Crypto wallets, short for cryptocurrency wallets, are software programs or hardware devices that allow you to store and access your cryptocurrency.
While you can store cryptocurrency in an account at an exchange, many savvy users and those with high balances keep their cryptocurrency in a wallet where they have complete control.
Because you can’t reverse crypto transactions or recover lost assets, it’s essential to store your cryptocurrency (and NFTs) in a way that keeps cybercriminals at bay while giving you easy access to receive, send, and use your currency. Transferring assets from an exchange account to a crypto wallet gives you maximum security.
Here’s a look at how cryptocurrency wallets work and the best crypto wallets available today.
What Is A Cryptocurrency Wallet?
A cryptocurrency wallet is used to store cryptocurrencies and digital assets, including Bitcoin, Ethereum, Dogecoin, Stellar Lumens, Shiba Inu, and non-fungible tokens (NFTs).
Cryptocurrency wallets store a combination of your public wallet address and private key. Combined, these allow access to your crypto assets. Cryptocurrency wallets come in three forms and each has pros and cons:
Cryptocurrency enthusiasts often use a combination of these types of wallets. For example, you may use a paper wallet for a cryptocurrency miner, a software wallet for regular use and NFT purchases, and a hardware wallet for long-term storage.
There’s no objectively right or wrong answer when it comes to the type of crypto wallet that should be used. But there’s likely a right answer for you.
Do I Need A Crypto Wallet To Buy Crypto?
Do you need a crypto wallet to buy crypto? No, you don’t. If you open an account with a cryptocurrency exchange or brokerage, they'll hold the cryptocurrency on your behalf.
If you need a wallet to receive crypto in the account, the exchange will generate wallet information for you. However, many crypto users believe running your own wallet is more secure than relying on an exchange or brokerage.
Pros And Cons of Crypto Wallets
Pros
Cons
Best Software Crypto Wallets – Free, Less Secure
Metamask: Best Software Wallet For Dapps
Metamask is a crypto wallet built into your web browser through an extension. You can sync your Metamask wallet to the Metamask mobile app for use on your iOS or Android phone or tablet. With Metamask, you can quickly receive cryptocurrency, swap cryptocurrency, and use crypto for purchases.
This software wallet connects with many exchanges, marketplaces, and other distributed apps (Dapps). These include distributed cryptocurrency exchange Uniswap and the OpenSea and Rarible NFT marketplaces.
Exodus: Best Software Wallet For Crypto Fans
Exodus is a software wallet and distributed cryptocurrency exchange in one. It’s a good solution for those who want to keep their crypto on a trusty laptop or desktop computer. There’s a mobile version available as well which can sync with the desktop app.
Exodus supports more than 145 different crypto assets for storage and exchange. It also supports additional security when using the Trezor hardware wallet (more on that below). Exodus works with several exchanges and Dapps, including apps to earn interest on crypto balances.
Phantom Wallet: Best Software Wallet For Multi-Chain
Phantom Wallet has been gaining a ton of popularity (especially since there may be an airdrop soon). However, it's key focus is that it supports multi-chain (Bitcoin, Ethereum, Solana), and it links to multiple NFT marketplaces.
Plus, they've added features like having a public handle that you can follow others with. Their mobile app is also a solid option if you prefer to trade and track on the go.
Coinbase Wallet: Best Software Wallet For Beginners
Coinbase Wallet is a free wallet from major exchange operator Coinbase. It works with distributed apps, including OpenSea and Uniswap. Coinbase also makes it easy to transfer funds to and from your Coinbase account, though blockchain network fees apply–these are fees charged by the cryptocurrency network, not Coinbase.
Coinbase Wallet works as an Android or iOS mobile app and through a Chrome browser extension. If you’re already using the Coinbase exchange, this wallet could be a good choice for getting started with software wallets.
Best Hardware Crypto Wallets – Paid, Most Secure
If you want the most secure cryptocurrency wallets, you need to get a hardware wallet!
Trezor: Best Overall Hardware Wallet
Trezor is a popular hardware wallet. The Trezor One and Trezor Model T support more than 1,000 different cryptocurrencies and work through a connection with your computer or mobile device. With Trezor One, you enter your PIN or passphrase on your computer. With the higher-end Model T, you enter your PIN more securely through a touchscreen on the Trezor device.
The software behind Trezor is open source, so anyone in the crypto community can inspect it for vulnerabilities. The Trezor app includes features to buy, exchange, and spend cryptocurrency. And with your wallet address and keys stored offline in the Trezor device, it’s perfect for long-term storage. The Trezor Model T is our pick for the best overall hardware wallet.
Ledger: Best Value Hardware Wallet
Ledger is a popular hardware wallet maker. The Nano S Pro is an excellent choice for low-cost hardware wallets. It supports up to three cryptocurrencies for exchange at once and connects to your computer or phone with a USB wire.
The Nano X is a Bluetooth-enabled device that works with up to 100 cryptocurrencies for exchange at once. Both store unlimited cryptocurrencies among the over 1,100 supported. Ledger owners use the Ledger Live software to connect and manage crypto in a Ledger wallet. Both Ledger wallets are very secure and reasonably user-friendly. The Ledger Nano is our pick as the best hardware wallet under $100.
Keystone: Most Secure Hardware Wallet
Keystone is a cryptocurrency hardware wallet that doesn’t physically plug into your computer or mobile device. This “air-gapped” hardware wallet is virtually impenetrable. There’s no Wi-Fi, Bluetooth, or USB connection at all. You interact with the wallet using its touchscreen and QR codes.
Keystone runs on open-source firmware and uses a proprietary chip to generate random wallet addresses and private keys. The only major downside is a relatively short list of supported assets, though the most popular (Bitcoin, Ethereum, and others) are supported. This premium wallet may be a wise investment if you have many thousands or even millions in cryptocurrency. The Keystone Pro is our pick as the best wallet for security for individual users.
Final Thoughts
While you don’t need a cryptocurrency wallet to engage in the cryptocurrency marketplace, it’s a good idea for those with significant crypto assets.
They’re also fun to use if you’re a crypto enthusiast who loves getting involved and understanding how the blockchain ecosystem works.
If you’re serious about investing in crypto, it’s worthwhile to also invest in a high-quality crypto wallet for secure long-term storage.
Eric Rosenberg is a financial writer, speaker, and consultant based in Ventura, California. He holds an undergraduate finance degree from the University of Colorado and an MBA in finance from the University of Denver. After working as a bank manager and then nearly a decade in corporate finance and accounting, Eric left the corporate world for full-time online self-employment. His work has been featured in online publications including Business Insider, Nerdwallet, Investopedia, The Balance, HuffPo, Investor Junkie, and other fine financial blogs and publications. When away from the computer, he enjoys spending time with his wife and three children, traveling the world, and tinkering with technology. Connect with him and learn more at EricRosenberg.com.