How to Choose the Safest Crypto Wallet for You

When choosing a crypto wallet, it’s important to consider the specific circumstances of your situation.

– For instance, a hardware or custodial wallet may not be the best option if you live in shared housing.

This is because it may be difficult to ensure the security of the wallet and seed phrase from roommates or visitors.

– However, if you can keep your wallet and seed phrase secure, a hardware wallet or non-custodial wallet would be a safer choice.

Remember, the safety of a crypto wallet depends on your ability to keep it secure, so it’s important to be aware of the different options available and how to choose the safest one for your needs.

The safest crypto wallet.

At this page’s end, there is a quiz to measure your crypto wallet safety level.

You can directly scroll down to the quiz if you feel confident about your knowledge. But we do recommend you browse through the content of this page.

Table of Contents

Important notice: Do your research.

Our content is intended to be used and must be used for informational purposes only. It is not intended to provide investment, financial, accounting, legal, tax, or other professional advice.

It is essential to research and verify any information you find on this website or any other website.

The Safest Crypto Wallet 101

Before choosing a crypto wallet, you must fully understand some fundamental concepts. 

The safety of your crypto wallet and your crypto funds depends on your digital safety knowledge and the digital safety good practices you follow.

It is a common belief that crypto wallets are used to store cryptocurrencies like Bitcoin and crypto assets like NFTs.

But this common belief is a common misconception. 

– Knowledge –

Crypto wallets store public and private keys, as well as public addresses.

Crypto wallets do NOT store cryptocurrencies or crypto assets.

To avoid misconceptions that may put your crypto assets at risk, there are four key concepts that you need to know:

What is a seed phrase, and why is it essential to keep the seed phrase secret

What is a private key, and why exposing a private key can lead to the loss of the assets from a wallet account

What is a public key, and what is it used for.

What is a public address, and how it is used to receive crypto assets.

And with those concepts clear, you can learn about the different types of crypto wallets and choose the one that fits you the best:

Custodial Vs. Non-custodial wallets

Cold (Hardware) Vs. Hot wallets

Desktop Vs Mobile Vs. Web Browser wallets

Cryptocurrency Wallets Keys and Seed Phrase.

A crypto wallet does store the wallet’s private key, public key, public address, and seed phrase.

And to keep your crypto wallets and crypto funds safe, you must understand those four concepts very well.

Hierarchical Deterministic wallet

You can create and use a crypto wallet without ever having to worry about private keys, public keys, or seed phrases.

You will only need the public address, which you will use to transfer or receive funds between wallets.

But you need to know the importance of keeping your wallet safe, especially the wallet seed phrase.

The wallet seed phrase is the main target for hackers and scammers, and they know that YOU are the one who can provide the seed phrase to them.

– Knowledge –

It is the user who makes a wallet safe or unsafe.

A cold wallet used by a careless person is less safe than a hot wallet used by a person with developed digital safety knowledge and who follows digital safety good practices.

Wallet seed phrase

What is a seed phrase, and why it is so important?
KNOWLEDGE

Wallet public keys

What is a public key and what it is used for?
KNOWLEDGE

Wallet private keys

Learn why your wallet's private keys are important.
KNOWLEDGE

Wallet public address

What is a public address and what it is used for?
KNOWLEDGE

Custodial and Non-Custodial Wallets

The following statement will be very familiar if you have been into crypto for a while. 

Or, if you are new to crypto, you will hear it eventually, for sure:

– Knowledge –

NOT YOUR KEYS, NOT YOUR CRYPTO

A very important piece of knowledge:

Centralized crypto exchanges or centralized crypto lending platforms create custodial wallets for their users.

And this means that a central authority must approve every single transaction.

So, for example, in case of insolvency, the users may not be able to withdraw their assets if the central authority decides not to approve any transaction.

Over the years, there have been far too many cases of users losing access to the assets stored in custodial wallets.

And this is why it is essential to understand the difference between custodial and non-custodial wallets.

– Knowledge –

Cold wallets are non-custodial wallets.

Hot wallets can be custodial or non-custodial wallets.

Exchange wallets are custodial wallets.

Custodial Wallets

When using a custodial wallet, you do NOT own the private keys. A third party holds the private keys.

– Knowledge –

Custodial = You do NOT own the private keys.

Custodial wallet advantages and disadvantages.

You have probably heard about banks going insolvent and preventing their customers from withdrawing their money. So, with a custodial wallet, it may happen the same.

And, while the banking system is very regulated, the crypto space is not. And there is a very substantial possibility of losing your funds to a crypto exchange being insolvent when using custodial wallets.

But, there are situations when using a custodial wallet is needed, like for example buying crypto using fiat, so when choosing a custodial wallet make sure that you do your research and choose the most respected custodial wallets providers.

Coinbase crypto wallet

Hot wallets for desktops and mobile devices
Custodial

Binance crypto wallet

Hot wallets for desktops and mobile devices
Custodial

It would be best if you considered using custodial wallets only in the following situations:

For small amounts of crypto like, for example, pocket crypto, you need frequent or the spot transaction.

For exchange transactions like, for example, buying Bitcoin. Once the transaction is completed, move the assets to a non-custodial wallet.

When having a non-custodial wallet is not possible due to safety concerns, e.g., you cannot safely store the non-custodial wallet seed phrase.

For diversification, having all your private keys under the same roof may lead to significant losses in a disaster like a fire or a robbery.

Non-Custodial Wallets

When using a non-custodial wallet, you own the private keys. 

– Knowledge –

Non-custodial = you own the private keys.

Non-custodial wallets' advantages and disadvantages.

For as long as you are the unique owner of the private keys, there is no risk that anyone can take over your assets.

Your assets, Bitcoin, Ethereum, and Cardano,… are in the blockchains, and you are the only person with private keys. 

You are the sole owner, but this significant advantage comes with higher responsibility.

Ledger crypto wallet

Cold wallet for desktops and mobile devices.
NON-CUSTODIAL

It would be best if you considered using non-custodial wallets in the following situations:

For safety, if you own large amounts of crypto, hardware wallets may be the safest way to keep your assets safe.

For diversification, storing all your funds in non-custodial wallets may lead to significant losses in case of insolvency or a bank run.

If you still have not fully clear the importance of using non-custodial wallets, you may have a look to some online videos, like the one below.

Hot Wallets

A hot wallet is a cryptocurrency wallet installed on shared hardware devices, like a laptop, mobile phone, or PC.

The hot wallets do offer easy and quick access to crypto assets because the hardware devices where the hot wallets are installed are mostly always connected to the internet.

When to use a crypto hot wallet. Hot wallet risks and threats.

And because hot wallets are always connected to the internet, it is commonly assumed that they are more vulnerable to threats.

And to an extent, this may be a  misconception because:

– Knowledge –

Hot wallets are as secure or insecure as the device where they are installed. 

An UNSAFE computer or mobile device with OUTDATED software, firewall, and antivirus… will put your hot wallet and crypto assets at risk.

Someone who disregards software updates or installs new browser extensions without care, will probably put any hot wallet at risk.

Conversely, someone who knows crypto threats knows how to avoid hackings or scams and follows good digital safety practices will most probably keep any hot wallet safe from disasters.

Hot wallets can be subdivided into desktop, web, and mobile wallets.

Hot wallets advantages and disadvantages

Desktop Hot Wallets

Desktop wallets are a type of hot wallet installed on a physical device like a desktop computer or laptop.

Desktop wallets are non-custodial wallets.

Desktop wallets are especially suitable for cryptocurrency traders, who require large monitors, a keyboard, and a mouse for convenience to be able to handle crypto assets in a fast, reliable, and safe manner.

Some examples of desktop wallets are:

  • Atomic
  • Exodus
  • Bitcoin core.

Bitcoin core crypto wallet

Hot wallet for desktops
Non-custodial

Atomic crypto wallet

Hot wallets for desktops and mobile devices
Non-custodial

Web Hot Wallets

A web wallet is a cryptocurrency wallet that exists only online and is accessed through an application like a web browser or a browser extension extension.

Web wallets can be custodial or non-custodial.

Some examples of web wallets are:

  • Trust wallet
  • Metamask
  • Coinbase

Metamask crypto wallet

Hot wallet for browser extension and mobile devices
Non-custodial

Mobile Hot Wallets

A mobile wallet is a cryptocurrency wallet installed on a mobile device.

Mobile wallets can be custodial or non-custodial.

Usually, mobile wallets are used in combination with other types of wallets. It is uncommon to use only mobile wallets but very common to use them in combination with web or desktop wallets.

Some examples of mobile crypto wallets:

  • Trust wallet
  • Metamask
  • Exodus
  • Coinbase

EXODUS

Hot wallets for desktops and mobile devices
Non-custodial

– Good practice –

If you have a hot wallet or are considering using a hot wallet, you should:

– Make sure that your computer or mobile device software is up to date.

– Ensure your computer or mobile device is protected against viruses and malware.

– Learn how hackers and scammers are trying to steal your crypto.

– Learn about crypto safety good practices to keep your wallet and seed phrase from accidents.

Cold Wallets

Cold wallets come in two types, hardware wallets and paper wallets.

While hardware wallets are very common, and most seasoned crypto users have one, paper wallets are used only by knowledgeable and experienced crypto users.

– Knowledge –

While cold wallets are generally safer than hot wallets, a user who is not taking good care of the cold wallet or the seed phrase, is at high risk of permanent losses.

Cold wallets advantages and disadvantages

Hardware Cold Wallets

Hardware wallets are cryptocurrency wallets installed on dedicated hardware devices, primarily offline.

The cold wallets will only interact with other hardware devices, like a laptop, when transaction verification is required.

And the cold wallets are installed on dedicated hardware that does not host any other software or application.

But, the same as the hot wallets, the cold wallets are as safe or unsafe as their users. 

Use hardware wallets to protect your most valuable crypto assets.

The most popular hardware wallets are Ledger and Trezor, but other models are available on the market with higher or lower prices and more or fewer functionalities.

Trezor crypto wallet

Cold wallet for desktops and mobile devices
Non-custodial

Paper Cold Wallets

A paper wallet is a non-custodial cold storage wallet, a piece of paper with public and private keys written or printed.

An advantage of using a paper wallet is that it has zero connection to the internet, so it assures you that nobody will be able to hack into it.

But it has the downside that the materials used to record the keys, e.g., paper and ink,… may lead to degradation and permanent loss.

An additional downside is that you need to use a third party, a paper wallet generator, to generate the keys for you. And, can you trust that third party? 

It is 100% certain that many of the paper generator applications or websites that can be found online are malicious sites that will keep a record of the private and public keys and steal any funds you deposit in the wallet.

It is not advisable to use paper wallets unless you 200% know what you are doing.

What wallets should you choose?

You should choose the safest wallets you can afford, given your personal situation.

And this is especially important for those holding medium and large-size portfolios.

Because what is the point of having a large portfolio today if part or most of it is lost tomorrow to hacks, scams, or accidents?

Small size portfolios

For a small portfolio, you may consider having the following type of wallets:

One non-custodial wallet: One trusted crypto exchange for buying crypto using fiat or crypto trading operations.

One custodial hot wallet: You should consider having one custodial hot wallet to keep your crypto assets away from centralized exchanges and non-custodial wallets. And for crypto trading operations on decentralized crypto exchanges.

Zero hardware wallets: Purchasing a hardware wallet may not be cost-effective if you have a small portfolio.

For small portfolios, moving your crypto assets between wallets may not be cost-efficient because of the transfer fees.

If you are starting in crypto or are not planning any significant investment soon, you may consider having only a couple of crypto wallets. Keep It Simple.

Medium size portfolios

For a medium size portfolio, you may consider having the following type of wallets:

A couple of non-custodial wallets: A couple of trusted crypto exchanges for buying crypto using fiat or crypto trading operations. If, for any reason, one business is unavailable (e.g., maintenance), you can use the second crypto exchange.

A couple of custodial hot wallets: You should consider having a couple of custodial hot wallets to keep away your crypto assets from centralized exchanges and non-custodial wallets. And for crypto trading operations on decentralized crypto exchanges.

One hardware wallet: If you have a medium size portfolio, you should consider purchasing a hardware wallet to keep your most valuable crypto assets as safe as possible. 

For medium portfolios, you must pay attention to safety and ensure that you don’t lose any crypto assets to crypto exchange insolvencies, hacks, scams, or accidents like a house fire.

Large size portfolios

For a medium size portfolio, you may consider having the following type of wallets:

A couple of non-custodial wallets: A couple of trusted crypto exchanges for buying crypto using fiat or crypto trading operations. If, for any reason, one business is unavailable (e.g., maintenance), you can use the second crypto exchange.

A couple of custodial hot wallets: You should consider having a couple of custodial hot wallets to keep away your crypto assets from centralized exchanges and non-custodial wallets. And for crypto trading operations on decentralized crypto exchanges.

A couple of custodial hardware wallets: If you have a medium size portfolio, you should seriously consider purchasing a few hardware wallets to keep your most valuable crypto assets as safe as possible and as diversified as possible. No single point of failure.

For large portfolios, you must pay extra attention to safety and ensure that you don’t lose any crypto assets to crypto exchange insolvencies, hacks, scams, or accidents like a house fire.

And you should seriously consider using some of your funds in purchasing hardware wallets and also use some of your funds in getting the safest way your can afford to keep the wallets and seed phrases safe.

The One Rule You Must Always Remember

It is up to you to choose the wallet or wallets that are the best for your personal situation, but there is one rule that you must always remember:

Do You Own the Private Keys?

Not Your Keys Not Your Coins: Act Now
GOOD PRACTICES

Crypto knowledge quiz

Crypto wallet quiz.

This quiz will score your general Crypto Wallets knowledge.

After completing the quiz, your score will be displayed as well as our feedback on each one of the questions.

 

On what type of wallets does the owner have custody of private keys?

Which one of the following is used to sign transactions?

What do you need to know to send crypto assets to a crypto wallet?

Which of the following is used to encrypt transactions?

What types of wallets are installed on dedicated hardware devices?

What type of wallets can be accessed through a web browser? (select all that apply)

What do you do if a mobile app you downloaded from an app store asks for a seed phrase?

If you open an account on a crypto exchange, what type of wallet do you get?

Are hot wallets custodial or non-custodial?

What is phishing?

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