB stick which contain your wallet keys or code.
- Paper wallet: Literally paper printed with a QR code and your wallet address and key.
Pros of cold wallets:
- Highly secure and hard to hack
- Not reliant on a third party
- Leave control in the hands of the user
Cons of cold wallets:
- Must physically have the wallet in order to use it
- If the wallet is damaged the contents may be lost
Cold wallets we like:
Trezor or Ledger: Both of these multi-currency wallets live offline. They're both a little costlier than hot wallets, but offer very high security for funds that aren't being moved around on a regular basis.
Different cryptocurrencies are supported by different wallets. Some wallets support several currencies, but if you're buying multiple coins you'll probably need more than one wallet. Note that Coinmama uses smart contracts when sending coins, so be sure to choose a wallet that allows for smart contracts.