A crypto wallet is what you need if you want to store and send cryptocurrencies on the blockchain. There are different types of crypto wallets. It’s important to understand the differences between each type if you are new to the crypto space.
This article will sort out everything you need to know to find the best crypto wallet.
There are 3 types of crypto wallets - software crypto wallet, hardware crypto wallet, and crypto wallet service that allows users to store their cryptocurrencies by blockchain private keys.
A custodial wallet is a wallet where your private keys are stored by a third party. Thus, you do not have full control over your funds.
A non-custodial wallet allows you to fully control your funds. So it’s more secure than custodial ones. It will either give you a file or have you write down a mnemonic phrase that can consist of 12-24 random words. The code should also be open-source, which means it can be audited by security experts. This reduces the risk of malicious code entering the app and possibly extracting your private key.
Pros and cons of using a custodial wallet:
Easy: It is easy to use for new crypto beginners. It works like common Web2 products. Through registration and sign up, you can manage your cryptocurrencies very easily and quickly at any time as long as you are connected to the Internet;
Unsafe, not in your control: The private key is not in your control. You are actually storing your cryptocurrencies in others’ pockets. To users, if you store your cryptocurrencies in centralized exchanges (CEX), then it is a custodial wallet. A negative example of custody is the previous OKEx incident. When OKEx’s founder was taken away by the police, all the OKEx users were not able to withdraw their cryptocurrencies from their accounts at that time, since he’s the person who controls the private key.
Pros and cons of using a non-custodial wallet:
Safe and full control: You, not the custodian/third-party service provider, have full control over your money;
Your cryptocurrencies cannot be seized by a court decision, or get lost in a fork.
Not very user friendly: you have to go through all the unfamiliar Web3 wallet open processes. AND most important is, please DO keep your private key well. Once lost, you can’t find your cryptocurrencies back.
How to know if a wallet is custodial or non-custodial?
Search “Wallet” on dapp.com, then you will see there is a custodial and non-custodial tag put on each wallet.
For non-custodial wallets, there are 2 types: software and hardware wallets
Software wallets store your private key in your browser, in apps in your mobile devices like smartphones, or apps installed on your computer. Such wallets allow you to access your account as long as you or anyone else correctly enter your private key. So if your private key is carelessly leaked, it’s possible to lose your money in the wallet.
Hardware wallets are physical devices, which act as a flash drive and store your private keys. You can search “Hardware” on dapp.com to view those hardware wallets.
It’s the most secure type of crypto wallet.
When you keep the wallet disconnected, it makes sure that the wallet is off the net and cold. Whenever you need to send your crypto, you simply connect the wallet to a computer or a device, enter your PIN-code, and send the funds. When the transaction is completed, you just disconnect it and keep it safely in your pocket. The entire transaction validation process is done within the hardware wallet itself and not on the computer, and won’t expose your private keys even during transactions.
Check our Wallet topic page. We cover all the blockchain wallets for various cryptocurrencies and rank them by different dimensions, which are also the criteria you must check before your first deposit.
You can evaluate a crypto wallet’s reputation with its Social Signal, User Rate, and Alexa Ranking, etc.
Social Signal No.1 - Ledger
Alexa Ranking No.1 - Samsung Blockchain Wallet
You can check what wallets dapp.com is recommending here.
Crypto wallets should be easy to use. For example, you need to check if a wallet has a friendly interface, a simple recovery mechanism, or well-designed send flows.
Make sure to choose a wallet offering the features that are most important to you. Some crypto wallets allow you to buy cryptocurrency from within the wallet. Some are able to save addresses as contacts. It’s important to find a wallet offering the features you need.
Do not want to switch back and forth between exchanges and your wallet? Wallets on dapp.com with a “buy crypto” tag means you can trade cryptocurrencies directly inside the wallet. Check them in this playlist - Wallet with Built-in Token Swap.
MetaMask is one of the most used crypto wallets with over a million downloads and counting.
It provides services for blockchain newcomers, token traders, crypto gamers, and developers. It’s safe, convenient as a chrome extension, and of great reputation. If you are a DeFi yield farmer, you won’t be strange to it.
Ledger is one of the most credible companies in the hardware wallet space.
At the heart of Ledger’s innovation lies a distinct operating system called BOLOS, which they integrate to a secure chip for their wallets.
In conclusion, to choose the best crypto wallet, first, to check its reputation through different dimensions on dapp.com; then, check if the UI is friendly and easy enough to use; third, make sure it has all the necessary features you use most.
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