Congrats!  You just scored some of your favorite crypto from the exchange.  But… now what?

Well, why not just leave it there on the exchange? you may be thinking.  I mean, it’s right there, and you can see the balance whenever you visit the site.

The issue is that when you leave your coins on a site like Coinbase, Binance, or Cash App, you don’t truly control that crypto.  If that exchange went down, made a mistake, or decided to up and vanish on you… your coins are POOF!  Gone.

The beauty of crypto lies in the fact that it allows you to act as your own bank, one that doesn’t need a custodian to keep your funds safe.  Exchanges can act as a wallet if you leave your coins where you buy them, but there’s a major disadvantage to that convenience: security.

 

Let’s look at the most notorious example of when exchanges go wrong: Mt. Gox.

In the early days of bitcoin, before there were so many exchanges and options to buy and store your crypto… there was Mt. Gox.  Founded in 2010, Mt. Gox was the world’s largest bitcoin exchange, handling over 70% of all bitcoin transactions until early 2014.  That’s a lot of bitcoin all in one place, y’all.

Then… the sh!t hit the fan.

In early 2014, Mt. Gox announced that nearly 850,000 bitcoins (belonging to customers and the company itself) were “missing.”  It turns out that the missing bitcoins had been taken straight out of Mt. Gox’s wallet over a period of several years.

Customers had no recourse to recover their missing coins… the exchange had done them dirty, and (aside from pressing charges) there was nothing they could really do about it to get their coins back.

What if you had all your coins on Mt. Gox during this time?  Yikes.

 

And this, my friends, is why having your own crypto wallet is so important.

Don’t get me wrong: most reputable crypto exchanges have strong security measures to protect the crypto being stored there.  However, if you really want to ensure that your funds are safe and under your control, you’ll want to make sure to find a wallet that works best for you.

But wait… what do I mean when I say “under your control?”  Let’s break it all the way down for just a second.

 

Let’s talk about “keys.”

Every crypto address has two types of “keys.”

Public Key

This key is what you use to receive your crypto and is totally safe to be displayed in public.  Your public key can also be called your “public address.”  Speaking of addresses, think of giving out your public key like giving out your PO Box address; mail can only go in.

I’ve even seen some folks go so far as to include their public key on their social media bio, figuring “why not?”  What’s the worst that can happen, someone accidentally sends you some crypto?

Private key

This key is what you use to send your crypto, and this one is crucial to keep safe.  Only the person with the private key can send crypto from that address, so if someone else got control of your private key, they’d be able to take all your crypto.

If your public key is like your PO Box address, think of your private key like your Social Security Number or the key to your personal safe.

When you keep your crypto on an exchange, you might have access to your public key, but you actually don’t have access to your private key… only the exchange does.

You’re basically being given an IOU from the exchange by leaving it there, unable to control your coins without their direct involvement.  As we have seen before in the Mt. Gox example, however, that’s leaving a lot of trust in the hands of the exchanges.

Personally, I always advocate for taking full control of your crypto when possible.  And that’s where crypto wallets come in.

 

Crypto Wallets

There are two distinctions to be made when we talk about wallets: “cold” wallets and “hot” wallets.

 

“Cold” Wallets

A cold wallet is a wallet that keeps the private keys stored offline and not connected to the internet in any way.

Most cold wallets are actual physical devices (also called “hardware wallets”) that can connect to a computer.  The keys are stored within the device’s software, so you can think of them as a sort of crypto keychain.

There are two industry-standard hardware wallets: Trezor and Ledger.  Both have been the go-to hardware wallets for countless crypto-enthusiasts since 2014. So let’s have a look, shall we?

Trezor

Founded in 2013 by SatoshiLabs, Trezor makes two versions of their hardware wallet: the $60 Trezor One and the $181 Trezor Model T.  Both perform the same function of securely holding your keys. However, the Model T offers a touch-screen functionality while still supporting the same number of coins (over 1,000 as of this writing).  I personally own and am perfectly happy with my Trezor One (pictured below), but fans of touchscreen technology willing to pay a higher price might prefer the Model T.

Ledger

Like Trezor, Ledger also offers two versions of their wallet: the Ledger Nano S ($59, pictured below) and Ledger Nano X ($119).  Ledger’s products resemble a USB flash drive more closely than Trezor, and the display screen is a bit smaller.  However, Ledger supports a reported 1,200+ coins, several hundred more than Trezor.

I own a Ledger as well, and while its user interface and functionality are equally user-friendly, I tend to use my Trezor a bit more simply because it was the first hardware wallet I ever owned.

Whichever you choose, be sure to order from them directly and not from a third party.  Second-hand devices could easily be compromised, and you could lose all your crypto.  You can find direct links to Trezor and Ledger devices right here.

 

“Hot” Wallets

A hot wallet is a wallet that’s connected in some way to the internet, usually in the form of an app on your phone or desktop.  Hot wallets offer a more immediate and convenient way to store your crypto.  After all, people usually have their phones with them these days and don’t carry their Trezor or Ledger devices around.

The potential trade-off is that of security. For example, if you left your phone or laptop open in the hands of someone with the right know-how, they could gain access to your crypto stash much easier than if it were on a hardware wallet.

So what do you say we take a look at some of the top hot wallets?  I like to break these down into two types: Desktop wallets and Mobile wallets.

 

Desktop Wallets

These are wallets that would be downloaded to your laptop or stationary home computer.  While they don’t have the nimbleness of a Mobile wallet, they often have much larger displays and can be easier to engage with visually.  Some of the ones I like to recommend include…

Exodus

With support for over 100 coins and a sleek, night-friendly design that’s easy on the eyes, Exodus is a go-to desktop wallet for any level of crypto investor. In addition, you can connect your Trezor device for added coin support, and you can even receive passive interest on select coins like Cardano, Algorand, Tezos, Vechain, Cosmos, and Dai.

As a bonus, Exodus even boasts a built-in exchange so that you can swap coins like BTC for ETH within the wallet itself.  Pretty cool.

 

Electrum

Who says old-school can’t still be relevant?  Electrum is an OG in the wallet game and is one of the longest-standing wallets in crypto.  With one of the most simple, straightforward interfaces out there, Electrum is no-frills, no-nonsense, and classic as they come.

The downside?  Electrum only supports bitcoin.  Also, if you’re looking for a wallet with fancy bells and whistles, Electrum might not be for you.  But, if you’re looking for an easy way to send, receive and keep your bitcoin safe, look no further.

 

Daedalus

Simple and yet modern, Daedalus is my go-to wallet for storing and staking ADA.  I’ve used Daedalus since the early days, and they’re continually rolling out improvements regularly.

You can send, receive and store ADA, of course, but Daedalus keeps an entire copy of the Cardano blockchain on your home computer.  This means you’re effectively running a “full node” from home and, as such, are granted access to some pretty awesome features.

You can delegate your ADA to a staking pool of your choice for starters, and every five days, get a payout in ADA if you choose to stake on Daedalus.  Your coins are never locked, and there’s no minimum needed to stake.  It’s a win-win all the way around, as far as I see.

Daedalus also recently enabled optional voting for blockchain proposals. So if you choose to vote on community project proposals, you could be in line for a sweet little ADA payout for your participation.  Man, I love this wallet.

 

Mobile Wallets

These wallets live on your mobile device for crypto investors on the move.  Here are some you might want to check out.

 

Trust Wallet

Trust Wallet is a solidly straightforward, multi-purpose mobile wallet supporting “over 160 assets” and “40 blockchains.”  You can buy, swap and even earn interest from the comfort of your phone.

You can even store personal collectibles like non-fungible tokens (NFTs), and the format is intuitive and user-friendly.

 

MetaMask

With so many projects being built on Ethereum’s blockchain these days, apps like MetaMask help crypto investors really dig deep into this ever-evolving, multi-faceted world.

What may appear as a standard mobile-based Ethereum wallet, MetaMask is not only a wallet but a true “gateway to blockchain apps.”  Not only can you make purchases via Apple Pay or bank transfer/debit card, but you can use MetaMask to access the decentralized finance (Defi) app Uniswap if you’re looking for some hard-to-find tokens that aren’t available on major exchanges like Coinbase or Binance.

And, like Trust Wallet above, you can access the world of NFTs by connecting to Open Sea (a decentralized NFT marketplace) through your MetaMask extension. So, again, this is a pretty powerful tool for the Ethereum enthusiast.

 

Mycelium

Finally, we get around to one of the oldest hot wallets in crypto: Mycelium.

Like Electrum above, Mycelium is a simple, no-nonsense wallet that only supports bitcoin.  For those looking for a streamlined, easy way to store your bitcoin safely, this tried-and-true wallet may be just what you’re looking for.

 

The list doesn’t end here, of course.

I’ve only selected a preferred handful from the ever-growing list of crypto wallets out there.  No matter what coins you’re interested in or your personal investing strategy, there’s a wallet for you.

Personally, I like to mix it up and use a variety of different wallets for different reasons. But at the end of the day, I rest well, knowing my coins are secure and that my keys are safe.

There are lots of decisions to be made, but in the end, it’s reassuring knowing that you are your own bank and in full control of your financial future.

 

 

Stay golden.

 

Got your crypto all neatly tucked away, but market downturn leaving you bummed out?  Learn how to deal with the dips that come with the crypto territory.

What other questions do you have about wallets? Got a favorite? Tell us in the comments below.