What is a Crypto Wallet?
The use of a crypto wallet is a crucial first step to using Bitcoin or any other cryptocurrency in circulation. Crypto wallets are a software program that stores the public and private keys necessary for trading various cryptocurrencies through the blockchain.
Think of a crypto wallet like you would a bank account as the two are very comparable. Just as how your bank account serves as an interface to the conventional monetary system, a crypto wallet operates in the same way.
The private and public keys stored within a crypto wallet serve as nodes that allow the wallet holder to send and receive crypto tokens along with monitoring account balances. What makes a crypto wallet different from a bank account is that it does not store currency at all, only records of transactions.
The wallet only stores transaction records because cryptocurrencies do not exist in any single location or any physical form. There are only records of transactions on the blockchain. That is why it is not necessary to store your coins as what needs to be secured are the private keys that give access to the transaction records.
Types of Crypto Wallets:
There are two main types of crypto wallets available to the crypto community, hardware wallets, and hot wallets.
Hardware wallets are a physical storage device built for the sole purpose of securing cryptocurrency. These wallets are more commonly known as cold wallets as with cold storage; the wallet exists on a platform that is disconnected from the internet.
By being disconnected from the internet, cold wallets are safe from cyber-attacks, and other vulnerabilities internet-connected wallets are susceptible to. For transactions to occur with a cold wallet, the crypto wallet must connect with your computer, phone, or tablet before sending coins.
The downside to cold wallets is that they must be purchased, and they can be challenging for new users to understand.
On the other hand, hot wallets are crypto wallets that run on internet-connected devices. Since hot wallets generate your private keys on an internet-connected device, they are not as secure as a cold wallets. This statement is not to say that hot wallets are unsafe, as many hot wallets go through great lengths to ensure security. Hot wallets just can not be considered 100% secure like cold wallets.
Despite being less secure than cold wallets, hot wallets do have some advantages. Hot wallets are very convenient as spending and receiving payments is very easy and fast. Hot wallets are also an easy way to store cryptocurrencies for both old and new users.
It is recommended only to keep small amounts of crypto in hot wallets and instead use cold wallets to store large amounts of crypto.
Top 3 Crypto Wallets of 2020:
“Ledger is the most popular hardware wallet in crypto at the moment, and deservedly so.”
– Ian Balina, Founder and CEO of Token Metrics
The two hardware wallets that Ledger offers are the Ledger Nano S and the Ledger Nano X. Both the Ledger Nano S and Ledger Nano X are roughly the size of a flash drive and include the Ledger Live software. With this software, Ledger supports over 1,200 crypto coins and even supports coin staking.
The difference between these two cold wallets comes in terms of price and additional features.
The Ledger Nano S is the base model for Ledger wallets as the Nano S only supports up to 20 different currencies at a time and sells for $59. The Ledger Nano X Serves as an impressive upgrade from the Nano S, and the price reflects it. The high-end Nano X sells for $119 but supports up to 100 different currencies at a time while also being Bluetooth enabled.
One downside of owning a Ledger wallet is that it does not have an incorporated crypto exchange. By not having this feature, you must use another platform along with your wallet to trade your cryptocurrencies, which can be inconvenient.
“Getting your private keys offline is important, especially if you want to hold your cryptocurrency for long periods. Trezor is a good cold storage option to store your private keys offline.”– Sam Monac, Head of Research, Token Metrics
Coming in 2nd place is the original crypto hardware wallet, Trezor. Trezor was the first-ever commercially available bitcoin hardware wallet and is Ledger’s main competitor in the crypto wallet market.
While Ledger is a newer cold wallet and has a sleeker design, Trezor has a more proven track record in terms of crypto security. The trade-off of this proven track record is that a Trezor wallet does not come with all the bells and whistles that come with a Ledger wallet.
One security factor unique to Trezor is its randomized pin code generator that is required before use. This additional layer of security allows a Trezor wallet not only to be protected from malware but also keyloggers.
The two cold wallets offered by Trezor are the Trezor One and the Trezor Model T. The Trezor One is the more standard hardware wallet, while the Trezor Model T is the premium option.
The Trezor Model T supports all the cryptocurrencies found on the Trezor One but also adds Ripple, EOS, Cardano, Monero, Tezos, and Ontology to its supported coins.
The Model T can be purchased for $169.99 and comes with a full-color touchscreen and a microSD card to store passwords.
It is important to note that unlike Ledger, all Trezor wallets have an incorporated exchange. This feature means that with a Trezor wallet, you do not have to look for an exchange to trade your coins. You can instead trade your tokens conveniently from your wallet.
3) Trust Wallet
“Trust Wallet was acquired by Binance exchange in late 2018; It is one of the most dynamic cryptocurrency wallets in the industry. It offers diverse functions such as storing and staking crypto assets.” – Diego Lara, Token Metrics Advisor
Rounding out the nominees is the mobile app Trust Wallet. Trust wallet is a change of pace from the other honorees in that it is a hot wallet designed for mobile users.
Trust Wallet is a mobile app designed to allow the user to send, receive, and crypto with a focus on simplicity. Trust Wallet supports over 1,000 coins as it supports all significant blockchains in the Ethereum network and works with any ERC20, BEP2, and ERC721 tokens.
Trust Wallet’s dedicated support to Ethereum is not to say that the wallet is limited to only tokens on the Ethereum network as it supports many cryptocurrencies outside of Ethereum’s ecosystem.
With being a hot wallet, there are some benefits to Trust Wallet that are not available with a cold wallet. The most significant difference is that Trust Wallet is free to use and download. You only pay the transaction fees when using its built-in exchange.
Another unique benefit of Trust Wallet is its ability to interact with decentralized applications (dApps). Trust Wallet allows users to interact with dApps directly through the wallet app with its Web3 browser.
Trust Wallet is available for download on both the App Store and Google Play.
Rising Star: Digifox
“At Digifox, we have a single objective; to help the world become their own bank. In order to do so, we needed Digifox to be simple, functional, and accessible to as many people as possible.” – Nicholas Merten, Founder and CEO of Digifox
“Digifox is a company that can disrupt legacy finance. Nicholas Merten understands both crypto and crypto users, having built the largest crypto YouTube channel in the industry. The company vision of taking crypto mainstream aligns with our vision at Token Metrics. We’re very excited to support Digifox on this disruptive vision of bringing crypto to the masses.”
– Ian Balina, Founder and CEO of Token MetricsSource: Token Metrics